Blockchain technology in supply chain management is a very convenient factor in making things more efficient and transparent in all aspects including warehousing, delivery, and payments without any dispute, regarding the transaction. As there is the same version of the ledger on all entities on the chain.
In today’s life managing supply chains are not a piece of cake. The supply chain can spread over a hundred stages and multifarious locations, an abundance of invoices and payments. It will be intriguing to know how blockchains might transform supply chain management in the current complex and non-transparent supply chain management.
What is supply chain management?
Supply chain management enforces a well-organized and well-managed procurement function. Procurement refers to the random selection of the suppliers on the ability to deliver products at the appropriate rate. Businesses make some effort to classify their suppliers and rational supply chain strategies.
Why it is better than current chain supply management?
Blockchain technology in supply chain management is however interesting to minimize the issues present in the current supply chain management.
A few of them are as follows:-
- Lack of trust
- Difficulty in tracking
- High cost including procurement cost, inventory cost, and transportation cost
- Hurdles in development
Blockchain technology in supply chain management
Blockchain technology and supply chain management are intertwined in many ways. Adopting blockchain technologies may help in resolving the current scenario of supply chain systems. Blockchain technology is however the leading industries that could interfere with the supply chain system and change for the better.
Decentralization, transparency, and immutability are the key properties of blockchain that would help to protect and modify supply chain management.
Furthermore, the two key points are there to fully elaborate that how blockchain technology could help in supply chain management.
Blockchain is supposed to be a transparent system of building trust by allowing everyone to the network and go through all the information. It provides the key data points, like certifications and claims. Then it provides open access to the data publicly. It allows its customer to view the information join the network. The authorization can be verified by a third party once registered.
Blockchain security is based on cryptography and the key properties of blockchain such as decentralization and consensus ensure trust in the transaction. It provides strong cybersecurity technology, being a distributed ledger technology(DLT). Blockchain eliminates unnecessary audits, saving a considerable amount of time and energy.
Traceability Blockchain enables the instantaneous tracing of the products to their customers by proper mapping and visualization. Every customer is conscious about the outsourcing information about the product they are buying. Hence, with the growing demand, blockchain assists other organizations to understand their supply chain process and provide real, meaningful, verifiable, and well-established data.
What are the benefits of blockchain technology in supply chain management?
Blockchain is an automated alternative for various processes in the supply chain like record-keeping and tracking of products. However, it rectifies the complex challenges of supply chain management and comes up with a better-automated alternative to administer the centralized database.
Aside from product tracking and record-keeping, blockchain serves a lot more:-
Even the well-established and bold companies somehow lose track of the accurate transaction. Then, eventually, it overhead the cost and fails to protect the customer data. Hence, a displeasing customer-company relationship and a ruined image of the brand.
It becomes easy to fetch information by embedding sensors and RFID tags. Thus, blockchain in supply chain management is a convenient way of tracking and record-keeping the database.
The product history can be traced spontaneously from its point of origin to the current situation. Such accuracies can be a good step in resolving the misleading and complexities of transactions in the supply chains.
Blockchain in supply chain management reduces the overall cost. Maintains better transparency and traceability with the customers. Cost reduction is the topmost benefit of any business strategy especially blockchain technology in fashion world. The extra cost while maintaining the security can be minimized with blockchain in supply chains as the real-time tracking of the product is offered. The elimination of intermediaries and middlemen is also a factor in the reduction of the cost. It brings down the fraud and duplicity of products keeping accurate records about transactions.
Maintaining an image when there are multiple participants in the supply chains is challenging and essential for growth and smooth functioning.
The unity of records should be in such a way that when the information passes to another participant, he should rely on that without a second thought. Blockchain is consists of immutable record-keeping, which prevents the data from interference.
Blockchain technology in supply chains keeps the data inter-operatable to share it easily among manufacturers, retailers, contractors, and vendors. By acquiring transparency it resolves conflicts and delays. It provides appropriate security to the products and prevents misplacements.
Blockchain technology offers expandability and scalability, which helps in accessing large databases from multiple locations around the world. The customers can customize the data according to the data feed. And the most profitable part is “selective permission” in that the participants are only allowed to view the permissible data.
We can conclude some benefits of using blockchain in supply chain management:-
- Lowers the cost
- Build trust among customers
- Enhances transparency
- Improves traceability
- High cybersecurity
- Resolve delays and conflicts
- Minimizes the chances of frauds
- Provide integrity in records
Blockchain technology in supply chain management is a convenient way of building trust, more profit, and integrity to the records and database. It makes it easy from warehousing to delivery and payments. The current system of supply chain management is not enough trustable and lacks accurate information. These hindrances can be resolved by using blockchain. Decentralization, immutable data, and transparency are the key features of blockchain that make it convenient for supply chains. However, the advanced traceability of the product from its origin to the current situation reduces the delays, frauds, and chances of misplacement.
Frequently Asked Questions FAQs
- What is blockchain technology in the supply chain?
Ans: Blockchain can enable more transparent and accurate end-to-end tracking in the supply chain: Organizations can digitize physical assets and create a decentralized immutable record of all transactions, making it possible to track assets from production to delivery or use by end-user.
2. How do you use Blockchain in the supply chain?
Ans: 7 steps to implement blockchain technology in supply chain management
- Determine blockchain’s use case, feasibility.
- Find the right blockchain partners.
- Identify best areas for blockchain implementation.
- Aim for data interoperability.
- Envision blockchain’s potential.
- Understand blockchain volatility.
- Test the technology.
3. Which blockchain is the best for you?
Ans: As companies have started realizing the potential of innovative technologies like Blockchain, they have started implementing it for real-time data access, privacy, traceability, and suitability for their supply chain management. Since no one can’t deny the significant potential of Blockchain in Supply Chain, here we are listing the top 5 companies that successfully use Blockchain.
- De Beers
4. Can the blockchain be hacked?
Ans: The bitcoin network is underpinned by blockchain technology, which is very difficult to hack. There have been instances of exchanges or wallets being hacked, but not the entire network. Having said that, there do exist potential security risks in various stages of the Bitcoin trading process.
5. What are the disadvantages of blockchain technology?
Ans: Although, blockchain is beneficial to all the business in some way or other.
- Blockchain is not a Distributed Computing System.
- Scalability Is An Issue.
- Some Blockchain Solutions Consume Too Much Energy.
- Blockchain Cannot Go Back — Data is Immutable.
- Blockchains are Sometimes Inefficient.
- Not Completely Secure.
- Users Are Their Own Bank: Private Keys.