Blockchain technology has transformed the business world through its ability to create secure and transparent network, blockchain plays vital role in supply chain management.
Blockchain technology is distributed database of records of all the transactions that have been executed and shared among participants in the blockchain network. Transaction on blockchain is verified by consensus. And entered information cannot be deleted or erased. It is a decentralized system means it is not controlled by any central authority or it does not require third party to record transactions. Blockchain technology is highly secure as it is based on cryptography that ensures once the data has been recorded in the blockchain cannot be altered without consensus from the network participants. This makes it difficult for hackers to hack the data on the blockchain.
There are public blockchains and private blockchains. Public blockchains are open for anyone who wants to participate in the network and it does not require permission to join. Private blockchains are accessible to authorized participants who have been granted permission by the network owner.
Supply Chain Management
Supply chain management is the approach to managing the flow of resources throughout the procedure of converting raw inputs into complete outputs for end consumers.
Blockchain in Supply Chain Management
Blockchain in the financial world provides digital continuity. In supply chain most exchanges bring together different parties that have no reason to trust one another. Blockchain plays an important role in supply chain management where transparency and trust between different parties are crucial components, it can help eliminate error-prone transactions and helps in creating a digital identity. Blockchain in supply chain management can provide a range of benefits that are:
Improved Traceability, Transparency and Trust
Blockchain provides the tracing of products from their origin to their destination it will reduce the risk of fraud. This provides transparency and allows users to track products and monitor performance in real-time. This can improve trust between parties within the supply chain.
By automating supply chain process, blockchain technology can increase efficiency. Blockchain makes supply chain more efficient by allowing companies to complete transactions directly without third parties.
Blockchain technology helps in reducing the cost across the entire supply chain by eliminating third parties. Through blockchain companies can reduce administrative overheads.
Blockchain technology provides security to the users as it is based on cryptography. Data stored on a blockchain can be permanently secured. This makes it impossible for hackers to tamper with data on blockchain.
Strong customer relationships
With the help of blockchain consumers can learn everything they need to know about the product. By making the order tracking process transparent blockchain plays a significant role in improving customer experience.
Supply chain product clarification
The product ledger consists of various components, quality, and quantity. These are stored in a secure network and can be represented in consumer-facing applications. It is linked to pre-existing data sets. Blockchain technology provides brand value for products and decentralizes the technology-shared architecture.
Secure Internet of Things
Blockchain provides secure communication mechanism. It adds a layer of security to data transfer and storage, provides peer-to-peer messaging and offers secure platform.
Origin of goods
With decentralized nature of blockchain retailers and manufacturers can track the origin and location of a product along the supply chain. It could eliminate the burden on one trusted centralized party when dealing with multiple parties in multiple jurisdictions that are exchanging multiple goods and documents.
Food safety issues such as cross-contamination is difficult to track. Using blockchain with supply chain tracking to ensure the supply chain has transparency of all product movement and status. Companies including Nestle, Walmart are using blockchain to reduce the time it takes to remove the source of foodborne illness within the supply chain.
Blockchain technology facilitates fast, secure and low-cost international payment processing services through distributed ledgers that provide real-time verification of transactions.Bext360 is using blockchain technology to track all the elements of the worldwide coffee trade and boost supply chain productivity.
Blockchain technology plays a vital role in ongoing digital transformation. It can strengthen the supply chain by offering origin tracking and enhancing transparency. Supply chain faces many challenges that can be easily achieved with blockchain in supply chain management, it will reduce the risk of fraud and will be more transparent to businesses.