Blockchain has been a true game-changer if you consider cryptocurrency, and more such use cases. We all know that Blockchain is a specific digital ledger system where encrypted transactions are executed by parties on the basis of predetermined mechanisms and protocols.
Ledger technology is an example of decentralization and distribution, where centralized control is not required. This enables users to transfer digital assets from anywhere without third-party involvement or contractors.
There is now a growing case for the use of Blockchain in supply chain management, in a bid to shore up security and overall transparency levels. Here’s taking a look at the applications of the technology throughout the SCM (supply chain management) spectrum.
Why Supply Chain Management Needs Blockchain Technology
Present supply chains are highly complex and are sometimes non-sequential too. They are multi-tiered frameworks with a sizeable count of logistic partners, suppliers, manufacturers, and storage partners.
Whenever the system witnesses higher levels of complexity, then it becomes tougher to execute operations with transparency and higher efficiency. Supply chains can use blockchain for greater safety, transparency, immutability, and distribution.
One of the key hurdles for supply chains is the growing illegal practices and counterfeit products in the market. Supply chains have to make sure that raw materials and parts are legal. Tracing every process is also a challenge if a supply chain encompasses several locations and innumerable partners.
How to know if a supplier is using unethical mechanisms for getting raw materials? How to know whether a product is counterfeit or real? Supply chains require blockchain technology which functions on the basis of smart contracts, cryptography, and traceability.
How Blockchain is Increasingly Indispensable for Supply Chain Management
Blockchain is increasingly becoming crucial for more efficient supply chain management at multiple levels. Here are some of its core applications:
On the whole, blockchain technology has contributed greatly towards the safety and security of supply chains, along with digitizing traditional procedures for better and more efficient operations along with real-time information transfer across participants.
Companies can function at higher speeds while responding quickly to business requirements and movements. All transactions and contracts are easily saved in a secure blockchain and this means that the logic of the business, as we call it, is integrated within the supply chain network itself, and not in any offline documents that may be lost or tampered with.
What is blockchain technology and how does it relate to supply chain management?
Blockchain technology is a distributed ledger technology where every transaction is stored as a block in the blockchain. It relates to supply chain management in several ways, enabling smoother operations, higher transparency, better information flow, and enhanced safety.
How can blockchain technology improve supply chain transparency and traceability?
Blockchain technology stores each and every transaction immutably and in a tamper-proof manner as a block within the blockchain. Hence, there is higher traceability for every product from its origin and raw material supply to its delivery to the final consumer. This naturally enhances transparency at multiple levels, particularly with the implementation and proper storage of smart contracts.
What are the benefits of using blockchain for secure supply chain management?
There are multiple benefits of using blockchain for secure supply chain management, including the immutable nature of stored smart contracts and transactions as blocks within blockchains, encrypted transactions initiated by private keys or digital signatures, easy authentication by receiving parties, easy visibility of transactions for all participants, and quicker detection and cause identification of execution errors.
How can blockchain help prevent counterfeiting and fraud in supply chain management?
Blockchain technology can go a long way towards combating fraud and counterfeiting in supply chain management. This is possible through its storage of transactions securely and immutably in the blockchain as blocks, which are visible to all stakeholders, and encrypted transactions which may only be initiated with unique digital signatures or private keys. Also, smart contracts can be tamper-proof and stored securely as a part of the blockchain.