How is blockchain transforming the supply chain industry?
Maintaining distribution channels is extremely difficult because all parties involved must keep paper-based records. The supply chain could include hundreds of phases, numerous geographical locations, numerous stakeholders and entities, and a large number of payments and invoices, depending on the product type.
The blockchain offers a chance to alter the supply chain and logistics sector because there is a lack of openness among supply networks. Let’s examine the difficulties facing the supply chain, how the unique characteristics of blockchain could be helpful, and instances of actual blockchain applications affecting supply chains to understand better how blockchain development services can revolutionize the supply chain.
Challenges in Supply Chain
The supply chain did not appear complex a century ago because business was conducted on a limited scale and was, therefore, straightforward. Now that firms are expanding globally, supply chain management is complicated. Because of the ecosystem’s absence of transparency, consumers cannot determine the product’s actual value.
Let’s utilize the food supply chain as an example to understand the supply chain. In the food sector, the supply chain is defined by linking:
- Crop production
- Processing Food in Refineries
- Food products are delivered to stores.
- Food Products Sold to Consumers
Lack of Traceability
Traceability provides a precise picture of where the products are at any one point in the circulating supply chain. Because each participant in the supply chain network now maintains their own database and system, it is challenging to perform predictive monitoring and determine where a product is at a specific moment.
Documentation & Regulatory Compliance
Due to the use of paper-based records for management changes, letters of credit, bills of lading, pro-for-mas, and detailed payment schedules, supply management contracts can be highly sophisticated. Keeping paper documents requires a lot of work because locating earlier records is hard.
Supply chain management currently involves many intermediaries, including attorneys and regulators; as a result, the ecosystem is burdened with additional high expenses. Intermediaries are needed in the supply chain process to instill trust in the organization.
Numerous examples of supply chain counterfeiting are recorded yearly due to the lack of openness. The firm for Economic Cooperation and Development estimates that illegal and fake imports cost the world over $50 trillion annually. Counterfeit goods have an impact on both the economy and potential human life.
Products virtually ever match the required quality standards because there isn’t enough information available regarding the project’s beginning and all of its stages.
How Blockchain Changes Supply Chain?
Before we help you comprehend how it’s employed in logistics, let’s first talk about it. Keep in mind that the blockchain has applications outside of cryptocurrencies like Bitcoin. The blockchain is a distributed digital ledger that securely and transparently records all network transactions. You can utilize it for many tasks, such as information sharing, monitoring, contracts and agreements, and fund transfer.
Transparency is maintained by distributing the various copies of the ledger and each transaction on the block throughout the network’s nodes. The blockchain provides excellent security since each block is connected to previous and subsequent blocks.
Therefore, blockchain has the potential to improve supply chains’ transparency and efficiency in all areas, including the warehouse, delivery, and payment.
The transaction associated with each time a product changes hands across the supply chain can be timestamped, maintaining a complete history of the commodity from production to sale. Time delays, human errors, and additional expenditures that currently influence supply chains could be eliminated as a result.
- Keeping track of the quantity and transfer of goods as they move across supply chain elements
- tracking purchase orders, change orders, shipping alerts, trade papers, and receipts from the blockchain ledger.
- Storing serial numbers, RFID tags, or bar codes associated with physical goods on a blockchain.
- Transparently sharing on the blockchain information with vendors and suppliers regarding the processing or manufacturing process, delivery, assembly, and maintenance of items.
You will be able to know who you are working with, where the goods have been sourced from, who processed or manufactured them, and whether the payment is fair or not by using blockchain in the supply chain.