Supply Chain Management: Blockchain to the Rescue
Thanks to the daily churn of news around BTC, you must have heard about blockchain. Still, many don’t realize what this buzzword is all about. Fair enough — it can be a little complicated to pinpoint an exact definition of this groundbreaking technology. To give you a very wide, non-generalized definition, blockchain is the outstanding invention of Satoshi Nakamoto (the alias of a person or persons).
You have probably come across the concept of “a distributed, decentralized, public ledger.” In plain English, it’s just a chain of blocks, but not in the common sense of these words. In this case, it’s digital information kept in a public database. Once data is stored in this open-source technology, it is extremely hard to change or alter. Each and every transaction on the continuously growing list of records is secured with a digital signature proving its authenticity.
It’s almost surreal to think that people started to dream about the innovative idea of documenting information in a new era of the internet back in 1991. Designed for trading BTC, the power of this difficult-to-hack record of transactions reaches far beyond virtual currency. With the aim to revolutionize everything from voting to stock trading, putting the tech of the future into practice can turn any new company into a leader in its niche.
The Core Benefits
Here is a list of the main advantages of this promising approach. Let’s get started:
Greater Transparency
The information in a virtual public ledger is viewable by all participants and can’t be altered, eliminating doubts or disputes among users. A lack of transparency can have devastating effects (such as delays in commerce and a breakdown in relations) that sometimes leave a permanent stain on a company or brand’s image. Detailed information about transactions results in greater confidence, providing a more stable relationship based on openness rather than negotiation.
Enhanced Security
Any transactions that have ever been registered must be agreed upon in a consensus. The cutting-edge technology offers a hyper-secure framework because every user entering the network is guaranteed with a unique identifier linked to his or her account. This ensures account owners themselves are the ones operating the transactions. Due to the block encryption, hackers have no chance to disturb the traditional setup of the chain. The distributed and encrypted nature of the core system that underpins BTC means it will be difficult to hack.
Lower Costs
Corporations are willing to spend an awful lot of money to reduce costs and correct their current management system. By using the new tool to cut costs, companies can lower outliers associated with third party services. Because the approach invented to power BTC requires no centralized verification, it is not necessary to pay any supplier expenses. When one speaks of confirming a transaction, there is less interaction required, which further destroys the necessity to waste money or time doing basic things. The maturing cutting-edge technology sector has even produced some blockchains with little to no fees at all. Do we need to say more?
Faster Transactions
When dealing with traditional transactions, you normally have to trust that a third party will not steal your data or money. The way you link encrypted digital records makes life easier — there is no authority that you should trust. With the innovative technology, it’s finally possible to complete secure financial transactions without an intermediary.
A Balanced Overview of the Benefits for Supply Chains
Countless months have gone by with the same word on everyone’s lips: blockchain. Some biggies, such as Microsoft and IBM, have already given its mind-blowing opportunities a try.
Thanks to the complexity and opacity of the present supply chain, many people are curious about how this distributed system can change the landscape. The retail giant Walmart is living proof. The company aimed to apply the innovative technique to follow the trajectory of Mexican mangos and Chinese pork and assess their traceability, and the results live up to the expectations. The time retracing the origin of products was dramatically cut.
There is considerable interest in applying the most promising technology in logistics because of the trends of globalization and digitalization in all spheres of economic activity. However, the implementation of blockchain is at the initial stage of development in the form of test programs and startups. The cold hard truth is that only 1% of companies currently use it, and very few of them actively invest in it.
Thanks to blockchain, it is finally possible to optimize information flows with minimal headaches by
- registering all transportation documents in the public domain
- reducing document processing time
- implementing instant cargo insurance
- providing customs authorities with documents from head office
- minimizing the accompanying information flow
- reducing time spent on tax inspections
Traceability
Let’s dive into blockchain-inspired traceability. First and foremost, economic globalization expects increasing transparency from businesses. This expectation is most relevant for food producers, where communication with the end customer is crucial. There is also a slew of factors to take into consideration: supplier-related issues, food safety regulations, and weather conditions. The revolutionary technology can provide traceability of goods.
Walmart’s global system allows the corporation to monitor where each piece of meat comes from, every processing and storage move, the products’ sell-by dates, which batches are affected, and who bought them. Another example is the Swiss startup Blockchain.XYZ, which is planning to release a food chain token designed to offer remote access to informational resources and provide user security and owner identification.
Now and then, everyone has doubts about food safety or freshness. If only we could dispel lingering doubts with visibility in every stage from farm to fork. With groundbreaking solutions, dreams do come true! Due to certain technological features, blockchain opens up opportunities for effective and transparent tracking. That means that consumers can check everything from the unintentional presence of allergens and unacceptable components to the raw material suppliers. Having accurate data could also help in the event of a product recall, a health problem, or non-compliance with specifications or a particular label.
Reliability
Reliability is another thing this governance technology is really good at. In well-regulated sectors, such as food and pharmaceuticals, goods must be transported to various locations within tightly controlled temperature intervals and certain timeframes. It is essential for manufacturers and distributors to provide proof of compliance with set ranges. Otherwise, these high-value deliveries may be delayed or confiscated for investigation.
Financing Trading Operations
Implementing blockchain allows supply chain partners to integrate documentation data into their systems, eliminating manual data entry, possible errors, and delays. It also reduces the number of conflicts with suppliers and financiers, avoids penalties from customs authorities for late payment, and allows companies better manage costs due to cargo delays and storage beyond the specified time.
Segmentation
This feature will replace today’s one-size-fits-all concept. Customer orientation is not just talk — it has become a reality. Agile Supply Chain is the future of the ADC. It offers a link to tech innovation: to implement a proper segmentation-oriented planning process, companies must create scenarios that allow them to determine the ideal configuration of the supply chain for a segment.
Another technological aspect of supply chain segmentation can be found in the transaction processes. Every sector requires real-time information to identify relevant events and act on violations to ensure consistent levels of service (especially in high-speed market segments).
Bottom Line
At the extreme end, we would like to point out once again that blockchain has the transformative power to change the landscape of the supply chain and the way we produce, sell, buy, and consume products. Among the keynotes is the extension of the scope of interaction due to the disappearance of physical boundaries, allowing companies establish close relationships and increase the speed of operations; reduce state corruption, costs, and the risk of fraud and errors; increase safety due to fully automated communication process; and more. Increasing transparency and traceability can be a breakthrough in becoming a safer and much more reliable economy by promoting trust and integrity and preventing questionable practices.
