A supply chain is defined as an end to end process involving a network of people, resources, activities, organizations, technology, information, etc. that provides a path to the movement and, the flow of goods and services from the supplier to the end-customer.
Now, this doesn’t sound troublesome when it’s carried out at a smaller level. But imagine, what it would be like for the companies and organizations having a business that is spread across multiple countries.
They can face several challenges that can create hurdles in the smooth flow of their supply chains. The problems arise mainly because of the distance and location of the sites making it hard to coordinate, cooperate, and track the flow.
And guess what? That’s not where the challenges end. Any disruption and disturbance in the Supply Chain Management has severe effects on the
- Speed of the production, distribution, and sales in the longer run.
OK, I know that you are probably down the road of worries already, but you need to get yourself together as Blockchain can rescue us from these horrors and save the day.
Blockchains having interconnected sequenced blocks, assist in containing the transactional information enclosed in their data structures that are not owned by a single entity.
Sounds impressive, right? This data helps the companies, organizations, and customers too to avoid the problems that Supply Chain can face in tracking the flow, keeping the record safe, etc.
Problems that can be solved with Blockchain
So, to have a deeper understanding of how Block Chains are helpful, let’s start with the problems that Supply Chain Management can face.
The flow of the Supply Chain has different levels. There is a flow of information and a stream of goods and products. Along with that, there is a flow of financial capital. The information plays the main role flows as they help us to keep track of the rest of the three flows. They assist in navigating the movement of the goods and raw materials right from the supplier to the end-customer. These flows provide information about the location of the products, their records, the space available, etc. during the movement in the supply chain.
Any glitch in the coordination and tracking of the flow can lead to several problems, including:
- Lack of transparency
- Loss of the track
- Customer dissatisfaction
- Mishandling and damage to the product
- Information sprawl
- Auditing problems
- Enforcement of the contract
- Slow process
These are some really serious issues. Moreover, with the increasing demand for transparency at customer’s end the ever-growing requirement of the interconnectedness in the supply chain by the global industry, the companies and organizations have been forced to look for alternate solutions.
Blockchains, are public and private ledgers with a decentralized data structure. It provides security and their user-friendly features help the Supply Chain Management to overcome many issues.
On a superficial level, by using the BlockChain technology, companies and organizations can:
- Handle a business scattered across several countries
- Keep an eye on the working of third party agents
- Track the flow of Supply Chain through Multiple stages
- Self-execute Supply Chain Contracts
- Manage any form of agreement
- Self-regulate cold chain management
- Ensure transparency
- Offer more security
But if you are wondering how do Blockchains really work, you need to dig deep into the realm of its features. What we need to remember is that they mainly rely on three basic principles that include transparency, decentralized data, and immutability.
Being a digital ledger, data is spread over several computers, which are called nodes. Through the cryptographic principles, this data is secured, and an immutable link between the different blocks of data created.
In simple words, the data recorded inside the blockchain is not under the control of one particular party. Instead, it is shared and owned by everyone who is a part of the whole network of blockchain.
Immutability makes the data of the blockchains unchangeable. Hence, it becomes impossible for anyone to meddle with it. In this way, the chances of counterfeiting are reduced to zero. Therefore, no financial, informative, etc. data can be changed.
And guess what? That’s not it. Every activity or procedure that will happen in the supply chain will be recorded in the blockchain, and the data and information will be shared with everyone. That’s how the blockchains have brought in transparency to the Supply Chain Management as everyone in the network will have access to that record.
Blockchain in the Logistics Industry
Supply Chain Management involves shipping, freight, logistics, trucking, etc.
Freight forwarding is the high-efficiency method of shipping goods from one destination to another by way of various transport carriers, including sea, air, rail, and road.
What we need to chew on is that the physical, as well as the informational flows, are directly linked with logistics and freight forwarding. For reliability, transparency, and efficiency the freight forwarding is also being digitalized and there are several digital freight forwarders. Blockchains are improving the overall working of the freight forwarding.
Key areas where Blockchain can help us
- In Contracts and Agreement
Blockchains have revolutionized the payment methods in Supply Chain Management. How did that happen? Well, through its technology, the contracts can be made digitally, which are then called smart contracts. Much of the times, smart contracts help people to hold funds in escrow accounts which are automatically released once the goods have been.
- In Payment
In the fast-moving world, everyone wants to prefer a way that offers speedy payments. By eliminating the banking protocols and delay the blockchain offers one of the best services in the Supply Chain. Moreover, faster payment methods add speed to the whole supply chain management process to move a larger amount of money around the globe in a shorter time.
Blockchains have the attention of the leading international industries. Its benefits are countless. For example, Walmart has already done two test runs with IBM, including one with Mexican mangoes. What Walmart had to say about it was that the use of blockchains along with many other profitable outcomes enhances the safety of food, lowers the food wastage, etc.
Through the speed with which it’s becoming popular, it seems that in the near future, the use of blockchains in supply chain management will become a norm.