The incorporation of blockchain technology will result in significant cost-cutting and operational efficiency in the supply chain transactions.
FREMONT, CA: The supply chain comprises a complex network of components and processes involved in moving a product from supplier to customer. Due to the various entities involved in the supply chain, it is difficult to maintain transparency in the product delivery life cycle. Lack of clear communication among the various parties is another aspect where supply chain lags. Blockchain is a promising technology that can address the above problems.
Blockchain can offer useful contributions to any form of agreement, exchange, and tracking process. The decentralized nature of blockchain allows it to maintain several copies of a transaction. Any attempt to falsification will require the tampering of all the nodes. Thus, blockchain can significantly enhance the transparency in supply chain transactions. Each supply chain gets stored on a digital ledger, which can be accessed by the players involved with that particular supply chain process.
For the supply chain agreement, a smart contract consisting of a unique software program can be used. The software uses blockchain technology to execute an agreement. The software program is stored on the blockchain, so the smart contract can only operate according to its programming. Moreover, if a transaction is not met in time, a smart contract can initiate a reactive measure.
The real-time tracking capability driven by blockchain incorporation can also result in significant cost reduction in the supply chain. The application of blockchain in the administrative processes automatically offsets the cost associated with manual handling of the situation. Further, blockchain also eliminates several middlemen and intermediaries in the supply chain, thereby eliminating fraud. Blockchain allows payments to be processed with the aid of cryptocurrency.
Moreover, the risk of losing products will reduce while the efficiency of the supply chain will increase with accurate recordkeeping of products and transactions.
Blockchain can play a key role in instigating trust among the various supply chain players. Trust among the supply chain participants is an important prerequisite for smooth operations. For instance, when it comes to regulatory compliances like custom enforcers, trust plays a crucial role. The immutable nature of blockchain is well-designed to prevent fraud and establish trust.
Thus, blockchain offers an efficient alternative to carry out supply chain transactions.
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