5 Ways Blockchain is Revolutionizing Supply Chain Management
Blockchain in supply chain | Credit: Shutterstock
Key Takeaways
- Blockchain technology improves supply chain traceability and transparency by giving a full picture of all transactions and events.
- Inventory management is streamlined by real-time visibility provided by blockchain and IoT devices, which lowers stockouts and waste.
- Automation through smart contracts improves supplier management’s efficiency and security while reducing costs and fostering greater trust.
- Blockchain protects customers and brands by building a digital trail and confirming the authenticity of the product, preventing the sale of counterfeit goods.
Blockchain technology is revolutionizing the supply chain industry across various fronts . Here are five key ways in which blockchain is transforming the supply chain management:
Enhanced Transparency and Traceability
Blockchain technology makes it possible to create a transparent and unchangeable ledger of transactions. This makes the blockchain an ideal tool to track every transaction and event that occurs along a supply chain, including the movement of items, ownership changes, and quality inspections. Due to the comprehensive picture of the whole supply chain that transparency from the blockchain gives stakeholders, it is simple to follow a product from its point of origin to the final consumer. Blockchain technology helps to increase confidence between parties, minimize fraud, and improve accountability.
A good example of blockchain technology being implemented in the supply chain can be seen at Walmart. A blockchain-based system has been put in place by Walmart in collaboration with IBM to track the flow of food supplies. Customers and retailers can get comprehensive information on the product’s origin, ingredients, shipping, and storage conditions by scanning QR codes on product packaging. Consumer safety is ensured by blockchain’s ability to swiftly identify and address problems like contamination or spoilage.
Streamlined Inventory Management
Inventory management is also made more effective by the real-time visibility and precise tracking features of blockchain. Supply chain participants can receive real-time updates on inventory levels, storage conditions, and delivery status by connecting blockchain with IoT devices and sensors. As a result, there would be fewer stockouts, fewer overstocks, and less waste overall.
The international shipping firm Maersk and IBM collaborated to create TradeLens , a blockchain platform for the global supply chain. TradeLens offers real-time visibility into the movement of goods by digitizing shipping documentation and integrating IoT devices, which cuts down on paperwork and delays and improves inventory management among various stakeholders.
Secure and Efficient Supplier Management
Supplier management has been made efficient and secure by blockchain technology. Supplier onboarding, supplier verification, and payment settlements can all be automated using smart contracts, which are self-executing contracts stored on the blockchain. Smart contracts do away with the need for middlemen, cut administrative costs, and improve supplier and customer trust.
The Food Trust Framework, a blockchain-based system designed to improve food safety and supply chain transparency, was introduced by Chinese e-commerce giant Alibaba. The technology makes it possible for food products to be traced from a place of production to destination, ensuring that suppliers adhere to legal requirements and that customers have access to accurate information about the goods they buy.
Prevention of Counterfeit Goods Across The Supply Chain
Supply networks are severely hampered by counterfeit goods. Blockchain technology can stop counterfeiting by creating a digital trail of every transaction and confirming the legitimacy of items. . With blockchain, altering or fabricating product information is more challenging , ensuring that customers obtain real products and allowing businesses to safeguard their brand name.
Conglomerate of luxury products LVMH collaborated with ConsenSys, Microsoft, and others to create the blockchain-based platform AURA . Consumers may confirm the origin, craftsmanship, and ownership history of high-end goods like handbags and luxury watches thanks to AURA’s tracking of the authenticity of luxury goods. This program aids in the fight against luxury goods that are fake.
Improved Supply Chain Financing
Finance procedures for supply chains can be streamlined and accelerated with the use of blockchain technology. Blockchain gives lenders real-time access to transaction data through digitizing supply chain data like purchase orders, invoices, and shipping information. Through increased access to working capital for suppliers and reduced risk for lenders, this transparency helps the entire supply chain’s cash flow.
Blockchain technology is used by the Singapore-based trade finance platform dltledgers to simplify supply chain financing. The technology provides safe and effective financing for suppliers by digitizing trade documents and automating procedures with smart contracts. As a result, cash flow is accelerated, financing costs are decreased, and businesses can more easily access working capital.
Also read: Introduction to Cryptocurrencies: What They Are and How They Work
