How Blockchain Can Transform Your Supply Chain
How Blockchain Can Transform Your Supply Chain
From performing audits and digital payments to inventory tracking and asset management, blockchain technology allows companies to improve efficiencies and transform their supply chain. In fact, many experts consider blockchain to be the single most significant invention since the internet itself.
Let’s take a closer look at how this secure time-stamped ledger can transform your supply chain.
What is Blockchain Technology?
Essentially, blockchain technology is a distributed database that contains tamper-resistant records of digital data. The information held in the ledger can only be accessed, inspected, and added to by verified users – however, they cannot change or delete the information already contained within each block.
Thanks to this, the original data will always stay as it is – ensuring a permanent and public record of transactions as the block is transferred from one user to the next within the chain.
This means that no single entity or user controls the transactions within the system. As blocks within the chain may only be updated through a consensus, an agreement among the participants within the system, it leaves the entire system tamper-resistant. In plain English, blockchain can be compared to a highly secure record-keeping solution.
Blockchain enables businesses to conduct online transactions in a secure and transparent way. And it’s now getting increasingly popular across many industries. A recent report from consulting company Globant, reveals that companies are very eager to invest in blockchain and ledger tools to improve their internal operations, such as supply chain management. The majority cites blockchain’s ability to securely record and share data as the “technology capability most useful in helping them pursue greater internal growth”.
Interestingly, the study also reveals that while 2018 was the year to start getting excited about and prepare for the corporate blockchain, 2019 is likely to be the year where most companies start investing in the technology. This is clearly backed up by the study: Out of the 61% of companies already researching blockchain, just 28% had chosen their first provider by the beginning of this year. The majority is expected to follow suit in 2019.
How Blockchain can Ease Supply Chain Management
Security is one of the main driving-forces behind the immense interest in corporate blockchain.
Whenever a product changes hands or a transaction is completed, the details surrounding that transactions will be fully documented, thereby creating a permanent record containing all significant data from manufacture to sale. This can reduce time delays, minimise costs, and help avoid manmade errors that are all too common these days. As a matter of fact, many industry experts are predicting that blockchain can become the standard supply chain operating system in the next few years. So, how can it help streamline your business processes?
- Tracing Food Produce: When a company is verifying certifications of physical products or assigning key properties, blockchain can play a vital part in tracing the products or their origin. For instance in food products, brands can quickly identify whether their product is organic or fair trade.
- Record Keeping: When managing quantity and transfer of assets, such as containers or trailers, as they’re being moved between blockchain supply chain nodes, the technology can facilitate the recording and data keeping of crucial information associated with those assets.
- Alleviate Security Concerns: Keeping track of shipping orders, shipment notifications, and trade-related papers can be a hassle and often prone to human errors. Blockchain can alleviate some of the security concerns and data accuracy issues normally associate with the order management process.
- Proper identification: The ability to link physical goods to digital tags, such as serial numbers, RFIDS and bar codes, is another aspect where blockchain can be useful.
With the aid of corporate blockchain networks, enterprises can find a better and more efficient automation tool for administering their centralized databases. In addition to recordkeeping and the tracking of goods, we have gathered up a quick overview of a few other ways where it can ease up the supply chain management process:
Cost Reduction in Supply Chain management
According to a survey performed by the Digital Supply Chain Institute (DSCI) and APQC on supply chain industry workers, more than a third of them believe that cost reduction is one of the key benefits of implementing blockchain with your supply chain. This is due to the real-time product tracking functionality that it offers.
The increased visibility and transparency can lead to expenses being minimized without sacrificing the efficiency of the transaction. It will also ensure that any intermediaries in the supply chain are effectively eliminated, thereby contributing to the overall cost reduction. Finally, blockchain promotes highly accurate record keeping and saving, resulting in the reduction of operational and compliance expenses over time.
Strengthens Trust and Confidence in a Complex Supply Chain
Supply chain management can be a highly sophisticated process. With the many employees and tasks involved, it’s crucial to build trust and confidence in the system to ensure a smooth and efficient business operation.
Often, it can be difficult to trust the accuracy of the information of the recordkeeping process is prone to errors. However, since the data is contained within the ledger and cannot be changed or tampered with, your employees can trust that the information is at all times accurate.
Transaction History Tracking and Monitoring
For companies dealing with a high volume of transactions in their supply chain, it can be easy to lose track of their transaction history. Such inefficiencies are prone to add additional overhead expenses, and the potential of losing customer data may hurt your company, both financially and customer relationship-wise.
A supply chain management based on blockchain technology offers comprehensive origin tracking, which helps make the data collection process easier and more efficient. Additionally, the accuracy and accessibility of origin tracking may also be employed for identification and detection of fraudulent activities in complex, large volume supply chains.
Implementing a Private Blockchain Network
In the past few years, we have seen the evolution of blockchain technology move beyond the original bitcoin vision. It now possesses more enterprise-friendly features than ever before.
Most blockchains, such as the Bitcoin blockchain, are part of public networks. This means that anyone can participate, update and add to the blockchain in question. However, public blockchains tend to have limited consensus options, which can be rather costly for enterprises. In addition, the transaction speeds of public blockchains are rather limited as well. For example, the Bitcoin blockchain has a maximum throughput of only seven transactions per second.
This is one of the key reasons for why Bitcoin is often being described as having a scalability problem.
On the other hand, you have the private blockchain networks. These work similarly to the public networks, except for that it’s hosted within a secured and permission-restricted network. Access to the network is defined by business relationships that already exist in the real world. Private blockchain networks also provide business transactions with improved privacy – especially since you have the ability to specify which entities can access and view specific information. Naturally, not every employee needs full access to every transaction within the blockchain.
The good news for enterprises is that private blockchain networks are capable of handling exponentially higher transactions that the public ones. While Bitcoin is struggling with a meagre 7 transactions per second, Visa’s private network is capable of reaching up to 2,000 transactions per second.
That bodes well for other companies looking at acquiring their own private blockchain network.
Interested in blockchain?
The technological advancement of blockchain technology has piqued the interest of companies across multiple industries, and 2019 seems to be the year where plenty are putting their plans into action.
Are you curious to see how blockchain technology can ease your business processes? Fill out the form to your right, and one of our blockchain consultants will get in touch with you shortly. Let 2019 be the year where you take your business to the next level!
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