What are the Blockchain Benefits in Supply Chain Management?
In today’s fast-paced business environment, supply chains are the lifelines of industries. As customer expectations evolve and market dynamics shift rapidly, businesses are constantly seeking innovative solutions to enhance their supply chain efficiency. Technology has emerged as a key driver in this transformation, with blockchain standing out as a particularly promising development. Global giants like Walmart and Nestle have already embraced blockchain, signaling its growing importance. In this article, we explore the various benefits of blockchain technology in developing an effective supply chain management system.
Supply Chain Management (SCM)
Supply chain management (SCM) optimizes and monitors the production and distribution flow of products or services. Companies can streamline their businesses with effective SCM. This helps them increase efficiency, improve collaboration with suppliers, reduce inventory and overhead costs, and better-quality control. Businesses achieve higher levels of transparency, security, and efficiency with blockchain technology in the supply chain.
Let us explore in detail its various benefits.
Blockchain in Supply Chain Management
Blockchain is a decentralized ledger that records transactions among various participants. Broadly it is categorized into two types — permissionless and permissioned. In a public blockchain, users can access and read the stored data whereas in a permissioned blockchain, only authorized network participants can read or write information.
Here is how blockchain technology can be used in various processes in supply chain:
Raw Material Procurement
During raw material procurement, blockchain-powered smart contracts can automate purchase orders and payments. These self-executing contracts execute themselves after certain pre-defined conditions are met. They also verify supplier credentials and certifications. All this data of transactions and movement of goods is recorded in a tamper-proof and transparent ledger, also known as a distributed ledger. Suppliers in the supply chain have access to this record.
Blockchain along with other technologies like IoT (Internet of Things) and AI (artificial intelligence) track the origin and authenticity of raw materials. This ensures compliance with sustainability and ethical sourcing standards.
Manufacturing or Processing
As raw materials move into the manufacturing or processing phase, blockchain continues to add value. By recording production data, quality control checks, and component tracking, manufacturers gain real-time visibility into production processes. This improved quality assurance makes it easier to identify defects and their sources. It leads to faster resolution of issues and higher overall product quality.
An automotive manufacturer, for example, could track each component’s journey through the assembly line. This ensures quality at every step and quickly pinpoints the source of any defects. Each part, from engines to electronics, can have a unique identifier recorded on the blockchain. As these components move through various manufacturing stages, their status, origin, and compliance with quality standards can be updated and verified by all authorized parties in real time.
Quality Control
After manufacturing or processing, products undergo rigorous testing and inspection to meet specified standards before being approved for distribution. Blockchain immutably records each quality test result, inspection report, and certification. It creates a tamper-proof audit trail that stakeholders can trust. Supply chain businesses use this data to track any point of failure. They can use smart contracts to create automated alerts for quality issues or deviations from standards.
For instance, food industry supply chains can have immutable documentation of test results and inspections using blockchain. This record can be used for quick identification and tracking of defective batches.
Delivery
Warehouses receive products after quality control. Here, blockchain records product receipts and storage conditions. Upon meeting predefined criteria, smart contracts initiate payments to the relevant parties. During the delivery phase, the technology tracks each step, from picking and packing to dispatch and final delivery confirmation. This real-time tracking and data integrity ensures that all stakeholders have access to accurate, immutable information throughout the product journey.
For example, a logistics firm can use blockchain applications to automatically transmit delivery confirmations and timestamps. The system can verify if goods were delivered under agreed conditions (e.g., temperature, humidity) and release payments to appropriate parties. The benefits of blockchain technology in this context include enhanced efficiency, reduced errors, automated compliance checks, and improved trust among supply chain partners. This level of supply chain transparency and automation significantly streamlines operations and reduces disputes.
Implementing Blockchain in the Supply Chain
Implementing blockchain in the supply chain management requires technical expertise and careful integration with existing systems. Kalp Studio’s enterprise blockchain model provides businesses with a structured approach to integrating blockchain into their existing systems. It offers tailored solutions that address specific business needs, such as enhanced traceability, improved transparency, and increased operational efficiency. By utilizing Kalp Studio’s expertise, businesses can create more resilient, efficient, and transparent supply chains. This solution can ultimately lead to improved customer satisfaction and a competitive advantage in the market.
Connect with our blockchain experts to learn how we can help you gain the benefits of blockchain technology in the supply chain.
