Why to implement Blockchain in Supply Chain Management?

Why to implement Blockchain in Supply Chain Management?

Updated On Jan 17, 2021

As we well knew that, mobile phones became the human’s third hand. Right? Have you ever got amazed that where did the phone come from? or the clothes that you buy or the food that you eat? For this, human nature thinks about the relevant shops where they purchased their needs. Behind the shops, there exist a whole chain of different interlinked elements which work on delivering these products to you. That connected chain is called a supply chain. To point out, all the essentials of our daily lives that we grab are possible only through the supply chain.

Supply Chain Management

In general, the progress of any supply chain initiates by delivering the raw materials from a supplier to a manufacturer and ends by delivering the final product to the consumer. implementing supply chain management legitimately result in enhanced sales and revenues, diminished frauds and overhead costs, quality improvisation. On the other hand, this will also lead to accelerating production and distribution.

It seems to be simple in theory, but managing the supply chain practically is an exhausting task even for small businesses. When a business grows, the interlinking of various elements in the supply chain increasingly becomes more inefficient. For resolving these inefficiencies, different technologies like AI & ML are being applied. Over these technologies, blockchain is scrutinizing new ways to revolutionize the overall game.

Blockchain - An Overview

Blockchain technology can be correlated to a shared ledger or an open record system which is useful to track different transactions efficiently.

Blockchain is employed to keep track of data such as home records, voting records, and medical information. As the term “Blocks” symbolizes that each transaction is segmented by blocks. Once the blocks are verified, it can’t be changed. Any user can see the transaction in a blockchain that represents its transparency.

Now, you have comprehended what is blockchain technology and the fundamental principle of how blockchain works. Right? Proceed further to grab why blockchain technology is a revolutionizing one.

Why Blockchain?

Seeking blockchain technology is for the four prime reasons. They are as follows

I. The high degree of trust and security

II. Openness, transparency and dependability

III. Lower transfer and interaction fees

IV. Integrating digital and physical world.

Challenges in Supply Chain Industry and Blockchain Solutions

Usually, blockchain can be practiced for several supply chain challenges such as complex record keeping and product tracking. Being a non-corruptible and an automated alternative to centralized databases, the following are the ways that denote how blockchain can be useful in the supply chain industry. Though there may be several challenges and blockchain solutions, there are 3 chief challenges which are the major concern of the industry.

1. Provenance Tracking

It is a known fact that big companies and organizations have several more elements in their supply chains. Because of these significant elements, it is impossible to track each and every record even for multinational corporations. As a result, the lacking of transparency leads to cost makes issues among the customer relations that eventually dilute the brand name.

In a blockchain-based supply chain management, managing records and keep tracking of provenance becomes simple with the easy accessing of product information through the embedded sensors and RFID tags. To point out, the history of a product, I.e. from its origin to currently where it is can be traced simply through blockchain. Furthermore, this sort of precise provenance tracking is chiefly utilized for fraud detection in any part of the supply chain.

2. Cost Reduction

The product’s real-time tracking in a supply chain with the assistance of blockchain diminishes the all over cost of moving items in a supply chain. As per the survey of supply chain workers organized by APQC and the Digital Supply Chain Institute (DSCI), more than one-third of people mention that the cost reduction of costs as the upmost benefit of Blockchain application in supply chain management.

Guaranteeing the transactions' security is possible when blockchain is utilized to boost up administrative processes in supply chains. Through this, the surplus costs occurring in the system are also diminished automatically. The eradication of the middlemen as well as any intermediaries in the supply chain rescue the risks of frauds, duplicacy of products and saves money too. To mention that, payments can be processed between customers and suppliers within the supply chain by cryptocurrencies rather than relying on EDI. On the whole, we can experience the enhancement of efficiency and diminished risk of losing products with accurate recordkeeping.

3. Establishing Trust

For smooth operations in the supply chain, having trust with many participants is a necessary one. For instance, when a manufacturer distributes his products with suppliers, he/she should be able to depend on them for following factory safety standards. On the other hand, while going for regulatory compliances like custom enforcers, trust plays a pivotal role. The unchangeable nature of blockchain in the supply chain is well-designed to forbid tampering and establishes trust.

Blockchain Use Cases in Supply Chain

Blockchain technology can ensure provenance tracking and traceability across the supply chain if it is applied properly. As well, this also leads to a few counterfeiters and guaranteed safety in the processes. In the same way, blockchain in the supply chain also lets manufacturers, transporters, and end-users to gather data, study trends and employ predictive monitoring process for better product experience. The following are some of the use cases of blockchain in a supply chain.

1. Seafood verification

2. Coffee supply chain

3. Drugs and pharmaceuticals

4. Food supply chain

5. Automotive supply chain

Bottom Line

As a matter of fact, blockchain has revealed its potential to make positive changes in many industries as well as businesses. In that, supply chain management is one of the most obvious and useful applications of blockchain technology which is to maintain robust, transparent and end-to-end communication.

While engaging with this information, I hope, you have grabbed a lot about supply chain, blockchain and why blockchain for the supply chain. Right? For this impact, companies are diagnosing ways to filter the way their supply chains work at present and adopt the change which blockchain had offered. Having the intention to cover your supply chain with blockchain? Fine, you are now in the right place!!!

Blockchain Development Company

We, Osiz technologies, an enterprise blockchain development company furnish absolute blockchain solutions for supply chain management to optimize your business transaction with greater efficiency and visibility that maintains the best trading relationship in your business network. For further, queries and clarifications, feel free to engage with our blockchain professionals.

Call/Whatsapp : 9500481067

E-mail : [email protected]

Skype : Skype : osiz.tech