Leveraging Blockchain for secure supply chain management
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: Traceability of specific products– A majority of supply chains begin with raw materials while concluding with finished goods. Blockchain technology traces the entire journey of any product from the raw material supply to the end-consumer. Blockchain technology ensures excellent traceability across every stage in the movement of a product which is fully transparent and immutable. This helps minimize revenue losses and recalls, while also ensuring safety at one level. Payment mechanisms– If you are using blockchain for cryptocurrency-based payments, then these can be tracked easily and in a more transparent manner, without any central authority needed for tracking purposes. Smart Contracts– These smart contracts can be implemented between supply chain partners using blockchain technology. Complex supply chains come with innumerable partners and there can be thousands of such contracts added to a block in the transaction. Owing to the immutability of blockchain transactions, every contract will be tamper and misuse-proof. Information Flow Preservation– There is a humungous amount of data flowing across stakeholders in supply chains, including specifications of products, quality, and so on. With blockchain technology, the information flow is preserved, preventing loss of data, misuse, misinterpretation, or misplacement. Higher transparency at all levels– Blockchain-based transactions are easily visible to every participant. Every transaction will be an immutable block that is also tamper-proof. This ensures greater transparency for the supply chain itself. Finding errors in execution– Supply chain networks are highly prone to execution errors, including missing out on shipments, inventory information mistakes, payment problems, etc. Conventional systems may find it hard to detect and plug these errors on a real-time basis. Blockchain technology may be of help in creating a safer mechanism since it records each transaction immutably. Hence, stakeholders will find it easier to identify and find the cause of any execution error, thereby saving time and money greatly. Higher Security Levels– Blockchain transactions come with encryption, courtesy of the digital signature or private key which initiates them. This makes transactions completely tamper-free and this works wonders for supply chains with several partners. Each partner will have his/her own digital signature which is unique. Whenever any purchase order or similar transaction gets initiated, it is secured with the help of this digital signature. This makes for an immutable transaction and the recipient can verify the authenticity of the purchase order alongside. Every transaction is added in the form of a block within the blockchain, and counterfeiting becomes impossible as a result. There is a sequential and trustworthy transaction trail that becomes possible, as a result. 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. FAQs 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
