Do you know?
The demand for global blockchain solutions in the supply chain industry is expected to reach a market size of $3153.7 million by 2028 – at a CAGR of 51.3%.
This whopping revenue & eye-opening statistics clearly demonstrate the scope of blockchain-based supply chain projects. In the past few years, blockchain technology has started gaining momentum in multi-industrial real-world applications. Not only this, but when combined with other high-end technologies, blockchain technology offers state-of-the-art solutions that solve business challenges.
For instance, robotics, the Internet of Things (IoT), and artificial intelligence (AI) are deployed in warehousing and manufacturing globally. With blockchain fusion, the use cases become more powerful and multi-purpose.
In this blog post, we’ll look at the potential applications of blockchain technology in supply chain management.
What is Supply Chain?
The end products we consume encapsulate the cumulative effort of various stakeholders. From suppliers of raw materials to intermediate regulatory entities, and manufacturers to distributors, there is a chain of parties working together to ship products to consumers. A supply chain management system is linked through physical and information flows.
In the supply chain, physical flows refer to the access, manufacturing, storage, and movement of materials and goods used. Information on physical flows is tracked from suppliers to the warehouse to avoid any turmoil.
As the term suggests, information flows involve the details of coordination, control, and management of the day-to-day flow of materials. The supply chain monitors product sourcing, manufacturing, procurement, and logistics of finished goods. An effective supply chain process streamlines all the processes by providing quick access to important information. This helps reduce costs and mitigate potential risks.
Challenges of Supply Chain
The current supply chain infrastructure follows traditional procedures to manage operations. Manual monitoring is cumbersome and time-consuming. Also, it is prone to errors. Comprehensive analysis shows that transparency is one of the major challenges faced by the supply chain industry. Stakeholders do not know the performance and status of goods. Management is struggling to get real-time information about processes to avoid delays.
Transparency can be divided into two:
Information Visibility – Accessibility and visibility of information refers to the data collection such that all the links in the supply chain could be easily tracked and managed.
Communication – It refers to the internal and external information flow of data to make sure the processes are streamlined.
Some other problems in the current supply chain structure are
- There is no clear knowledge of the origin of raw materials used for product manufacturing
- There exist trust issues between the buyer and seller
- Supply chain execution is highly inefficient
Blockchain technology in supply chain and logistics keeps records of each transaction and data in blocks. It could be the goods’ source, billing details, scanned documents, or product information. Every time, when a transaction takes place, a block is added to the blockchain.
To understand it in a better way, let’s have a look at how blockchain records supply chain data.
How Does Blockchain Streamline Supply Chain Processes?
Blockchain makes it possible for the supply chain to track all the transactions in a more transparent and secure way. Each piece of information is stored in the blockchain network which makes it easy for the companies to look at the history of records and current status. An interesting point to note here is that blockchain and supply chain software development services make use of smart contracts to automate regular operations.
Smart contracts are programs that execute automatically to undergo certain operations. They are embedded with all the pre-conditions in code to streamline the workflow.
Below are some ways blockchain technology is revamping the supply chain industry.
Efficient Operational Infrastructure
Blockchain eliminates the involvement of third parties and intermediaries and operates independently. This means there is a reduced fee and delays in the regular operations. Blockchain technology has the power to maintain the integrity of entire financial and logistics systems. In an implementation, the payment solution ultimately reduces the time of ordering and payment processing. Smart contracts enable compliance, reduce legal fees and taxes, and mitigate the risks of fraud.
Blockchain technology also offers support for the integration of useful tools. They can integrate radio-frequency identification (RFID) tags in the blockchain network to easily track and identify the goods. It is an easy way to store important information related to products in the warehouse.
Transparency & Security
Blockchain is an immutable ledger which means, the data once stored on the blockchain cannot be altered. This characteristic allows supply chain records to be highly transparent and secure. Each block in the blockchain is protected by a strong cryptographic hash function that makes it difficult for the fraudster to tamper with or access it.
The Supply chain industry has considerable room for improvement and end-to-end traceability. At the same time, blockchain technology has the potential to revolutionize the industry with its manifold benefits. All you need to do is figure out the gaps in your workflow, develop new standards, employ technological solutions and get more returns. So if you’ve decided, reach out to a blockchain supply chain development company to transform your business!