Impacts of BlockChain to Supply Chain Management
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Back then, supply chain management was an ever-complex transaction. It was a costly operation given the manual need to ensure whether the services and products brought to clients and customers met their needs. Not to mention the expensive administrative tasks and the cost of data storage.
With the emergence of technological innovations, managing business activities have become more accessible and provided more profits and achievements. The supply chain management function has embraced a vital tool that would now take it to a revolutionary step: the use of blockchain.
So, what is blockchain? And how did it emerge? Blockchain is a digital ledger that provides automated transactions, digital file storage, and tracker to the advantage of businesses. It is one of the greatest innovations used in the 21st century, started by Stuart Haber and W. Scott Stornetta in 1991. Their work was designed to secure documents using a cryptographic system. In 2008, the blockchain became relevant thanks to the creation of Satoshi Nakamoto. Although he was not the founder of blockchain, he was considered to be the brain of innovation.
In 2009, he released a blockchain whitepaper that described the use of the technology to provide digital trust with the decentralized security it offers. The blockchain was applied using a digital wallet called Bitcoin. After he handed it over to new core developers, it evolved, resulting in numerous applications. Slowly, blockchain became widespread and embraced innovation in the financial world, but along the way, various industries did relevant experiments which opened them outside the financial services alone.
Among those that embraced blockchain innovation was the supply chain enterprise. Whether you are planning to improve your current organization or open a new business, this article is for you. Read on to find out more.
Here is the list of the blockchain’s impacts to the supply chain management that you should know about:
1. Assures Transparency and Credibility
Transparency is an essential aspect of business activities. It holds power to create a reputation when protected or a downfall when a company fails to deliver it. Most importantly, it builds a good relationship between the business and its customers.
The use of blockchain in supply chain management has given it a more secured and assured transparency opportunity. It allows the organization to track its transactions and activities. This includes the accurate traceability of the product or service information, including delivering the goods from the warehouse to the customer’s locations. This visibility allows the organization to review the gaps that needed improvements and the success rates on every transaction while improving and assuring customer experience. This is because it provides detailed information to the clients about the product or service, whether accredited and law-regulated. It also reveals the quality, origin, and history crucial to substantiate product or service claims and ultimately soliciting the trust of the potential customers.
2. Reduced Cost
Reduced cost is a vital gift of the use of blockchain in supply chain management. The cumbersome paper works and administrative costs are eliminated given the usage of digitalized set-ups.
As corporations competitively aim to expand their empire in the different parts of the world, they embrace technological innovations that would ensure them with efficient and low-cost results. Lower costs mean higher profits which is crucial for company growth.
This is why blockchain has become an imperative tool to businesses or organizations as it brings favorables results.
3. To stay competitive
Competition has always ruled the industrial world for years, and it will be so for other generations to come. Various organizations and businesses have either embraced new technological advancements or generated secret methods to ascend to the top of the market chain.
With the rising numbers of competitive organizations in the industrial world, having an edge and sustaining competitive products, services and transactions are crucial for recognition in the market area. The use of blockchain offers this massive opportunity for the organizations using it. This is because of the ensured efficient and more cost-effective result it brings.
Since there are still organizations that are yet to use blockchain, those who can utilize the experiment use of this innovation will have the edge of smartly applying it in their operations and progress. And, remember, gain and profit come together.
4. More Secured Company Information
Classified or confidential information is an important asset that would define the progress and future of the company. It holds confidential transactions, activities, and other crucial information that could result in its downfall when fallen to the prying eyes. This is because competition in capitalist industrial societies is inevitable.
However, with blockchain, transactions, activities, and other information that are kept are secured. Once they are stored, they will not be tampered with or altered. Blockchain uses a unique cryptographic system that requires approval before any access to the confidential files is made. This helps prevent theft, fraud, and unauthorized activities from pushing through. More importantly, it will be difficult for cyber hackers to access them since the records are stored across a network of computers.
5. Improves and ensures product/service quality to customers
Gaining customers’ trust is one of the top priorities of every organization as they will serve as potential frequent customers or clients who will soon bring up the reputation of the organization through the positive feedback they will be providing.
The previous set-up in the supply chain management, which is traditional, gave results that are not as promising as that of the blockchain managed supply chain system. It was prone to human error and was challenging to keep track of the records, changes, gaps, and transactions, especially during the delivery of goods and services.
Blockchain in this position is a game-changer. The organization can easily trace the products and quickly alert when changes or problems arise before or after the product was delivered to the customer. And they can sort out solutions in favor of the customer’s grievances and concerns. Another significant contribution is the assurance of authentic products. Lastly, compared to the traditional system, blockchain-operated operations are comparatively faster.
6. No more laborious and time-consuming operations
Before blockchain was introduced and embraced by organizations, administrative paperwork was inevitably used in the transactions and activities of the organizations. These were deemed time-consuming and painstakingly laborious that even took a lot of money. However, this problem was reduced or eliminated with blockchain as the paperwork, and manual monitoring of transactions was converted to digital ones. Tracing the progress of deliveries and conditions of the products became much more manageable.
Blockchain allows the authentic ownership and licensing of supply chain management. It verifies and tracks the previous owner through systematic and standardized licensing procedures, vital for any industry. This innovation also assures the consensus, which blocks disputes in the transactions under the supply chain system.
To understand better the booming impacts of blockchain on the supply chain management, let us hear from the examples of other industries on how they benefited from the blockchain:
- Pharmaceutical companies and the food industry
The processing of food and drugs is a complex process that goes through various procedures from harvesting, manufacturing, and delivery that can lead to problems with a single misstep. The blockchain in the food and pharmaceutical industry helps identify the safety issues or contaminations in their products before they are hauled to the customer’s door or before their customers fall ill.
These two industries fall under the government’s regulations with the different organizations such as the FDA that are monitoring food labels, hygiene, and product sources. A single lapse in the product could risk the reputation and bankruptcy of the company. This is why using blockchain has helped avoid such trouble even in terms of complicated management inventories, slow product innovations, inefficient product verifications, costly audits, lack of transparency in labeling, etc.
- Financial Industry
The financial industry was the first to use the blockchain before other entities embraced it. The financial sector has gotten tremendous help from the blockchain in various ways, just as it did with the food and pharmaceutical industries. One benefit gained from blockchain was the opportunity to secure confidential information that is crucial to run their companies and keep their client’s trust.
Those are the examples that are just the tip of the iceberg on how blockchain caused a revolutionary change in the industrial landscape. The bottom line is, blockchain provides a structure for tracking and saving data in a more accurate, secured, and effective way, much to the advantage of supply chain management. This way, human errors are avoided, intelligent contracts are ensured, assets and liabilities are more recognized and separated, paving the way to more efficient business operations.
Now that you know how it solves the inefficiencies, better use it to improve your current company and explore ways you can fully utilize it to obtain an edge over your competitors. And if you are just about to start a business, I highly recommend using blockchain to ensure profitable and effective operations that would eventually lead to your company success.