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Blockchain: Disrupting the Supply Chain Industry

How could blockchain change the everyday experience of purchasing, cooking and serving dinner? Think about this. Every ingredient of your dinner has a history. Blockchain allows you to see where these ingredients come from, how they were produced, and who handles them. At the same time, it also allows the producers to track where their ingredients are and how they are incorporated into finished products.

Small contracts built into this revolutionary technology also create new options for buying goods, including automatic recurring orders and naming your own price. Blockchain is very profound. In fact, many have already thought about business ideas where they can use such system. In fact, Steve Wozniak of Apple has already joined a blockchain firm. He is also convinced of the disruption that technology is creating in the supply chain industry.

The blockchain could challenge our assumptions of what makes commerce secure and reliable. It could transform the world for the next decade. If you have not considered the technology to be relevant to your business, you will risk being caught flat-footed as those who failed to see the potential of the Internet. So, why is the blockchain disruptive?

The blockchain removes the need for a third party to guarantee a transaction by combining powerful encryption with distributed structure. It coordinates agreements among partners and minimizes interference. It creates a highly tamper-resistant structure that makes almost all kinds of transactions secure and verifiable. In a word, it is a breakthrough that could reshape the entire digital economy.

In conclusion, the blockchain can create a formal registry to identify products and track their course through the different points of supply chain. It will allow internet-connected equipment to monitor the products they are handling and tag them according to temperature, location and other relevant environmental conditions. This provides assurance that the products were safely handled throughout their journey in the supply chain.

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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.

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Blockchain 101: What You Need to Know

Companies need to know what goes on beyond the four walls of their businesses in order to gain greater insight to their full supply chain. They need technology that will enable them to understand the total process that runs their supply chains. Thus, Blockchain becomes a very interesting idea for organizations. It promotes trust among companies by bringing transparency into the supply chains, therefore making it “trustless”.

What is a Blockchain?
First, let us define what a Blockchain is. It is a transaction database that contains a continuously growing list of data shared by all nodes participating in the system. Every block contains a hash of previous blocks, creating a chain of blocks. Each block is guaranteed to come chronologically after the previous block and is computationally impossible to modify as every block after it would have to be regenerated.

Blockchain is the main innovation and technology behind Bitcoin. It is most widely used in the currency’s public ledger of cryptocurrencies. Based on a Bitcoin protocol, it contains every transaction executed in the currency. It contains all information about the addresses and their balances. That is because every computer connected to the Bitcoin system gets a copy of the blockchain. It is automatically downloaded upon signing up to the network.      

Decentralization
A block chain is open but secure. It is auditable and runs without a centralized operator. It is the only place that Bitcoins can exist in the form of unspent outputs of transaction. Unlike traditional payment systems like PayPal, it does not require a centralized database.  Since transactions are made by software applications, the nodes validate the transactions, add them to their copy of the ledger and broadcast them to other nodes.

The blockchain provides transparency a traditional centralized approach cannot. It can allow companies to make informed purchases by increasing visibility. It makes the authenticity and transparency of products and services less difficult by ensuring safe and verifiable transfer of digital property across expansive networks. In a word, blockchains may very well change the game of the complex global supply chains.

Time will tell.  Organizations are conservative, but we are already seeing adoption of the technology across the financial sectors worldwide.   Supply chain professionals should start considering the value of an open public ledger when considering new b2b commerce networks.

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