Lahari Published on: 08 Jul 2024, 10:30 pm
Collected at: https://www.analyticsinsight.net/blockchain/blockchain-technology-how-its-revolutionizing-supply-chains
Supply chain is the process of production, delivery and distribution for resale of a product. Blockchain revolutionizes supply chain by providing a decentralized, transparent, and safe way of tracing and authenticating the flow of services and products.
Blockchain can ensure data integrity in the supply chain. Therefore, blockchain has the potential to revolutionize the supply chains. It can also be used in powering digital cryptocurrency networks such as Bitcoin, which is a digital ledger with huge potential to disrupt the financial sector. Supply chain management is among the areas it has a great deal of potential for.
Blockchain can offer highly enhanced supply chains through speeding and making product delivery cheaper, enhancing product traceability, enhancing coordination between partners, and facilitating access to financing. The supply chain applications with blockchain technology are going to differ from cryptocurrency applications.
Blockchain Advantages in Supply Chain Management
Two benefits of blockchain in supply chain offerings are improved traceability and transparency. Blockchain helps avoid fraud and counterfeiting and enhances customers’ trust in what they put their money into by a tamper-proof, decentralized record of the flow of goods and services.
Another advantage that blockchain technology provides is the increased efficiency attainable in the use associated with supply chain management.
The majority of supply chain management procedures can be automated by applying blockchain technology, which helps to get rid of the involvement of middlemen and enhances the accuracy, speed of information flow, hence reducing costs and improving general efficiency.
Blockchain technology automates labor-intensive processes, reduces the involvement of intermediaries, thereby reducing costs and increasing general efficiency.
This blockchain technology can draw supply chain participants at large into cooperation. This would reduce the need for middlemen by providing a transparent, decentralized record of the flow of goods and services.
Again, more cooperation and coordination would increase among these innumerable participants in the supply chain, hence reducing chances of delay and increasing the overall effectiveness of the supply chain.
Imagine a smart, refrigerated container with an IoT device that measures temperature.
Now, any unsafe fluctuations in the temperature can be remarked upon within a blockchain. Whenever there is a doubt about the authenticity of a returned product from a retailer, blockchains can allay that as counterfeits would not have the verification history on a blockchain.
We’ll talk a bit later about how companies are working to prevent corrupt actors who seek to introduce counterfeit goods into both supply chains and the blockchains.
Companies in many industries are exploring this application of blockchain, either driven by regulations forcing them to prove the provenance of their products or downstream customers demanding that they have the ability to trace component inventory.
Every inventory unit transferred from one company to another has its tag read and recorded on the blockchain to create a history from origin to the last mile—the customer.
Some early success in testing this method in the United States saw the corporation conduct more pilots in other locations and move toward broad adoption in Europe. However, in the near future, IBM is working on a related project to make the food supply chain safer. It’s established the IBM Food Trust and has also teamed up with Walmart to apply blockchain technology in an attempt to trace fresh produce and other food goods.
This actually makes the information disclosure for these applications low: purchase orders, invoices, and payments do not have to be on the same blockchain. Therefore, firms hesitant to disclose competitive information are more likely to join the platform.
Benefits are obvious. When a company discovers a defective product, blockchain technology helps the business and supply chain partners trace the product, identify all of the suppliers involved with the product, trace batches of manufacture and shipment involved with the product, and finally remove it from the market efficiently.
In reversible goods, especially fresh food and some medicines, blockchain enabled the participating businesses to trace quality control automatically.
Challenges and Conclusion
While there is huge potential for Blockchain technology applications in the sphere of supply chain management, there are still some challenges to be solved. The first major challenge is the lack of standards.
Having so many Blockchain technologies and several different platforms to choose from brings up a major point for decision-making within an enterprise: which Blockchain platform will it use, and how that will integrate with pre-existing systems.
Moreover, the blockchain technology itself is still at an infant stage of development; hence, other concerns regarding security, scalability, and regulatory compliance remain somewhat open as well.
At the moment, blockchain technology is giving a very good opportunity for much-needed innovation in this crucial process of supply chain management. Among the dissimilar advantages that blockchain technology bestows on supply chain management are its capability to enhance efficiency, traceability, and transparency.
Nevertheless, there still remain some obstacles that must be pulled down prior to the attainment of full acceptance of such technology.
FAQs
1. What is blockchain technology?
Blockchain is a digital ledger technology that allows for the secure and transparent recording of transactions across a decentralized network of computers. Each transaction or record, called a block, is linked to the previous one in a chain, creating a permanent and unalterable record.
2. How does blockchain benefit supply chain management?
Blockchain enhances supply chain management by improving traceability, transparency, and efficiency. It enables the tracking of goods from their origin through every touchpoint in the supply chain, reducing fraud, ensuring product authenticity, and enhancing overall trust among stakeholders.
3. Can you provide an example of blockchain in supply chain management?
One prominent example is the diamond industry, where companies like De Beers have implemented blockchain to track diamonds from mines to consumers. This ensures transparency regarding the diamond’s origin, quality, and authenticity, reducing the risk of trading conflict diamonds.
4. What challenges does blockchain face in supply chain management?
Challenges include interoperability between different blockchain platforms, scalability of blockchain networks to handle large volumes of transactions, security concerns related to data privacy and hacking risks, and regulatory compliance issues in different jurisdictions.
5. What are some industries adopting blockchain in supply chain management?
Industries such as food and agriculture (e.g., IBM Food Trust for tracking food safety), manufacturing, pharmaceuticals, and luxury goods are actively exploring or implementing blockchain solutions. These industries benefit from improved supply chain visibility, reduced costs, and enhanced consumer confidence in product
Leave a Reply