Role of Blockchain in Supply Chain Management
Posted By : Asha Devi | 20-Aug-2018
The blockchain is disrupting the supply chain as more companies are adopting it positively. It’s high time for the companies who have not yet adapted to follow their early adopters and derive the business benefits.
Here is a brief note of adoption challenges, working nature, and the benefits of adopting blockchain in supply chain management.
Supply chain management requires transparency and traceability with the cost-effective administration for businesses of any size or segment[s]. In fact, the chain from procurement of raw materials to the end user and its recycling looks like more of a web rather than a chain as the name suggests.
There is a need for optimization of business transactions and trading relationships in a smoother way, as it involves producers, freight forwarders, brokers, and, the consumers. In addition, it spans varied stages involving several procedures like invoices, payments, logistics, returns, lost and found, theft, and, etc.
Though the firms are using the systems like electronic data interchange, or the XML messaging already to maintain the continuity in information, it often leads to failure in sync and movement of data. Indeed, the supply chain is a vast ecosystem.
With blockchain development technology, the companies are able to redesign their approach as the blockchain syncs all the data and transactions across the complete network and each authorized user can verify the work and calculations.
It updates the transaction status to everyone present anywhere in minutes and facilitates them to trace back any product to its origin. The companies are able to gain the digital ledger for transactions and movement to its participants in the network, while saving time, money, and efforts.
In brief, blockchain has the capability to redefine your business processes in a more amicable and efficient manner.
Being a distributed database, Blockchain holds the digital data records, events and makes it tamper-resistant. Though several users can access, analyze, inspect, or add the data, they are not able to change or delete them. The first and original data leaves a public and permanent information trail or the chain, that is hard to delink.
It maintains the records in an easier and secure way of facilitating businesses to interact across the globe. The transactions are recorded in a series of blocks and are present as multiple copies across the systems making it impossible to delete all at the same time and the chances to do so is negligible.
Henceforth, it is used in all possible kinds of transactions and tracking. Let us learn more about its implications over supply chain management here. Before understanding the work and benefits, let us understand the challenges faced by the supply chain industry.
Challenges of Supply Chain Management:
Global connectivity has led to the complexity of the global supply chain. A few of the risks and challenges include sudden changes in demand, variability risks, ineffective supply chain management, lack of end-to-end visibility, outdated technologies, and, etc.
Changes in Demand:
Globalization has led to pressure on margins, and the companies fail to cope up with the sudden and drastic changes in the demand.
The varied layers of supply chain like the stakeholders, suppliers, distributors, or the consumers increase the risk of the supply chain.
There is a need to predict the risk accurately. Monitoring it at regular intervals and accurately is indeed a challenge.
Lack of end-to-end Visibility:
It is a struggle to know the internal and external risks like fraud, violating the code of conduct, and, etc.
There is a continuous requirement of advanced tools and its implementation, meet the inherent risks, and so forth.
As the supply chain stakeholders are global in distribution, and multi-layered, the challenges are severe. Let’s see the role of blockchain in this kind of supply chain management full of challenges.
How does Blockchain Works for the Supply Chain?
Automated Supplier Payments:
Blockchain facilitates the direct transfer of money from the payer to the payee without any middlemen. It produces a secure cryptocurrency exchange platform at a faster rate and lower price.
The quantity and transfer of assets like the trailers, containers, and, etc., are recorded accurately as they move in the supply chain nodes. They are linked with serial numbers, barcodes, RFID digital tags, and, etc.
Tracking of Products:
Every event of the lifecycle is recorded, tracked, and monitored like the invoice, purchase orders, change of orders, shipments, receipts, delivery, assemblage, maintenance, and, any other documentation[s].
The sharing of information between the stakeholders at the global level is easier. As traceability is ensured, it reduces the inherent risks and lessens the grey market trading, reduces paperwork, and investment cost for administration.
Violations and fraud detections:
The transparent and auditable features of blockchain helps to detect the violations of the code of conduct or any fraudulent activity immediately. This lowers the business risk as reputation is safeguarded effectively.
Blockchain and Internet of Things [IoT]:
Blockchain and IoT are trending technologies and are becoming interdependent. The IoT utilizes the features of blockchain and the blockchain realizes the opportunity that IoT can provide.
The blockchain-based IoT solutions are explored more today for simplifying the business processes, enhance the connectivity and customer experience, achieve the significant cost- cutting, and thus more reliable and trusted business process.
As there is transparency in the process involved, it reduces the risk of malpractice. It strengthens the corporate reputation, earns the public trust, and thereby enhances the credibility to the business.
In brief, the organizations are able to digitize their assets, create a decentralized and immutable transactions’ record, and track them from the production stage to reach the end user. It delivers the necessary transparency and benefits to the businesses and the consumers as well.
Business Benefits of Implementing Blockchain Development Services:
- Streamline the business by transforming the supply chain, industry, and the ecosystem.
- Smarter, and reliable supply chain system for the manufacturer and the end user as well.
- Decentralized architecture leads to opportunities for innovation in the business process.
- Enhances the inventory management processes.
- Reduces paperwork, eliminates fraud and errors.
- An unlimited database is assessed from multiple touch points across the globe.
- Identifies and reduces the issues faster and increase the trust.
- Leveraging the technology increases the profit and strengthens the relationship.
- Smart work delivers high value to the customers and thus an appreciable relationship.
- Keep the data internal for business by creating private blockchain.
Use Case for Blockchain in Supply Chain Management:
“Bext360 is using blockchain technology to better track all elements of the worldwide coffee trade—from farmer to consumer—and thereby boost supply-chain productivity, reports Bitcoin Magazine”.
Way Forward for Using Blockchain in Supply Chain:
Blockchain has a steep growth curve. The technology is bound to revolutionize the supply chain management process through a perfect capture of the data, access, and usage in a more secure and shared manner.
It is understood that it is driving the supply chain innovation and the companies must observe the early players in the field and onboard the technology into their realm of the supply chain in no time.
Asha is a certified Content Marketing Professional and a passionate writer. She loves to create content that cuts through the noise, connect the business with audience, increase brand awareness, site traffic and sales.