Blockchain is set to improve the efficiency and security of procurement companies in all industries — while adding value for their customers.
Are you ready to be blockchain-ready in your supply chain?
Cryptocurrencies are one of the most famous examples of blockchain potential. It is the technology drawing attention from outside finance.
Blockchain is Transforming Supply Chain Management
The decentralized ledger is the core technology of blockchain. It records and protects transactions shared between multiple parties.
Cryptocurrencies use blockchain such as Bitcoin, Ethereum, and Dogecoin to allow unlimited anonymous parties to transact without an intermediary.
Supply chain management allows known parties to transact directly, while increasing security, contract compliance, and reducing costs. Supply chain blockchains “tokenize” a variety of transaction-related data. This creates unique and easily verifiable identifiers such as purchase orders, inventory units, and bills of lading.
Transaction between stakeholders is recorded. Every phase of each transaction assigns each participant a unique digital signature. That signature is used to “sign” tokens, and it’s an audit trail that cannot be altered. But, of course, bad actors would also have to find a way for them to modify the links in subsequent documents.
Blockchain technology offers many critical benefits to businesses
Blockchain improves efficiency: A supply chain that uses blockchain technology to improve communication and collaboration among all parties relies on a common network infrastructure. Transparency and traceability reduce waste and eliminate duplicate orders. Invoice fraud and rogue spending will not exist. Contract compliance contingencies help all parties meet their obligations promptly, completely, and accurately. Small businesses can have better financing options and processing times thanks to complete visibility of financial performance and financial information.
Blockchain is more ethical with sustainable sourcing: The traceability and tamper resistance of the blockchain makes it easy to track where goods and materials come from, where they travel along the supply chain, and who has access.
Blockchain offers more significant savings: The gains in efficiency and the reductions in stock losses and waste are essential sources of cost savings using blockchain technology. A distributed network can share resources and conduct transactions digitally. This eliminates the need to use paper-based workflows or materials. Not only does it lower material costs, but it also reduces the associated costs of storage and labor to manage and process all those documents.
Additional Functionality for Other Digital Transformation Technologies: The blockchain integrates other technologies like process automation and IoT objects, such as intelligent sensors or RFID tags, to improve efficiency, visibility, and accuracy across the value chain.
Cloud Project’s Requirements for Success
A few key factors will determine whether blockchain (the cloud) is suitable for a project within the supply chain.
Data Exchange: Blockchain is an ideal candidate for data exchange between unrelated parties.
Trusted Partners: As blockchain updates must be made by multiple parties unrelated to each other, it is vital to have confidence that you can trust all the partners in the project.
Shared Value: If the project is of value to all parties, they will be encouraged to adopt the technology and the processes that make it work.
- Defined Data Standards: All partners can use a consistent, well-defined process, and data standards will ensure data accuracy. It is ideally a standard like electronic data interchange or EDI.
- Integrated: To get the best out of blockchain, it should be integrated with existing tech stacks, such as an enterprise resource planning system (ERP).
Cost Versus Benefit Analysis: It is crucial to consider the computational costs associated with blockchain in addition to capital costs. Transactions made through the cloud can have different costs. For example, it depends on how quickly they must be completed. These transactional costs are often overlooked. As a result, the viability of a project is impacted.
These elements will not be present, so it is unlikely that the project is worth your time.
Leading Organizations Already Leverage Blockchain’s Potential
It is still an emerging technology, so it may not be a good idea for companies to implement. Many companies have already put the blockchain’s capabilities into use in their supply chains.
- FedEx incorporated the blockchain in its chain of custody to improve traceability, provide a trustworthy record and address customer disputes. The company is also a Blockchain In Transport Alliance (BiTA) member.
- DeBeers uses the blockchain’s tracking technology for monitoring the source and progression of each natural diamond they mine. In addition, the Tracker app helps address consumers’ concerns about ethical sourcing.
- Walmart is taking a serious interest in blockchain and piloting multiple programs powered through Hyperledger Fabric. For example, the retail giant uses the blockchain to track the origins of mangoes in America and track the sale of pork in China.
Blockchain’s role is a catalyst for global economic transformation. However, currency is only the beginning. Blockchain technology offers the powerful potential to provide further control and visibility to the supply chain than ever before. As a result, blockchain technology holds the key to unlocking lower prices, greater efficiency, and more robust positions in a competitive market for businesses ready to embrace the new face of supply chain management.
Image Credit: Karolina Grabowski; Pexels; Thank you!