Currently, digitization is continuously increasing in the functioning of almost every industry. Supply chain business is also not an exception to this trend, as supply chain owners are looking forward to digitizing their operations. And for the digitization of their business, Blockchain seems to be the most effective technology. Converting paper files and hard documents into digital data is a challenging task for most companies. There are several issues in this like warehouse management, inventory tracking, and ERP solutions. But, the Application of Blockchain technology or taking your business operations on Blockchain platform can assure you increased visibility, reduced inconsistency, increased payment procession accuracy, and elimination of compliance-related problems.
The question here is why Blockchain only? The answer to this is that the Supply chain is a crucial sector in our goods and service industry. Without the effective functioning of this sector, the economic regulations may be hastened, leading to a chaotic environment. To prevent this industry from constant fall, Blockchain being the leading technology currently can help in this. Here, in this article, we will discuss how Blockchain can revolutionize supply chain operations. So, here we start with the way Blockchain affects the Supply Chain.
Effects of Blockchain Technology in Supply Chain
With its potential, Blockchain technology allows more secure and transparent tracking of all types of transactions, and it shows endless possibilities of improvement across the Supply Chain. Blockchain provides documentation of a transaction and creates a permanent history of the product from the manufacturer to the customer, every time a product moves from one hand to another. Blockchain technology can reduce time delays, added costs, and possibilities of human error in transactions. Let’s see, what the Blockchain principle for the implementation in Supply Chain is.
Blockchain technology means to address some usual challenges observed in a Supply Chain business, which includes-
- Complex Ecosystemdue to the development of an intricate web involving suppliers and logistic channels, at regional, national, and even international levels, by global enterprises.
- Lack of traceability due to the complexity of the supplier network and hard finding the point of provenance.
- Lack of responsiveness and delays caused by process mismatching between companies and countries.
- Lack of visibility due to process mismatch and ineffectiveness of barcodes ensures tracking of goods in such a case.
- Data reconciliation also becomes a significant problem as data is logged in different ways in different processes.
- Lack of trust due to the non-transparent nature of systems and procedures. Also, the absence of a single source of truth for the congregation by companies and their suppliers.
For, addressing these challenges, Blockchain technology means to address these challenges with an open-source distributed ledger with the ability to record transactions between parties involved in the process in a verifiable and permanent manner. Blockchain comes with the following feature in ensuring the appropriate response to the challenges:
- Open and distributed: Blockchain is a useful database shared to and by all the involved parties in the transaction.
- Efficient: A blockchain system can trigger transactions in an automated manner.
- Verifiable: Every record made in a Blockchain platform is authentically identified and validated.
- Permanent: Records made in the Blockchain platform are endless as they cannot be deleted, tampering, and revision.
Blockchain technology has already been implemented in some of the Supply Chains, and according to the experts, the technology has the potential to become the universal Supply Chain operating system considering how this technology can improve the following functions:
- Recording: Blockchain creates records of the movement of the products between various Supply Chain nodes. This recording includes the quantity and assets transferred such as pallets, trailers, containers, etc.
- Tracking: Blockchain effectively manages purchase orders, change orders, delivery receipts, shipment notifications, and other critical trade-related documents.
- Assigning: Application of Blockchain technology in Supply Chain mechanism can improve verifying certifications or properties of products and certify a product’s origin on pre-defined measures. For instance, it determines whether a food item is organic or not.
- Linking: Blockchain can automate various essential details such as serial numbers, bar codes, and digital tags like RFID, etc. to physical goods. This saves a lot of time and ensures the accuracy of details by reducing human error.
- Sharing: Blockchain effectively shares vital information about the process of manufacturing, assembling of products, delivery details, and maintenance of products among suppliers and vendors in an automated manner. This facilitates transparency in the whole process.
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The nature of Supply Chain business is complex, and Blockchain technology can be a solution by ensuring several additional benefits for the organizations, and such services may include:
- The creation of Smart Contracts brings higher levels of accountability among vendors and suppliers. It maintains adherence and compliance with the liabilities of each party pre-defined in the service legal agreement.
- Blockchain ensures integrated paying solutions and reduces the time consumed in ordering and payment processing. This allows the proper and timely movement of products and avoids delays in delivery. This also prevents the involvement of illicit payments or banned entities in the transactions.
- The creation of separate private and public Blockchain protects proprietary information from unauthorized parties.
- Blockchain allows recording all activities in the entire process, including the quantity and movement from different nodes and delivery.
- Blockchain’s ability to provide crucial and more accurate information about the manufacturer, origin, transfer, and use of a particular product facilitates better customer service and far-reaching scalability.
Throughout the Supply Chain industry, Blockchain is gaining popularity as a more reliable technology and efficient platform for automating the entire process. Blockchain professionals are leveraging the Blockchain technology benefits to not only the company owners but indirectly to their vendors and suppliers. Blockchain’s ever-increasing innovations can create new and specialized uses of technology and better growth opportunities in the Supply Chain industry. Smart shippers and business owners are already leveraging these innovations to enhance efficiency and profits. Learning Blockchain is a good idea as the Supply Chain industry, and several other sectors are all set to draw the benefits of Blockchain technology shortly.