Blockchain Technology Application in the Supply-Chain Industry helps to deliver large scale Efficiency Improvements
November 13, 2019
Blockchain Technology Application – Blockchain has found its way into every industry because of its unique advantages. The biggest propeller of blockchain adoption in specific sectors derives from its impact that it can remove mediators in the system and at the same time, create a trust-based system. One such industry that could benefit significantly from blockchain could be supply chain management. To evaluate how the supply chain can benefit from blockchain, we briefly brush on what is blockchain.
Blockchain is a distributed ledger technology that tracks all transactions through a distributed database such that no single entity owns or controls the ledger. The key idea behind blockchain is decentralization. In a blockchain, all records of data are time-stamped chain, and they are immutable and cryptographically encrypted. The data in a blockchain cannot be easily modified. As the block of data moves in the blockchain, it is secured and has a history of the movement. Blockchain also creates transparency; in a public blockchain, all can view all transactions. These key features of blockchain make blockchain a powerful solution for adoption in the supply chain.
Supply chain management influences affect every company in the world. From raw materials to manufacturing to shipping products to product returns, the supply chain manages the entire journey of a product. There are software and tools that track the product from raw material to manufacturing or from manufacturing to shipping or shipping to retail stores. However, the primary issue is the disconnects that exist in between these stages. One can never truly track the entire journey easily. This complexity is mainly because, in a supply chain system, there are too many intermediaries making the system bloated. Hence the bloated system creates delays and adds cost and error. There is no end to end visibility.
The significant issues in the supply chain system included a lack of transparency. No one can trace the complete history of the product, the origin, raw materials, all the suppliers, distributor flights, invoicing companies, or shipping companies simply and effectively. A different party manages each of these stages, and the information is not shared easily. Easy traceability helps in many ways. One is to manage the inventory effectively. Another is when there are foodborne diseases. It becomes easy to trace the origin.
High costs – Having too many players can add to the price of the system. The more middle layers introduced from the supplier to the customer, the more fee is added.
Maintain integrity: As discussed before, the lack of transparency creates integrity issues. There is no guarantee or tracking to ensure the product does fall in the wrong hands.
Slow: The bloated system causes a delay in the supply chain process.
Accountability: because of the lack of tight integrity of the end to end system supply chain lacks to create liability in the system.
Impact of Blockchain Technology Application in the Supply-Chain Industry
Blockchain could help streamline and mitigate significant challenges in the supply chain system. Blockchain creates efficiency in the system by removing the middlemen and adding trust within the system. Blockchain will also create transparency in the system, which allows anyone to trace the goods movement in the system. This process prevents any tampering in the system. This is a powerful feature that is especially useful in the drug supply chain, where currently there are causes of concern of counterfeiting. Blockchain in the supply chain can streamline the entire supply chain process. Blockchain also offers other great benefits like reduced costs, faster transactions, and greater security. With blockchain, no one can tamper with the data. The ledger is immutable, making hacking or counterfeiting not possible.
The most significant benefit that blockchain offers is the transparency and trust in the system. In a blockchain system, all the transactions are maintained in a distributed ledger. Implementing blockchain in the supply chain means the movement of goods from one source to another is kept in a ledger and is available to anyone in the blockchain. This process ensures a real-time tracking of all the transactions. Any transaction in the blockchain is publicly accessible. As the goods transit, the information is available in real-time. Anyone who wants to know what’s happening in the system can access the data. It creates trust in the system without having to trust the intermediaries. No external audits are necessary, in a blockchain-based supply chain system on can trace the from the raw material to production to delivery to the customer, including the payment processing and invoicing without investing in third party agencies.
Blockchain helps to maintain the integrity of the data in the supply chain. The data in the blockchain is immutable; any data in the ledger cannot tamper. Any transaction in blockchain needs to be verified by the network. This ensures no one manipulates the data or hacks into the data.
With blockchain, a supply chain management system can implement smart contracts and payments. This helps to ease the payment and delivery process, trustable and smooth.
Examples of Blockchain Technology Application in the Supply-Chain Industry
Food Industry is one of the best places where supply should implement the blockchain. Any contamination of foodborne disease can be easily traced and stopped on time if the industry uses blockchain. Walmart is has started using blockchain to track some of the products to its source when its produced to sell-by dates.
Blockchain can also be used in the agriculture industry smooth management of products from farmers to the end customers without any third party.
Aircraft and Automobile industries involve lots of parts in manufacturing, and they work with many suppliers. Blockchain can help in maintaining the integrity of the components used in the system by clear traceability and ensuring no tampering in the supply chain.
The mining industry is another place where blockchain is crucial in supply chain management. It helps to tracks and record data through the mining process with its vendors.
Drug Industry: It’s also critical to implement blockchain in the supply chain of the drug industry. It helps to track the movement of the drug smoothly and prevents and mismanagement or counterfeiting. The supply chain can also be used in the drug industry to ensure the drugs are not used beyond the expiry dates.
Blockchain Technology Application in the Supply-Chain Industry cuts across a wide range of other industry sectors.
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