You’ve probably heard the word “NFT” being thrown around for a while now. But what exactly are they? NFT is an acronym for ‘non-fungible token,’ meaning that a distinct image that is bought or sold cannot be owned or copied by anyone else. NFTs, which exist on a blockchain, are currently popular in the art world, but they’ve managed to enter other industries, such as the supply chain.
Utilizing blockchain technology in the supply chain isn’t new. Once information is stored on blockchain, it cannot be deleted or changed; this kind of interface enables an ongoing ledger of information all across the supply chain. This accountability ensures better supply chain finance management, inventory management (forecasting for future demand, allocation by expiration-date, real-time updates of SKU count, and more). Additionally, blockchain allows a customer to see the entire journey of their product, which leads to retention; this traceability is key to improving customer relationships. When a blockchain framework is adopted by all service providers, there is a smoother handover from the freight provider to the warehouse, and from the warehouse to the freight provider. Providers can track when the product was received and shipped.
So how do NFTs fit into supply chain technology? Essentially, NFTs use blockchain in a similar fashion to the supply chain– to verify ownership and payment history. So, as it applies to the supply chain, NFTs can be linked to specific products or crates, which enables businesses to access a microlevel view of their goods’ journeys. This kind of bird’s eye view extends to authentication; luxury items, for example, utilize distinctive NFTs to fight against counterfeit items by allowing both the brand and the end-consumer to track products’ path from creation to sale. These NFTs are linked to a barcode, making traceability for everyone even easier. Operators at different touch points in the supply chain can simply scan the barcode and verify that a designer item, for example, was in fact manufactured by a couture fashion brand. Of course, this authentication process prevents brands from losing money via corrupt sellers hawking counterfeit items.
Regarding supply chain visibility, NFTs are incredibly useful for letting supply chain stakeholders know about product delays. Since NFTs can offer transparency into a specific product, organizations who utilize a just-in-time manufacturing model, which necessitates sourcing many separate parts from various locations and synchronizing those parts’ journeys, can track each individual part to forecast potential delays. This, in turn, gives organizations the ability to mitigate future supply chain disruptions.
In essence, NFTs’ usage in the supply chain sector isn’t going anywhere. As Osa co-founder and CTO Shlomi Amouyal says, “Companies can use NFTs to identify, track, and prove ownership of any physical and digital item and link them back to the blockchain, a capability that is extremely valuable in e-commerce for retailers, the food industry and also for in-game shopping. Customers will continue to demand visibility and blockchain enables companies to better communicate with their audience as items are tracked through every touch point in the supply chain, protecting intellectual property and patents, authenticating precious valuables, and much more.”