How is blockchain technology improving supply chain management?
Amid countless technologies that continue to present promising opportunities to the supply chain industry, blockchain has emerged as a critical innovation, with the potential to revolutionise digital supply chain management.
With supply chains growing more complicated by the day, using blockchain technology can help organisations record relevant information more efficiently, making way for improved transparency, better traceability and reduced costs.
What is blockchain?
In simple terms, blockchains mean digital information (the blocks) stored in a public database (the chains). A particular party does not own the data stored in a blockchain but instead is collectively shared by everyone who is a part of the whole network of blockchain.
The core of this technology being immutability, i.e. while multiple stakeholders can access the recorded data, no record can be erased, thus ensuring transparency.
Key areas where using blockchain can help you drive supply chain efficiencies:
Transparent transactions at all times
Blockchain technology helps speed up transactions and brings greater transparency as there is no other intermediary such as a bank involved in the process. Moreover, the ledger gets updated automatically, making the process faster and easier.
To ensure that the payment is visible only to the authorised participants, payment conditions can be set accordingly beforehand. As each transaction is immediately apparent to the authorised party, there is no scope to tamper any information added to the blockchain.
Blockchain can help supply chain professionals effectively record price, location, date, quality, quantity, source and other relevant information. With all this information stored in the blockchain, the traceability of materials in a supply chain can be improved and increased by several folds. An outcome of this can be reduced losses from the counterfeit and black market, enhanced visibility over the functioning of your supply chain and more.
Trustworthy channel, safer payments
With its decentralised nature, blockchain doesn’t have a single point failure. In addition to that, the risk of fraud gets wholly eliminated as the transactions processed on the blockchain are 100% immutable, making it an ideal medium particularly for paying for high-value goods.
Smart contracts and agreements
With blockchain technology contracts and agreements can be made digitally within no time. It has transformed the way payments are made in supply chain management. When organisations use smart contracts, you can hold funds in escrow accounts (third party accounts where funds are kept before they are transferred). These funds get released automatically along with goods.
Streamline operations and administrative processes
Blockchains make it possible to streamline administrative processes and operations with the help of effective audits of the data generated by your supply chain. The otherwise time-consuming methods can be accelerated with the ease in distributing and accessing information that the innovation gets along.
Besides, with blockchains, you know the transaction fees for cross border payments well in advance as against the traditional methods where the cost is deducted only after the transaction is made.
The technology can also help you gain better control over outsourced manufacturing. As every concerned person within the supply chain has access to the same information, less time is spent in communication or correcting errors that happen while transferring data.
The next big thing…
The pace at which blockchains have grabbed the attention of various industries, it appears to be the next big thing in the supply chain industry as well. With its ever-growing popularity, using blockchain technology may even become a norm in the logistics and supply chain management in the years ahead.
For information on how GoComet can help you build a resilient and agile supply chain, reach us here.
Also check out our Sailing Schedule and Freight Index modules