Blockchain: The Next Big Thing in the Supply Chain

Blockchain has the potential to change how the supply chain works. Although it is owned and monitored by everyone, it is ultimately controlled by no one. It is like a gigantic interactive spreadsheet that everyone can access and update. It consists of transactions and blocks, which contain a hash of the preceding blocks – thus the name blockchain. It creates new and secure ways of interaction between businesses, with no prior relationships, over the Internet.

The blockchain promotes trust and transparency in the supply chain. It can create a formal registry to tag products and monitor their course in different points of the supply chain by confirming receipts and automatically releasing payments. Without the blockchain, transactions can take place in two to three days. The technology speeds up the operations within hours and also reduces transaction fees.

Every time a product is moved, the transaction is documented in the database and into the blockchain. This helps producers to trace where their products are and how they are integrated into finished items. It also allows consumers to identify and trace the merchandise from manufacturing to delivery. In a word, the blockchain assures producers and consumers that the products were safely and verifiably transported.

The blockchain changes the game of complex global supply chains. It promotes trust among companies by ensuring a secure and confirmable transfer of digital assets across expansive networks through a transparent supply chain. It also allows them to make informed decisions by improving visibility. Thus, supply chain professionals need to consider its value when regarding new B2B commerce networks.

Many are now employing the blockchain in ways that go far beyond Bitcoin. In fact, the financial industry has already adopted the technology. Companies have found a way to improve supply chain efficiency through it. As a distributed ledger, blockchain tracks a product throughout its journey in the supply chain. This enables businesses to understand the process that runs their supply chains.

 Sign up for our weekly blog summary and newsletter!

 

 

Applying the Blockchains to the Supply Chain

Blockchains are known to be the marvel behind the Bitcoin, but other industries also benefit from this revolutionary technology. Companies that are looking to improve efficiency have found a way to solve the supply chain issues using this technology. Companies are able to trace items from manufacturing up to the delivery of products at the consumers’ doorstep. In a word, blockchains hold the key to a more transparent supply chain.

The supply chain is facing many obstacles such as lost, stolen, diverted or counterfeited products. Using a distributed ledger, blockchains can be used outside financial transactions. In the same way that they improve money, they can also enhance the supply chains globally. How? Once a product is labeled at the marketing level, it can be tracked through the entire supply chain.

Two Applications of Blockchain in Supply Chains
There are two ways blockchains can be applied in the supply chain. First, they can be used to track products and inventory by confirming receipts and releasing payments automatically. In a word, it can help track products across a decentralized network. They can also help reduce transaction fees as well as speed up payments. Usually, transactions are processed in two to three days. With blockchains, they can be done within hours.

Second, blockchains can aid transparency in the supply chains. They can be adapted to track information about the product – ultimately revealing the full chain to the public. Using a website or application, consumers are able to trace information all the way back to the manufacturing level. This could highlight work practices, Fairtrade considerations and many more. In a word, blockchains help us understand transactions from end to end.

In conclusion, blockchains promote trust and transparency in the supply chain. They help identify and trace items from manufacturing to delivery. Every time a product is moved, the transaction will be recorded in the database and into the blockchain. As a secure, joint record of exchange, consumers can track what is going on with the products and who handles it along the way. In a word, blockchains create entirely new opportunities for participation.

Sign up for the weekly blog summary and newsletter!