Using Blockchain Technology to Transform and Innovate Supply Chains
Without a doubt, blockchain technology can transform and innovate supply chains. However, what is blockchain anyway?
To simplify the definition, consider the blockchain to be a digital ledger and this ledger records business transactions in a series of blocks. Spread over multiple computers called nodes, the ledger is surprisingly secure as each new transaction block set is joined to prior blocks – making tampering a thing of the past. Moreover, the supply chain does not depend on a bank and is, therefore, decentralized. As new transactions are made, the connected nodes receive updated ledger versions. So, trying to tamper with the ledger would mean tampering with all copies at the exact same time, the chances of falsifying information are extremely low.
Thus, at the most rudimentary level, the core of blockchain logic means that inventory cannot exist in the same location twice. If a product is in transit, the transportation status will be updated for everyone within minutes and of course, can readily be traced to its original point.
How blockchain applies to supply chains
Often, the supply chain can become inefficient and complicated. For instance, at times, it can take many days for a payment to be received by a customer from a vendor and/or a supplier and even from a manufacturer.
Additionally, as contracts need to be dealt with by lawyers and other professionals, there is an extra cost and delay in completing these tasks. Similarly, if there is a defect in a particular type of product, it can be difficult to trace these products back to their original suppliers in order to eliminate the defect.
In general, suppliers and providers must deal with third parties and in turn, time and money are wasted. Simple transactions become complicated ones when additional people and companies become involved.
That said, what can help eliminate these time and money wasters?
Well, blockchain could solve many of these types of problems. While blockchain does offer a secure way to exchange and hold money, blockchain can also be utilized for many different types of agreements, exchanges, and tracking/tracing of shipments.
Specifically, blockchain can help the following in the supply chain industry:
With the use of blockchain in the industry, a copy of all-important shipping data is stored in individual nodes on a decentralized network. Therefore, if a company’s network is hacked, the data will still be safe and sound. As an added incentive, blockchain can help an organization discover security breaches much more quickly. As the shipping industry can be prone to cyber-attacks, it is important to protect inventory in order to serve clients in the proper manner.
As mentioned, one of the major problems in the international supply chain is the ability to keep track of inventory in transport. Blockchain can connect suppliers and customers effectively as the technology is extremely transparent.
Every time inventory is moved, the transaction is duly documented. Therefore, shippers, consignees, and others will know exactly where a particular piece of inventory is at any given point in time and this will create greater efficiency in the system.
Overall, blockchain technology can be used to eliminate errors and optimize the supply chain industry – without a doubt, this is the future of a technological renaissance.