One of the most important technology mergers is making a wave is a blockchain in supply chain management. As the supply chain becomes more complex and globalized, there is a growing need for a secure, transparent and efficient system to manage the movement of goods.
Blockchain development company offers a promising solution by providing decentralization and a tamper-proof ledger. It can record every transaction and movement of goods in the supply chain. With its robust performance and security, blockchain technology offers countless applications to every industry and market. In this article, we will explore the potential benefit of using blockchain technology in supply chain management.
What is Blockchain Supply Chain Management?
Blockchain technology has emerged as a powerful tool for supply chain management that can help businesses streamline operations, reduce costs and improve efficiency. Some of the challenges faced by supply chain management, such as the need for real-time visibility of goods and the ability to track and trace products through the supply chain, can be solved with blockchain.
By leveraging blockchain technology, we can create a secure and transparent record of every transaction. We can also track the movement of goods in the supply chain and reduce the risk of fraud, counterfeiting and other disruptions. It will also help with the automation of some of the manual processes, such as order processing, invoicing and payment reconciliation. Let’s learn more about the benefits of using blockchain technology in supply chain management.
Benefits of Blockchain Integration with Supply Chain Management
Transparency and Traceability
Transparency and traceability are two of the most important aspects of every supply chain management where blockchain can provide assistance. Blockchain provides transparency by creating an immutable and tamper-proof record of all transactions. This can only be accessed and verified by authorized parties in the supply chain. In terms of transparency, it provides the ability to see all relevant information about a transaction and all parties involved can see the same information about goods.
Blockchain also helps with traceability by recording each transaction that can be traced back to its origin. Blockchain creates permanent and immutable records of all transactions, which makes it easier to identify the source of any issues or problems that arise in the supply chain.
Blockchain enhances security in supply chain management through various ways. Traditional supply chain management lacks security due to its centralized nature. This makes it vulnerable to cyber-attack, data breaches and other fraudulent activities. Blockchains are decentralized, tamper-proof, encrypted and permissioned, allowing extra security for supply chain management.
Blockchain can significantly improve supply chain management security, saving time and expenses. With an immutable ledger, we can provide tamper-proof data which cannot be altered. Each transaction on the blockchain is encrypted using a unique cryptographic key, making it virtually impossible to hack. Smart contracts can automate various tasks to reduce the risk of fraud or error.
Supply chain management manages the transportation of goods and the financial aspect of it, which requires an organized and streamlined work process. Blockchain offers a robust and efficient supply chain model that allows businesses to operate smoothly and quickly. Instead of using traditional methods of paper to manage the supply chain, we can employ blockchain to make the process comparatively faster.
By removing the intermediary or third party, we can expedite the process. We can also cut costs and improve the traceability of the goods. Blockchain uses decentralized ledgers and smart contracts to improve efficiency and automation to reduce errors.
Traditional supply chain management depends on third parties and intermediaries, which can cause delays and mistrust. Blockchain provides a safe and secure way to conduct business with other companies without worrying about misinformation. It will increase collaboration and reduce the various hurdles in the path. It will elevate trust between businesses and suppliers.
Blockchain offers transparency with a distributed ledger which allows both parties to access information. The data in blockchain cannot be altered or tampered which will create a safe environment for companies to conduct business. Smart contracts will automate billings and payments instantly once the goods arrive, reducing fraud and other payment delays.
Supply chain risk management provides strategies to avoid or reduce risks and issues in supply chain management. According to the national counterintelligence and security center, it is the process of identifying, assessing, and mitigating the risks to the integrity, trustworthiness, and authenticity of products and services within the supply chain. As the risk towards supply chain management rises, the attacks increased to 79% in 2020 and 58% of breaches victims are small businesses.
Blockchain can mitigate the issue by utilizing cryptography, decentralized ledger and smart contracts. All information regarding goods is available to both parties through blockchain, which reduces errors. They can trace the order from the supplier, reducing the risk of counterfeiting. Smart contacts will increase efficiency and lower the risk of payment-related fraud. Blockchain will decrease the time spent on validating the goods, reducing the cost.
Real-time Tracking and Monitoring
Tracking and monitoring are important aspects of supply chain management. It keeps both parties apprised about the movement of goods to avoid any issues. However, traditional tracking and monitoring tools are a bit out of date and don’t represent actual real-time tracking. Businesses can leverage blockchain to fill the gap and provide accurate tracking information.
Blockchain app development company also, saves data in blocks that contain information with time stamps. Also, it allows businesses to trace the goods’ origin easily to avoid any issue regarding goods quality. The data inside the blockchain is immutable, which means that it cannot be altered or changed once it’s saved, which can help with monitoring the supply chain.
Better Customer service
Supply chain management is all about how to provide goods to the end customer effectively and quickly. Currently, they are facing two major issues in supply chain management, tracking and traceability. Customers need to track their orders continually and need constant updates regarding the whereabouts of their goods. Also, they want to buy original and ethnically procured goods to avoid fakes and illegal.
Blockchain can provide real-time tracking that allows customers to check the location of their parcel at any moment. Also, they can check the product’s origin to confirm its originality. This can help with items like diamonds which are hard to trace to the origin.
Every business is looking for a way to cut costs in the transportation of goods. Supply chain management always faces issues with missing items, counterfeiting and fraud which can add up to the loss. Also, they need to find an intermediary to complete the order and pay them accordingly. It is considered an acceptable loss that hinders the progress of the company and profit.
Blockchain can solve this issue significantly and reduce the cost of supply chain management. With immutable data, no one can tamper with the information regarding the supply, which can cut losses. Blockchain also provides tracking information which will prevent any theft or fraud.
Blockchain in Supply Chain Management Use cases
Blockchain is still a new technology, and all its features might look like fair tails right now. Without proper use cases by reputable companies, other businesses won’t follow suit. Here are some examples of blockchain integration in supply chain management.
FedEx launched a pilot program with Hyperledger to gather data and information to deal with customer disputes. They will use blockchain technology and smart contracts to help them with tracking information about transportation. This will solve many issues for FedEx, such as creating a distributed ledger for transportation and manufacturing companies to track their items.
Kuehne + Nagel
Kuehne + Nagel is one of the biggest transportation companies based in Switzerland. They are using blockchain technology to create a logistic portal named Verified Gross Mass (VGM). This will allow the company to manage over 800k transactions per month. It will help them manage to bill and make agreements between the sender and transport company for the safety of goods.
British Airways and Sita launched a pilot program in 2017 named FlightChain to collect and synchronize flight data to reduce conflict. They used data from airports like London, Miami, Heathrow and Geneva for this project. They used smart contracts to collect all data and for the source of truth. They also launched two new blockchain projects that include travel review and traveler identification through biometrics.
DHL and Accenture are developing a new blockchain project for drug supply chain management. They will collect information about drugs manufacturer, prescriptions, ingredients, storage and transportation. This will increase the traceability of the drug to reduce fake and counterfeit products.
Supply chain management is part of everyone’s life as they transport our food, medicine, fuel and more. Blockchain can help supply chain management with countless applications and create a streamlined work process. According to Research Dive, the market share of blockchain in supply chain management was at $423 million in 2020 and it will reach $1.4 billion by 2030. This presents an opportunity for businesses to adapt to blockchain supply chain management.