NFTs for Competitive Advantage
In an article we published in 2021 on Healthcare Supply Chains, we illustrated how Blockchain can be used to create a Blue Oceans Strategic advantage. My more recent article on NFTs in Healthcare appears to have found resonance with readers, so I thought it might be useful to continue the discussion further to explore the business value from these technologies.
Ultimately, technology solutions are simply tools to achieve a preferred outcome. Executives invest in these tools when it makes business sense to do so. Operational excellence, particularly with supply chains, can confer strategic advantage. While there is always merit in streamlining efficiencies and reducing costs, creating a compelling narrative that redefines the customer journey can truly set a company apart. We believe that blockchains can create such a narrative - truly differentiating across a number of demonstrably measurable metrics.
Examining the Financial Benefits
Supplier Onboarding
A recent study by Accenture showed that inaccurate supplier onboarding data, such as mistakes in product order forms, inaccurate measurements and quantities, and incomplete risk assessment costs businesses about $15 million every year. Their True Supplier Marketplace solution achieved a 95% compliance rate through embedded risk assessments and workflow logic, a 73% Reduction in time to onboard a supplier end to end—from 15 days to 4 days and a 39% Reduction in manual data entry through automation.
Chainyard, a blockchain consulting and tech firm, claims that blockchain’s trusted source of supplier information can: reduce administrative costs by 50%, eliminate up to 90% of repetition and redundancy, and make the process of onboarding new suppliers 70-90% faster.
These innovations help reduce supplier cycle time and consequently total lead time (order to delivery time).
Production and Transportation
Blockchain can drastically reduce production cost by reliably recording and pinpointing errors in production systems. Tagging physical goods with non fungible tokens (NFTs) via QR code/NFC/RFID technologies can enable detection of defects at a much more granular level (down to individual items). These digital twin representations are much more easily tracked as good move along the supply chain when a shared ledger is used.
The total cost of recalls in the medical device industry has been estimated to be up to a staggering $5 Billion per year, without taking into account brand credibility or, more importantly, patient risk.
NFTs allows for real-world metadata about each product to be embedded. This includes information such as its identity, current physical location, responsible party, possession, container temperature or any other relevant data points, all of which can be
updated as conditions change. Through real-time visibility, KPIs such as Delivery in Full (DIF), Delivery-on-Time, and Damage-Free Delivery are all accessible to network participants.
Blockchains enable peer-to-peer data exchange, providing a single, agreed source of truth for that data. The metrics of success of a supply chain therefore need to include these elements when evaluating functionality over all:
Material Flow: Raw material at the beginning of the supply chain to the end of the supply chain.
Information Flow: Information like demand information, forecasting information, production and scheduling information flows through out the supply chain.
Finance Flow: It is the money flow of a supply chain. Without it a supply chain demise.
Commercial Flow: The material flow changes its ownership from supplier to buyer through the supply chain.
Blockchain Supply Chain vs Standard Supply Chain
Pharmaceutical Industry Use Cases
Mediledger
Contracts and Chargebacks
In the US alone, over 1 million chargebacks between manufacturers and distributers in the pharmaceutical industry occur every year. More than 5% of these are disputed, resulting in manual intervention at significant cost. These occur as a result of uncoordinated business rules and misalignment of customer and contract data between trading partners. Mediledger's solution, using blockchain, enforces business rules inside network trading partner systems before receiving data, without compromising on data security.
Roster Management
Manufacturers and Wholesalers spend countless hours retrieving, researching and evaluating customers on Group Purchasing Organisation (GPO) rosters as a result of inconsistent customer data. Rosters shared with different partners at different times can cause delays and contract misalignment resulting in inaccurate pricing for GPO members.
Mediledger's Roster Management product provides a single source of truth for Manufacturers and Wholesalers for GPO Rosters, and other data determining contract eligibility.
In addition Mediledger offers solutions for enhanced contract communication, claims adjudication and Product Verification.
Verartrak
Similar to Mediledger, Veratrak offers the ability to
Synchronise data between production, supply and planning
Streamline and secure document exchange and collaboration
Connect a portfolio of warehouses through a single, standard hub
Synthesise data across multiple systems, anchored on the blockchain.
Whilst these examples are pharmaceutical industry focused, the principles are easily applied to the medical devices sector and other industries more broadly.
Enhanced supplier onboarding, improved product quality and safety, enhanced inventory management and clarity in contracts and reduced chargebacks all offer real-world business value for supply chains.
Please get in touch if you would like a deeper dive for your industry to see how you might build a sustainable competitive edge.