How Can Blockchain Turn Supply Chain?

Major industries’ supply chains are being revolutionized and transformed by blockchain. Let’s examine the function of blockchain in the supply chain and how it might change it.

Supply chain management, also known as supply network or logistics network, is a database that stores data about the people, commodities, and other resources needed for the entire training process. Businesses spend a lot of money on their digital infrastructure, supply chain management software, and computerized enterprise resource planning (ERP). Nevertheless, despite their investment, companies have very little visibility and knowledge into where their items are at any one time.

In most cases, the analog gap between all the systems within the organization and outside of company borders is the cause of this lack of transparency. With the adoption of blockchain in supply chains, this issue can be solved extremely effectively.

Blockchain can reduce infrastructure costs for the supply chain and increase supply chain management’s effectiveness by accurately tracking assets. The blockchain supply chain translation system may provide comprehensive information on all elements, including the origin of raw materials, suppliers, manufacturers, distributors, retail locations, and ultimately, customers.

Supply Chain Management System Challenges

Supply chains still need to become more efficient, have audible tracking, and stop exploitative activities. The supply chain faces many difficulties. For instance, in the container industry, documentation costs around half the cost of transportation. According to an illustrative research done by Oceana, a global ocean advocacy group, seafood is mislabeled up to 87 percent of the time. Additionally, key consumer goods like pharmaceuticals, electronics, items from luxury brands, and so forth are more vulnerable to fraud and counterfeiting.

Such problems can be readily resolved with the introduction and application of hybrid, public, as well as private blockchain in supply chain. Blockchain technology will have a significant impact on supply chain management because it may significantly increase the transparency, traceability, and accountability of the flow of products and commodities.

How Blockchain Turn Supply Chain

Over time, supply networks have changed, but businesses haven’t kept up with managing technology. Electronic data interchange (EDI) and XML communications systems are no longer useful. Point-to-point communications systems frequently experience synchronizing issues, which causes inventory to appear to be in two places at once.

It is becoming more challenging to maintain profit margins due to rising expenses across the supply chain. It is necessary for supply chain managers to monitor all supply chain operations in order to address the various channels via which consumers can purchase goods. Therefore, how can we apply it to address these issues in antiquated management systems? The solution is blockchain.

1. Takes the place of intermediaries

Without the need for a middleman to double-check everything, blockchain in supply chain can let business partners agree on and exchange crucial bits of information. Blockchains synchronize data and transactions over the whole network, and all participants double-check each other’s computations and labor. Bitcoin, which synchronizes thousands of transactions over hundreds of network notes each day, is nevertheless regarded as being extremely dependable and secure due to the extensive cross-checking on the blockchain.

2. Precise tracability

Blockchain in the supply chain is more than just a secure digital transaction ledger. Additionally, this system can capture a product’s state at every stage of its lifecycle. From the product’s beginning phases of development and manufacture until the buyer purchases it, it is tracked.

Walmart is a well-known blockchain supply chain example. Walmart tracks and keeps an eye on the supply of pork coming from China using blockchain technology. The device carefully tracks and records every single piece of beef, where it originated from, every stage of its journey, and the date it was sold to a consumer. As a result, the business has total access to all of the information about it, from its origin to its destination.

3. Smart contracts

By incorporating smart contracts into their supply chain management system, businesses may stop fraud, deception, and other disruptions. A smart contract is a piece of software that executes a contract using blockchain technology. A smart contract can’t be altered because it operates according to its programming and sets off specific actions on its own.

For instance, the smart contract will immediately initiate payment for the product if the blockchain records that it has been delivered. For suppliers that frequently struggle with payment delays, this is highly advantageous. Transactive Grid is a good illustration of a Smart Contract that uses blockchain in a supply chain. This application was made in Ethereum and is also built on the blockchain. The program keeps track of and distributes solar energy generated by solar panels throughout the area. Additionally, it automates the purchase and sale of solar energy.

4. More transparency during transactions

The core principles of blockchain technology are audibility, transparency, and trust. The processing of traditional banking transactions can take several days, and there is a danger that they won’t complete. Money can be instantaneously moved between the buyer and the seller within a few minutes with the use of blockchain.

Additionally, blockchain keeps track of every step of every transaction, thus it cannot be tampered with. Blockchain keeps its data in units called “blocks” that are dispersed throughout the network. This guarantees that each party to a transaction has access to the same information. As a result, if one of the users tries to conduct fraud, they will be immediately desynchronized and viewed as a security risk.

5. Better product conditions

Consumer goods including food, medicine, and other items have unique requirements and requirements that must be met throughout delivery. Sensors can record the product’s storage conditions, such as humidity, temperature, or even vibrations, in accordance with its requirements, and the data can be saved on the blockchain. If any of these criteria deviate from the standard, the users of that specific blockchain can be immediately informed. A smart contract is used in this instance. These kinds of issues can be resolved by programming them to start certain operations and take the necessary measures.

It is clear how important this technology has the potential to be in this field now that the question of how blockchain is altering supply chain management has an answer.

References :

Iredale, G. (2020, November 2). 101 Blockchain. Retrieved from 101 Blockchain Web Site: https://101blockchains.com/blockchain-in-supply-chain/#:~:text=How%20Blockchain%20is%20Revolutionizing%20Supply%20Chain%3F%201%201.,Transparent%20…%205%205.%20Better%20Product%20Conditions%20