Blockchain is a technology that has expanded across multiple sectors including production, IoT, AI, fintech, and banking among others with an unbelievable speed. Due to its features such as transparency, traceability, and improved performance, the technology has become a favorite pick for tech experts.
Some common applications of Blockchain that you might have heard often are cryptos like Bitcoins, smart contracts, secured chatbots, and cybersecurity. However, from the perspective of supply chain management, manufacturing companies are adopting the technology with a speed unlike ever before.
Statista reports say the blockchain technology is expected to touch a global spending value of $19 billion. The major contribution of blockchain revenue is credited to manufacturing companies, customer service providers, banking, and financial companies as well. For tasks such as cross-border payment settlements, elimination of third parties, enhanced cybersecurity, and more, blockchain is used as a reliable technology.
What is supply chain management?
Before we proceed and discuss a few benefits of blockchain operations, let’s understand supply chain management in simple terms. Supply chain management, as the name suggests, is managing the process beginning from production to delivery. Stages such as inventory management, shipment, etc., are taken care of under the supply chain management processes. Here’s why Supply Chain Management (SCM) is gaining momentum across industries –
Companies are able to cut costs and reduce wastage of deliveries
The time invested into the shipment process can be reduced
Raw materials can be monitored and sourced more conveniently
The entire process can be better tracked and transparent
Automatic authorizations eliminate the human error
Consumers receive deliveries faster
Helps in creating a smarter shipment procedure for temperature-sensitive commodities
With predictive analytics, inventory requirements can be predicted
Why are blockchain applications needed in the SCM?
Well, that is a question that you should certainly focus on; especially if your businesses deal in the continuous distribution of produced goods in different markets. Furthermore, let’s discuss each blockchain benefits that are brought on the table to power a smoother supply chain management process.
1. Financial settlements
To ensure smooth financial settlements, blockchain paired up with technologies such as Smart Contracts can be used to eliminate the requirement of manual approval of payments. The blockchain in supply chain tasks can be useful in processes such as raw material order placements, settlements of taxes, and payments. Smart contracts are a set of rules and conditions that are uploaded on blockchain servers to automate such settlement processes. Segments like insurance companies are already using its advantages.
2. Cost-efficient supply chain
Blockchain and supply chains can coexist to ensure a smoother and more efficient inventory management process. There are a few ways that can make it possible-
Keeping a track of inventories to forecast and place orders of raw materials according to demands
Using the best possible cybersecurity protocols to eliminate losses caused by cyber threats
By keeping a track of the wastage and establishing proper recycling channels with the help of blockchain features such as traceability
Reducing the need of hiring third parties to manage inventories and place orders
Reduced need for buffer stocks by keeping a real-time track of stocks
Speedy insurance claim processing to recover unpredictable losses
Keeping an eye on any possible hardware or software glitch in the real-time
Using IoT to keep real-time tracks of incidents such as theft attempts, rerouting the shipment, etc
3. Protection against contamination
Blockchain-supported supply chain technology paired up with IoT sensors is useful in automating processes such as scanning and registering stocks. Scanning stocks for data such as their ID, condition, temperature, etc can help authorities in keeping a track of the condition of such stocks.
Not only it can be useful in identifying if these stocks are up to the quality standards or not, but blockchain with IoT can also be useful in recording the conditions of stocks on each checkpoint throughout the shipping route. Tracking the real-time conditions of stocks can help in identifying and filtering contaminating stocks that otherwise would get delivered or ruin other stocks too.
4. Smarter supplier relationships
With features such as smart contracts, blockchain usage makes it easier to onboard suppliers on a supply chain network. Moreover, healthier relationships can be built with these suppliers through blockchain implementation by automating processes such as transactions, order placements, tracking of the origin of products, etc.
IBM blockchain, for instance, also offers an AI that can detect and predict any possible anomalies causing disruptions. Relatively, as blockchain is known for its immune records that can neither be modified nor deleted, the digital supply chain can be more reliable for all parties involved in the process.
5. Improved traceability and transparency
To build better trust between sender and receiver of shipments, enhanced transparency, and real-time status are required. Thus, the transparency feature of blockchain supply chain systems can be really helpful. With the Internet of Things (IoT) sensors, it will become much easier to ensure that shipments are on schedule, on routes, and in the proper conditions. Also, the data collected through the server can be helpful in predicting accurate delivery schedules for future shipments as well irrespective of quantities or distance.
Well, these were some of the top usages of blockchain in supply chain systems that make the process smoother. As businesses are now onboarding digital platforms and trying to automate their multiple processes, technologies such as blockchain ensure better security and transparency. Also, with blockchain logistics, segments such as pharmaceutical companies have the freedom to handle and monitor sensitive shipments better.
However, blockchain benefits are mainly dependent on other technologies such as Artificial Intelligence (AI) or IoT. But including all these technologies in the digital supply chain is only resulting in a more efficient supply chain network and companies such as WallMart or Amazon have already adopted these logistics innovations.
Vikram is an experienced wunderkind, who embraced technology at a very early age, and today he is at the helm of it. Mobile apps are something that excites him the most, and now he is up to give this vertical the best shot. He routinely catches up with the new apps and comes up with the top apps that can excite you to the core.
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