Blockchain & Supply Chain

One of the largest and most intricate industries operating on a global scale is supply chain management. Global expansion results in increasing complexity in supply chains. Blockchain provides a great solution to solve the complexities in the current supply chain environment. It helps to manage, track and monitor the lifecycle of the supply chain.

Supply Chain Management

It is the process of managing the entire lifecycle of the product or service, from manufacturing to distribution, and as a result improving quality, dispatch, customer service, and profitability. The traditional supply chain includes five components which are planning, sourcing, manufacturing, delivery and logistics, and returning. The importance of supply chain management is minimizing costs, waste, and time in the production process.

Challenges Faced in Supply Chain Management

1. No Global Database: Many organizations keep their databases private and access restricted. Also, teams have separate own records which they share upon request. Thus there will be major communication gaps between the parties.
2. Limited Traceability: The main challenge in the supply chain is the lack of traceability and transparency. It’s not possible to trace the quality of the product until it reaches the end customer. Probably this leads to counterfeit products.
3. Lack of Quality Tracking: It is challenging to determine how the product has been replaced, or at which certain point or situation it has been compromised. As the current supply chain is managed in centralized servers, there is a chance of violations and fraud.

Blockchain for Supply Chain

Blockchain is a new robust technology that offers huge benefits to the supply chain. The processes in the supply chain like procurement, manufacturing, etc., are considered transactions and stored as separate blocks in the blockchain. After the transaction is recorded it will get distributed to the other computer in the network. The block information is transparent for all the members.

Uses of Blockchain in Supply Chain

1. Tracking Goods & Services in Real-time

The blockchain for the supply chain enables a transparent view of information and it’s decentralized among the network participants. It tracks when the product moves out, how it travels through the different stages of the supply chain, and what its quality or condition is until it reaches the destination user. It also tracks the origin of the product. This information is stored in the blockchain and smart contracts ensure real-time visibility. The company can get detailed and exact visibility so they can easily and quickly address or find the issue.

2. Faster Processing & Efficient Payment

Current supply chain transactions are slow and some rely on paper. Another problem is intermediaries. They charge additional fees. With Blockchain, the intermediaries can be avoided as well as eliminate paper works. Traditional invoice payments take more time but blockchain smart contracts enable instant and faster payment. The payment information can be seen by all the parties in the network.

3. Better Collaboration & Communication

There is back and forth between various participants which cause delays and conflicts. But blockchain can improve the collaboration and communication between parties. The distributed database helps to verify, access, record, or coordinate transactions. The transaction information is not able to alter once it’s deployed in the blockchain, so it remains secure.