Using Blockchain for Supply Chain Tracking
A supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product, from the delivery of source materials from the supplier to the manufacturer, through to its eventual delivery to the end-user (consumers). A basic supply chain system often involves the suppliers of food or raw materials, the manufacturers, the logistics companies, and the final retailers. Currently, there are loopholes in the supply chain management system which is a lack of efficiency and transparency during the process. There is no ideal system to prove the efficiency and transparency during each stage. However, with the implementation of blockchain technology, this issue can be solved since it provides a distributed system to record, transmit and share data to every party involved with the process.
The Benefits of Using Blockchain Technology
Since blockchain technology is designed as distributed systems, the data in a blockchain is immutable which cannot be changed and modified by any entities. This will benefits the supply chain system due to its transparency and security. A blockchain consists of a chain of data blocks, by using cryptographic techniques to ensure that the stored data cannot be altered.
In this manner, blockchain technology provides a secure and reliable system to convey information. Although often used for recording cryptocurrency transactions, blockchain technology is useful to secure digital data and can be implemented in the supply chain system.
Blockchain technology also helps to eliminate fees associated with funds passing into and out of various bank accounts and payment processors. These fees cut into profit margins, so being able to take them out of the equation is significant.
Most supply chain companies rely on the Electronic Data Interchange (EDI) systems to send business information to each other. However, this data frequently go out in batches, rather than in real-time. If a shipment goes missing or pricing changes rapidly, other participants in the supply chain would only get this information after the next EDI batch goes out. With the implementation of blockchain technology, the information is updated regularly and can be quickly distributed to all entities involved.
Blockchain ensures document immutability, and the agreements can only be changed if all involved parties reach a consensus. Thus, the organizations involved will spend less time with their lawyers going over the paperwork or at the negotiating table while having more time to develop new products or promoting business growth.
Blockchain technology can improve the supply chain system in many ways, from production and processing to logistics and accountability. Every event can be registered and verified to create transparent and immutable records. Therefore, the use of blockchain in the supply chain certainly has the potential to eliminate areas of inefficiency that are so common in the traditional management system.
