Blockchain Technology in Supply Chain Industry
Have you ever felt the need to retrace the origin of your mobile phone that you can’t keep away even for an hour?
Or from where your fav clothes came?
The stores that sell these products are the last anchor to a long thread of supply chain which begins when your clothes were just wool balls.
Every industry has its own supply chain but the most relatable industry is the clothing industry.
Right from the raw material supplier to the retailer, there is a sophisticated supply chain that in simple terms means the back-end industry.
A supply chain management includes the planning and the execution of all the processes included in getting the finished products.
It is a network of individual entities, businesses, organizations, technologies as well as resources that are put together in the manufacturing of a product. It is essential to properly plan and implement a supply chain as it holds benefits like increased sales and revenues, reduced frauds and overhead costs, acceleration of production and distribution, and quality improvisation.
It might seem easy theoretically but practically implementing and maintaining supply chain is a very hectic job. As the business grows, the supply chain tends to become redundant given that the interconnectivity among the integrated elements of the supply chain might not match the efficiency level to the enhanced scale. Such inefficiency may pose a major threat to the business operations and may lead to a breakdown.
Advanced technologies like AI and Machine Learning are used in Supply Chain Management (SCM) to overcome such inefficiencies that are hazardous to the businesses. But blockchain technology can prove as a total game changer in the supply chain management for the aid it provides in record keeping and tracking.
Blockchain – A better-automated alternative
Blockchain Technology can be used to resolve many challenges of the Supply Chain industry such as complex record keeping and tracking of products. With Blockchain Technology, a better-automated alternative to administer the centralized databases is offered.
Apart from the record keeping and tracking, there are several other ways in which the Blockchain Technology aids the functioning of a supply chain.
1. Origin Tracking
Due to a very high volume of transactions and many elements in the supply chains, even the companies with very advanced workforce lose the track to transactions. These inefficiencies attract additional overhead costs and sometimes loss of customer data costs unpleasant customer relationship and brand name dilution.
Blockchain-based supply chain management provides provenance tracking and record keeping which makes the information fetching very easy with embedded sensors and RFID tags.
The product history can be traced right from the origin to the present situation at any point in time. Also, such accuracy in provenance tracking can be utilized to detect and prevent frauds even in complex supply chains.
2. Cost Reduction
A survey conducted by APQC and the Digital Supply Chain Institute (DSCI) of supply chain workers unveils that more than one-third of people think that reduction of costs is the topmost benefit of Blockchain in Supply Chain Management. This is because of the real-time product tracking offered.
With Blockchain, extra cost can be reduced while maintaining the security of the transactions. Also, the middlemen and intermediaries in the supply chain are eliminated.
This reduces the risks of frauds and duplicity of products and enhances accurate record keeping and savings
3. Building Confidence
With multiple participants in the complex supply chain, building trust in the system is essential for smooth operations.
For instance, the integrity of the records should be such that when a participant in the supply passes the information to the next level participant, the receiver should be able to rely on the information without a doubt.
Also, the regulatory authorities, being stakeholders should be able to rely on the information and records. The blockchain is characterized by immutable record keeping which prevents the information from tampering on all levels.
Benefits of using Blockchain in Supply Chain Management
The Blockchain technology allows data to be interoperable which eases the data sharing process among the manufacturers, retailers, vendors, and contractors. The transparency in data sharing helps reducing delays and conflicts.
Also, it prevents goods from getting stuck in the supply chain cycle because each product can be tracked in real-time which makes the chances of misplacements rare.
Surplus capacity is available at ease with this technology. It offers scalability with which large databases can be accessed from multiple locations around the world.
While maintaining high standards of security the users have the ability to customize according to the data feed. The most lucrative feature of this is ‘selective permissions’ which means the participant will be able to view the data for which he has the permission.
The permission to allow the data to be accessed can be granted explicitly to the participants. Apart from these, there are others benefits of adopting Blockchain technology in supply chain management:
- Lessen or eliminate fraud and errors
- Advance inventory management
- Reduce courier costs
- Minimize delays in paperwork
- Identify any issue faster
- Build consumer and participant trust
Blockchain has the potential to spin the supply chain industry for good. Blockchain has the best use in the supply chain management and is expected to grow at a very fast pace in the coming future. The key to properly implement and operate a supply chain is to keep transparent and end-to-end connectivity.
In order to reap the benefits of applying Blockchain in the supply chain industry, corporates should begin to embed the newer system today. For higher rewards and improved performance, the bulky paperwork and complex databases need a replacement and there is no better substitute than Blockchain.