New technologies are emerging to optimize the supply chain sector and reduce threats. With the global acceptance and adoption of cryptocurrency, the true potential of the underpinned blockchain technology has managed to gather attention across several sectors. Blockchain has huge potential beyond bitcoins, and may revolutionize the world ‘digitally’. By 2030, the technology has the potential to enhance worldwide GDP by $1.76 trillion.
The end-to-end records of raw materials, products, or services are known as the supply chain. One of the major issues with supply chain management is keeping track of records. The application of blockchain technology in the supply chain can improve visibility, and security, by tracking complicated data involving sustainability, and ethical sourcing. The technology is adapted by various industries to optimize their performance and lower their costs.
Blockchain to Transform Supply Chain Management
The decentralized ledger technology stores data instantly in the form of blocks shared around the network, which cannot be unchanged or deleted. In supply chain management, the technology stresses a number of parties to conduct transactions among each other and improve contract compliance, security, and costs. The supply chain blockchains “tokenize” numerous transaction data, creating verifiable identifiers, and unique bills of lading, purchase orders, inventory units, etc.
In a blockchain network, the participants have their own digital signature, which is utilized as “sign tokens” flowing through the chains. The transaction between stakeholders of every phase is recorded along with an in-built immutable audit trail, where every member gets a copy. Any one member of the network tampering with the chain requires to do the same in every copy presented to others.
Benefits of Using Blockchain Technology in Supply Chain Management
In 2021, $6.6 billion was spent on technology by global companies. Blockchain technology has huge potential to optimize supply chain management, here are some of the benefits that companies will experience implementing the technology.
Since blockchain architecture is a shared ledger, using the technology in the supply chain will improve collaboration and communication among all network members. High traceability, and clarity eliminates chances of duplicity, fraud, waste, and extra costs.
Contract compliance incidents inspire all members to agree on the obligations in a detailed, valid and favorable manner. Complete visibility of monetary data enhances economic options for lower processing time by curtailing risk.
Credible and Sustainable Sourcing
The immutability and traceability of blockchain technology make it susceptible to assessing the source and the travel history of materials and goods through the supply chain.
Reduction in waste and stock loss improves efficiency in stock waste and loss are crucial sources for savings using blockchain technology. The distributed technology stakes transactions digitally and shares resources that eradicate the chances of paper-based materials and work procedures.
Paperless transactions and data records, not only reduce material costs but also removes ancillary costs associated with storage and the manual labor expected to manage and process these documents.
How to Successfully Implement Blockchain Technology in Supply Chain?
Blockchain technology can greatly transform the supply chain for big companies. However, it requires certain elements that infer the suitability of the technology for supply chain projects.
- Blockchain has great potential when data exchange is required among several members of a network.
- It is essential to have trusted partners within the blockchain network, as the technology requires updates from different parties.
- To keep the data accurate, a detailed and consistent project is required like an existing standard “electronic data interchange”.
- To make blockchain successful, the technology must be integrated with existing ERP.
Since, the technology is still nascent, it will take time for the architecture to take over the marketplace. However, companies like Walmart, FedEx have already leveraged the blockchain technology, and using its potential to optimize their supply chain management.
Bitcoin may have popularized the blockchain technology, however its potential is not limited to currency. The technology show promising opportunity over visibility, and security in the supply chain business. It has the key to better efficiency, cost-reduction, and holding a position in the competitive market.