Effective governance is a key indicator of a well-functioning global supply chain. Creating the framework for entities effectively working together is just as important as building operational solutions.
Inevitably, members of a decentralized, blockchain-enabled governance system will have different priorities and interests that need to be reconciled.
Thus, before forming the governing network, it is important to plan how decisions will be made and how the contrast of opinions will be resolved.
While no single solution will enable every disparate interest to be accommodated, establishing road rules early on can greatly help smooth disagreements or even prevent them altogether.
Deciding on a governance model is important in forming a supply chain consortium, as the governance model is key for all other decision-making fundamentals.
Benefits of Blockchain in Supply Chain Governance
Blockchain could dramatically improve efficiency and governance performance in today's supply chain uncertainty and limit exploitative behaviors.
- In the container industry, paperwork can account for half the cost of transport;
- Consumer goods, especially electronics, pharmaceuticals, and luxury brands, are susceptible to counterfeiting and fraud;
- The implementation of public, private, and hybrid blockchains will bring governance, traceability, transparency, and accountability to the movement of goods and information exchange;
Business And Operational Governance
The closed-loop supply chain ecosystem includes the importance of providing the business value that will be realized from collaborative operation for all stakeholders.
A well-designed, inclusive, and fair supply chain governance must operate and maintain a distributed ledger solution.
As circular supply chains, operations, and business models transform, trust is essential to manage risks and enable transactions and new ecosystems. Enabled by blockchain and behavioral-oriented solutions, it is vital to progress on the UN SDGs and decarbonization to deliver on the Paris Agreement and reach necessary targets.
The multiple layers of distributed ledger networks necessitate changes to more traditional operational governance models. For example, because each network participant operates an independent node that communicates with other nodes on a peer-to-peer basis, they must run up-to-date or compatible versions of the relevant software.
In addition, to ensure all participants on the network trust one another, each participant should be able to certify that it meets relevant information security and data protection standards.
The Key Transformation
Poor transparency, inadequate corporate governance, and a weak rule of law create a shaky foundation for supply chain transactions when an organization has a fragile regulatory and governing environment.
Most essential as a key part of governance is ensuring that the right resources with the right capabilities are available when needed.
With this insight, companies can identify and deliver the right information and education to uplift their supply chain governance capability to enable:
- Internal and external collaboratively planning, establishing, and communicating global policy guidelines, minimum performance expectations, risk assessment, and compliance metrics;
- Corporate-wide visibility of actual supply chain expenditures by logistical function categories and contract compliance patterns;
- Planning and executing key initiatives incorporating supply chain governance factors;
- Tracking and reporting the status of initiatives and key measures of supply chain governance across internal customer departments; external vendors, suppliers, carriers, intermediaries, providers; and key company stakeholders;
- Establishing continuous process improvements based on closed-loop monitoring and control of spending and compliance patterns;
Governance is a relationship among stakeholders to determine and control organizations' strategic direction and performance. Naturally, it is important to serve the interests of multiple stakeholder groups.
Organizational goals will likely be met without good governance; benefits will not be realized.
The right structure for your organization is essential and needs to be properly considered.
Care in evaluating the company structure, its needs, the markets in which business must be conducted, and the size of the operation are the main considerations.
What is Nexity Network?
Nexity Network is building a blockchain-enabled, circular, more transparent, and productive world by rethinking how everything is designed, created, used, and recycled, from the food we eat to the clothes we wear and how we do business.
We are creating the next economy to serve as a bridge for the companies and customers to enable transparently, responsible, and secure product & service flows.
The ecosystem is positioned to solve supply chain complexities, focusing on day-to-day operational activity from environmental damages, visibility gaps to trust between parties, and fragmented data exchange.
Press Contact
Nexity Public Relations
pr@nexitynetwork.org
