Blockchain: The Technology Reshaping Supply Chain
The outbreak of the coronavirus is showing how vulnerable our current supply chain systems are. The way trading partners do business today is a lot to wrap our heads around. The pressing challenges are obvious: an enormous amount of manual processes are paired with traditional paper-based workflows. It’s high time we applied the blockchain (a type of distributed ledger technology) to supply chain management (SCM). Hence, we thought it would be interesting to lay out a balanced overview of the advantages of blockchain-driven solutions.
Let’s make sure we are on the same page first. The supply chain is nothing more than a system of people and things involved in getting a product from the place where it is made to the end-user. Here we are talking about any item found on store shelves.
In the so-called supply blockchain, participants can enter data about an item’s price, quality, location, and other necessary details that will help them better manage the entire chain. Thanks to the availability of information in the blockchain network, we can improve the system to monitor material deliveries o and reduce losses from counterfeit products. Organizations will also be able to strengthen their leading position in the field of environmentally friendly production.
Supply Chain Management
Poor efficiency and a lack of transparency have undermined the productivity of SCM for a long time. That’s most regrettable. Attempts to integrate all parties involved in the process have been mixed. The operating model causes difficulties in maintaining the continuity and stability of the system. All of this adversely affects the profitability of firms and the total price of the product. Addressing some of the acute problems, blockchain technology presents new ways of recording, transmitting, and exchanging data.
Any party involved can check what’s going on when resources move from one company to another. When data is entered, literally no one can change it. And if anything goes sideways, the valid question “Who is responsible for it?” will not go unanswered.
The production lifecycle results in a large amount of waste. Inefficiencies within the system are to blame. This situation largely affects perishables. Greater data transparency and monitoring will help companies identify wasteful and inefficient use of resources to take action to reduce costs.
As we all know, commission costs decrease your earnings. The mind-blowing technology will also help you get rid of transfer fees for banks or payment systems.
A blockchain database ensures that the important documents and agreements remain unchanged. It saves you from the desk duty. Organizations can devote more time to new product development or business promotions instead.
The blockchain has huge potential in terms of significantly reducing trade costs by increasing transparency and facilitating automated processes, including financial intermediation, exchange rates, coordination, and other aspects.
Shipping a single container of roses from Kenya to Rotterdam results in a whole stack of papers. The World Trade Organization has found that the processing fees could be higher than the cost of shipping. Thanks to digitalization and the use of a specific type of distributed ledger, we can cut through the red tape. All data processing will be done in a matter of seconds, saving both time and money.
What is more, the blockchain eliminates the possibility of data stuffing or editing data retroactively. This, in turn, minimizes corruption risks and makes the information immutable and “locked down.” Additionally, it allows you to trace any interaction between customs authorities and goods carriers. Simply put, cargo information, registration forms, bills of lading, freight insurance, and inspection bodies (carriers, customs officers, and auditors) can interact with one another simultaneously in real-time within a single ecosystem.
The blockchain is a powerful tool to radically change the face of manufacturing. The revolutionary technology can provide the basis for direct communication and interaction between machines in the manufacturing market. Autonomous production — when machines make contracts run on a decentralized system and act as independent economic facilities — requires this technique. However, for implementation in this area, we must achieve high-performing and highly scalable blockchain solutions.
The groundbreaking technology and manufacturing industry are meeting each other halfway. The blockchain will play a decisive role in the development of future factories. It will certainly lead to increased efficiency in production chains, improved coordination in automatization, and the utmost transparency in trading.
Manufacturing has always been a sector receptive to new ideas, but the complexity of the production chain may delay blockchain implementation. Such vast changes will not happen overnight. They require strong cooperation between manufacturers, regulators, developers, and technology partners based on new platforms that can back up the transformation. If we do it right, blockchain innovations will revolutionize how manufacturers design, rewrite how firms interact, foster trust among competitors, and enhance products throughout their lifecycle.
One constant in all of this is that the blockchain can be a supply chain game-changer. A slew of startups have already implemented the technology in their projects. A greater number of companies will join them as soon as they realize the full potential of blockchain-inspired solutions capable of reshaping the supply chain.