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Implementation of Blockchain
Implementation of Blockchain Technologies for the Supply Chain Management in the Precious Metal Industry
Betsy Tesy Mathew ; Attributes of Commodity Supply Chains: Feasibility of Blockchain Technology for Responsible Sourcing
The potential of using blockchain technologies in the supply chain for the precious metals industry is very clear. We can provide an overview of all of its advantages as follows:
Blockchain technology can be used to create a permanent, unchangeable record of transactions, which can provide complete visibility and traceability of precious metals and gemstones from their source to their final product. This means that every step of the process, from mining to refining to selling, is recorded and can be traced back. This ensures that the metals and gemstones have been sourced and processed ethically and in compliance with all necessary regulations. It can also help to prevent fraud and counterfeiting, as each transaction is verified and recorded on the blockchain.
Blockchain can foster trust among all actors in the supply chain by providing a transparent, verifiable record of each transaction. This transparency can help to build trust between different parties in the supply chain, as everyone has access to the same information. It can also help to prevent disputes, as the blockchain record can serve as an impartial source of truth.
Blockchain can streamline the complexity of the supply chain for precious metals, reducing the need for paperwork and speeding up the process. For instance, Walmart was able to track a product from a farm to its store shelves in seconds using blockchain, a process that historically has taken days or weeks. This increased efficiency can lead to cost savings and improved customer satisfaction.
Blockchain can help manage environmental and human rights risks in the precious metals industry by providing a transparent record of the supply chain. This can make it easier to identify and address any issues, such as illegal mining or poor working conditions. It can also help to ensure that companies are meeting their sustainability commitments, as the blockchain record can provide proof of responsible sourcing and production.
Blockchain can facilitate a collaborative effort for the industry to increase transparency around minerals and metals sourcing in the face of growing public awareness and expectations. By providing a shared platform for recording and verifying transactions, blockchain can help to foster cooperation and collaboration between different parties in the supply chain.
Blockchain can help reward responsible production, build trust between upstream and downstream partners, and reduce transaction time and costs. For example, blockchain could be used to create a system of rewards or incentives for companies that adhere to ethical sourcing and production practices. This could help to encourage responsible behavior and promote sustainability in the industry.
Blockchain has the potential to transform certain parts of the mineral supply chain, including the development of transparent markets on the blockchain to facilitate the sale of responsibly produced material and drive demand. This could lead to the creation of new business models and opportunities, and could help to promote fair trade and ethical practices in the industry.
Blockchain technology can enable the creation of a digital trading platform on which downstream companies can directly purchase provenance-enabled and responsibly produced mined and unmined minerals. This could help to simplify the supply chain, reduce costs, and ensure that companies are sourcing their materials responsibly. It could also provide a more direct connection between producers and consumers, potentially leading to improved customer satisfaction and loyalty.
These benefits highlight the immense potential of blockchain technology in enhancing the efficiency, transparency, and sustainability of supply chain management in the precious metals industry.
The potential for blockchain and smart contracts in the mining and metals global supply chain is immense and in our view, adoption is inevitable. For our sector, which by its nature is already truly global, characterised by global trading hubs, relatively homogenous global trading norms and a strong ethos of adoption of automation in the search for productivity (e.g., driverless trucks and trains), we see the change as largely evolutionary.