The supply chain is an integral part of how the business runs. With time it has become complicated and cumbersome. You would also agree with the fact that the entire process of the supply chain has too many intermediaries and most of the system still relies on paper. Apart from this, tracing the products and tracking them is also a tedious task. Friction is another problem in the supply chain. There are too many go-betweens. Everybody in the entire chain ranging from suppliers, manufacturers, providers, clients, etc, have to deal with a third-party rather than dealing with each other. Thus, a simple process of demand and supply gets divided into some steps and too many intermediaries.
Blockchain might come to a solution provider to all these problems. We will be here onwards analyzing the use of blockchain in supply chain management. But, before heading further, let’s understand what blockchain is and what are the features which make it paramount for supply chain management.
What is Blockchain?
I will keep it crisp and straightforward; blockchain is a distributed digital ledger which has all the transaction stored in chronological order. The surge of this technology initially started with Bitcoin, however, with time, its versatility made it useful for various business niches and supply chain management is one of them.
Some of the critical features of blockchain which has proven it to be beneficial include the following :
- Distributed ledger
- Database stored in chronological order
- Quick response time
These features have made blockchain made a versatile technology which is highly customizable and thus, it finds application in almost all the business niches. However, here we will be concentrating on supply chain management.
Currently, the ocean freight accounts for around 90% of goods traded globally. But the irony is that most of the work of ocean freight still depends on paperwork, and only a few things work digitally. All the information related to shipping pass through contractors and companies, storing this information on paper is not safe. There can be a loss of data and information. Even in the cases where it is stored in the excel or software, tracing them can be a cumbersome job under the current scenario. Thus, there is a need for a system and tools in place which can automate the entire process.
Let’s see how Blockchain comes as a solution:
Let’s take an example of flower supply:
The flower supplier prepares the package, and then the shipment information is added to the blockchain. The container awaits transfer to the port, on the other hand, officials submit the information related to the shipment electronically. The blockchain confirms the transactions and executes the shipment thus, releasing it. After this, the container is uploaded to the ship, and it takes off.
Since the transactions or the information about the shipment is uploaded in the blockchain and it is a distributed ledger which is visible to all the people in the network; everyone, right from the supplier to the contractor to the receiver can see when and how the shipment is moving. Thus, everything happens quickly and in a much more transparent way.
What are the key benefits of blockchain in supply chain management?
With the help of blockchain, all the parties in the entire procedure of supply chain can benefit in the following ways:
- Eliminates the fraud
- Quickens up the pace of tracking
- Improves inventory management
- Reduces the courier cost
- Lessens the paperwork
- Better monitoring of shipment
Thus, you see that blockchain provides many advantages that can be helpful for all the people in the entire system.
After studying the latest development in the filed of the blockchain, we can say that it will transform the supply chain industry. It’s not only about the logistics or supply chain companies, but blockchain is also finding applications in almost all the business verticals. The idea behind using this technology is to streamline the process. In-depth transformation of supply chains will not happen overnight. It won’t is wrong to claim that blockchain has opened the door for a smarter, faster and a more secure supply chain system.