How blockchain can help organisations tackle key supply chain issues
The value of adopting blockchain technology in supply chain increases with the understanding that it eliminates frauds in supply chain and helps in maintaining the integrity of the system.
A blockchain, in simple terms, can be described as a tamper-proof, open digital ledger that records transactions with timestamps, across computers. The blockchain jots transactions in a way that the records cannot be altered retrospectively without altering all involved blocks. Since the related blocks are distributed and widespread in the system, altering all blocks has been deemed ‘undoable/impossible” till date. This record-keeping allows verification and audit of transactions independently and relatively inexpensively.
A blockchain database is autonomous, independently managed through a peer-to-peer network and a distributed timestamping server. The blockchain technology has solved the problem of double-spending issue by avoiding third-party involvements and introducing peer-to-peer transactions.
First designed and employed to track bitcoin transactions, the blockchain technology has immense potential for use in other sectors as well and is therefore, slowly and steadily finding deployment in sectors like supply chain. Supply chain transactions are extremely complicated independent of the commodities involved, whether it is equipment, consumer goods, food products, or digital offerings, there are just too many back-and-forth transactions affecting flawless record-keeping and tracking, preventing supply chains to work smoothly. To tackle this issue blockchain can be the best innovative technology that the sector can deploy.
Blockchain as a proficient technology system has numerous possible applications related to operations and supply chains:
Transparent and secure transactions - Blockchain gives businesses a platform to function with genuine integrity towards its stakeholder communities and customers. Transparency and sustainability have a critical role in supply chain sector, and with the very foundations of blockchain technology being transparency and traceability, the two together—the technology and the sector—make for a ‘made-for-each-other’ pairing. The technology ensures a transparent and precise end-to-end tracking in the supply chain, helping the organisations to digitise physical assets, create impeccable records of all the transactions, making it feasible to track assets from production to delivery or use by end user.
Greater scalability and automation - Blockchain allows significant reduction of bureaucracy and paperwork in supply chains by providing an automated process of storing information in digital format. Blockchain is a great asset as it helps in tracking the product’s lifecycle and tenure transfer from source to store shelf, it even helps in tracking the hands changing between the manufacturers, and logistics service provider, retailer and consumer. It paves way for smooth progress and automates each business transaction, enabling a direct relationship between each participant.
Reduce cost, time delays, and human errors - The real-time tracking of the product in supply chain with the aid of blockchain reduces the overall cost of tracking items and time delays, and eliminates human errors. A survey of supply chain workers conducted by APQC and the Digital Supply Chain Institute (DSCI) states that more than a third of people mentioned the reduction of costs as the chief benefit of using blockchain in the supply chain management. Blockchain has a powerhouse potential to bring out progressive changes in many industries and businesses including the supply chain industry.
Tracks digital data - Organisations have multiple elements in their supply chains, which makes it impossible—even for large companies—to keep a manual track of every record. Human errors creep in inadvertently. Errors lead to lack of transparency, which give rise to additional costs. Issues in customer relations crop up, ultimately diluting the brand name. In a blockchain-based supply chain management it becomes easy for record keeping and derivation tracking as the product information can be accessed easily.
The value of adopting blockchain technology in supply chain increases with the understanding that it eliminates frauds in supply chain and helps in maintaining the integrity of the system. Supply chains can begin using blockchain in several areas of its operations. Smart contracts can help eliminate costly delays and waste generated by manual handling of paperwork. This can open new doors for a faster, more intelligent and secure course throughout the entire supply chain. Blockchain technology will assuredly bring in higher levels of reliance, transparency, and effectiveness and alter the way companies and industries operate and control the future supply chains.
(Edited by Evelyn Ratnakumar)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)