Understanding the Role of Blockchain in Supply Chain Transparency
When talking about cryptocurrency, there’s a high chance that “blockchain” will be part of the conversation. It is, after all, a crucial part of every crypto transaction. But what is blockchain?
Simply put, blockchain is a digital public ledger that keeps track of all crypto transactions. For example, if you’re transferring Monero from your XMR wallet, then it will have to go through the blockchain first for the other party to receive it. It’s able to record information in real time and cannot be tampered with. Hence, if a wrong transaction is made, then there’s no way to correct it other than to just make a new transaction that will reverse the error. And even then, a record of both corrected transactions will still be accurately displayed on the blockchain.
These qualities of blockchain technology have led many other sectors to look into how they can utilize it for their own industries. One such process that’s starting to take full advantage in its use of blockchains is in supply chain management. Here’s how blockchain technology is helping companies manage their supply chains more effectively.
Traceable and Immutable
One of the defining features of blockchain technology is how its records are immutable. This is because each transaction is recorded as a “block” of data that is then connected with the next and so on. Each block is recorded one after another, which is how it becomes tamper-proof as there can’t be any way to change its chronological order nor to insert any blocks in between ones that were already recorded.
Now imagine this feature working for supply chain records. Integrating a blockchain into the process ensures that every movement or transaction cannot be modified. This would not only make it easier to trace them, but it also promotes trust and transparency. Business owners won’t have to worry about bad actors purposefully changing details in a transaction as the blockchain’s system will prevent them from doing that. This then makes blockchain records much more credible than those noted down on paper or other kinds of digital platforms.
Increased Efficiency In Operations
Relying on credible and accurate records can lead to increased efficiency in operations. Knowing that your records will always reflect perfectly what transactions were done means saving time from having to verify details repeatedly. Given that blockchains also reflect records made in real time, inventory checking will always be precise. Hence, there won’t be a need to go back and forth with whoever is in charge of supplies for further confirmation.
Another way blockchain can increase operational efficiency is by introducing automation. For example, you can program the ledger to automate payments that need to be made to suppliers based on an encoded set of conditions called smart contracts. This enables seamless payments by ensuring that any invoices are properly accounted for and given proper receipt.
Less Risks
Using blockchain technology reduces risks evident in supply chain management, namely sourcing issues, transportation disruptions, and the inability to meet supply and demand, among others. With blockchain’s ability to reflect data reliably and in real time, issues can be identified early on so that alternatives can be sourced right away.
Given how many parties are involved in a supply chain—from suppliers and manufacturers to warehouse operations staff and transportation service providers—confirming a detail in the chain can also take a long time and may sometimes even return inaccurate information. Blockchain removes that hassle and gives you a single platform to easily check what information it is that you need to verify, allowing you to make informed decisions about your operations.
Moreover, blockchain is a decentralized ledger that allows the business to still be able to keep a single updated record even if the various supplies of a company are located in different silos. This then eliminates confusion whether there’s enough of a particular supply or if the current inventory can meet incoming demand. And because blockchain records cannot be modified, you won’t have to worry about malicious tampering.
Adapt to Market Demands
Running a business in today’s digital age comes with high expectations. In particular, people expect their queries and transactions to be quickly attended to. Blockchain’s real-time data repository allows for quicker turnarounds to meet the growing demands of modern customers. Given how blockchain can help improve workflow, it allows your business to reach out to more customers and thus encourage growth and expansion.
In addition, business processes such as lengthy approval chains can be streamlined with the help of blockchain. This helps reduce lost time that can then be put into focusing on other aspects of the business, such as attending to customers or improving products as well as services.
As with any technology, challenges in implementing blockchain within businesses still exist such as figuring out compatibility with the technology you’re currently using and scaling it depending on the size of your operations. Even so, it is already helping numerous businesses streamline their supply chain management and make it more transparent. So if you’re looking for a solution to improving your supply chain records, then perhaps consider giving blockchain technology a look today.