Supply chain management is a proposal for companies that benefit from customer trust and satisfaction management tools. Supply chain management is a process that helps control the entire production flow from product discovery and acquisition to end product implementation and support.
Many people confuse the chain of coincidences with logistics, but logistics is only part of this concept. Classical chain management systems include a whole host of different processes for centralized control and distribution.
At the same time, due to the significant development and complexity, it can be challenging to observe the constant monitoring of all processes. That is why many modern companies are interested in what is blockchain technology and how to effectively implement it in their business processes.
Modern technologies for accounting and preventing data from different sources from having simple and understandable management for all employees. Blockchain helps automate many processes and clarify all transactions, probably all procedures, to avoid fraud in the pricing chain. This article will explore the main benefits of using Blockchain in the supply chain.
The key features of Blockchain technology
Blockchain technology is a more advanced database mechanism that allows exchanging of information within the same business network. This database stores all the essential information about data chains. Each block is interconnected and actively communicates with each other.
The data in this database is stored in chronological order, so you can not delete or change the data chain without an appropriate consensus from the public network. As a result, Blockchain technology can be used to store data for a long time without worrying about losing important information. Blockchain can maintain registers, register payments and accounts, and conduct transactions. The system has unique built-in mechanisms that prevent unauthorized changes to data. Key benefits of using technology to support supply chains include:
- Decentralization. Blockchain data is stored on numerous devices in a distributed network of individual nodes. Such a decentralized system is highly resistant to various failures and hacker attacks, which reduces the risk of losing essential data. Each particular node keeps its copy, so there is no risk of a weak link affecting the entire network’s security.
- Immutability. All blocks rarely change and are not canceled, so canceling already registered and saved transactions is impossible. That is why the Blockchain is ideal for storing reporting, payment data, and other critical information in the ledger. Companies can use Blockchain technology to prevent fraud and other unauthorized transactions.
- Transparency. The system enables everyone to track all transactions over time. All records are saved, so making any changes or deleting a transaction that has already been completed is impossible. The company owner can safely track all essential tasks with minimal consequences and risks.
Companies should be able to make all their transactions more reliable and secure. As a rule, all records are stored chronologically, making them transparent and accessible. This increases the speed and efficiency of auditing in a shared, decentralized network.
The Role of Blockchain in Supply Chain Management
Blockchain can provide greater transparency and understandability in the supply chain, reduce possible costs and risks in the management process, and improve the maintainability of critical operational parameters. Among the essential advantages of Blockchain in the supply chain, one should pay attention to the following:
- Increased traceability of materials delivery to ensure the material and technical base in corporate conditions following established standard requirements.
- Reducing production costs. Reducing the risks of getting fakes on the market and in trade.
- Improving work efficiency with outsourcing companies and reducing the risk of personal data theft.
- Reducing paperwork and administrative tasks.
Blockchain in the supply chain allows for transparency in the materials used, significantly increasing the corporate reputation in the market and attracting the attention of potential investors and customers. It also increases the level of customer confidence in the part of the data used. Engaging stakeholders and improving the quality of deliveries guarantee high security.
Blockchain-based supply chains can automatically update records when any changes are made, increasing supply chain traceability. Of course, there are some difficulties in implementing the technology at the moment since it is necessary to use new solutions and constantly rebuild production processes. Still, specialists are already actively working to solve the problem.
Use Cases for Blockchain in Supply Chain Management
Many large companies actively try to implement Blockchain technology in supply chain management. Blockchain is still at the testing stage and far from helping increase profitability and sales. In many projects, investments may not justify themselves, so it is essential to plan your costs correctly. Among the most striking and notable use cases of technology in supply chain management are the following:
- Walmart. Ensuring the continuous functioning of supply chain management is very important to ensure customers’ safety. That is why Walmart and IBM are actively testing Blockchain technology to improve the security and quality of medical supplies. This is a pilot project for quality control of food and medicines. Both companies are interested in improving the efficiency of the drug supply chain.
- Bumble Bee Seafoods. The company has implemented Blockchain technology to give its customers insight into food supply chains. Using the platform, you can track tuna sales directly from the catch to the distribution to the traders. This is the safest and most effective solution that allows you to implement the tasks.
- Naturipe Farms. The company is actively working on implementing Blockchain to show the traceability of the supply chains of blueberries from harvesting to reaching the consumer’s table. Each user can get all the necessary information.
At the moment, all projects are working in a test mode, trying to use all the advantages of Blockchain in practice to get the maximum benefit in tracking supply chains and increase the level of trust from customers.
Challenges to Adoption
Of course, Blockchain technology is considered one of the most efficient and productive. So there are many challenges to adoption. At the same time, some restrictions prevent it from being fully used in supply chains. Among the main problems are:
- Price. The cost of implementing and using innovations can be high, so not all companies can afford such a solution.
- Scalability. The limited nature of the chains and the ever-increasing number of operations create some difficulties in block management.
- Compatibility. The exchange of information between different blocks can be complicated due to other architectures and disruptions.
The solution to these problems can be the introduction of common compatibility standards, interoperability, and hybrid Blockchain systems, which will optimize all costs and simplify resource management.
Future of Blockchain in Supply Chain Management
The implementation of Blockchain in supply chain management requires a detailed study to understand the main drivers of development better. It is essential to develop a solid base that will be effective in the long term, as well as to establish company redesign processes based on innovative models to use the full potential of Blockchain technology. Future trends are constantly changing and developing.
Blockchain technology in supply chain management is an exciting and effective solution that can significantly simplify the life of many companies. With its help, you can completely transform the entire supply chain industry, improving supply chain transparency and security for every professional, regardless of industry. The main thing is to monitor trends and gradually introduce new functionality constantly.