Blockchain is a disruptive technology that can facilitate verified data communication between all the participants in a supply chain without involving a reliable central organisation. The supply chain involves establishing an ongoing work inventory from raw materials to end production.
Blockchain can enhance transparency across the supply chain by authenticating and recording data in real-time.
Simply put, blockchain is a ledger distributed in a digital format or a database of records or events that are recorded and shared among all the involved parties. Every transaction is time- stamped and confirmed by unanimity of the majority players in the process.
Blockchain technology can revolutionise the supply chain sector. The distributed ledger technology (DLT) can become the backbone of the digital supply chain. The innovative technology aids business entities in tracking and monitoring their products from the origin until they reach the final consumer. The digital ledger is immutable, meaning that the recorded data is unalterable, reducing fraud, errors, and even monitoring costs.
Blockchain initially started as a technology to facilitate fast and secure payments through cryptocurrencies like Bitcoin. However, the technology has recently been used to disrupt other economic sectors, including supply chain, health, logistics, etc. In this article, we look at the applications of distributed ledger technology in the supply chain. Applications of blockchain in supply chain.
Increase Traceability Across The Supply Chain:
Businesses can enhance their supply chain via a more transparent and precise tracking. Through blockchain technology, it is possible to digitize tangible assets and form a decentralised, unalterable inventory of all the transactions, rendering it possible to track the product from its manufacturing point to delivery or use by the consumer.
This gives more clarity to both the business and the end-users in the product they are using. Besides, distributed ledger technology can also help to curtail fraudulent activities in high-value products like jewelry and pharmaceutical meds. Counterfeit products account for more than $450 billion in trade every year as per the Organisation for Economic Co-operation and Development. Moreover, about 10-30 percent of medicinal drugs sold in developing nations are fake. Blockchain technology can effectively help reduce this.
Blockchain Reduces Paper and Administrative Costs:
Blockchain technology can rationalise administrative processes and minimize cost by permitting efficient scrutiny of supply chain information. Procedures involving manual work checks or credit checks that might take a long time can be expedited through a digital ledger of all the information.
Payment Of Supplies:
Blockchain technology enables the transfer of value to every corner of the world without involving traditional banks, since transactions can be made directly between the payer and the payee. Besides, payment through blockchain-based tokens is fast, secure, and affordable compared to traditional payment means.
Blockchain was initially created to facilitate secure, fast, and affordable payments through the Bitcoin network. In supply chain management, it helps to ensure timely settlement between suppliers and business owners.
Blockchain Technology Brings Traceability To The Supply Chain:
DLT enables effective and appropriate proprietorship. Confirming past ownership through systematic licensing processes is essential for many industries. The distributed ledger can be used to license products, services, and software through the implementation of smart contract settlements.
Besides, DLT provides a consensus – meaning there is no disagreement in the chain regarding transactions and information. All the involved players in the supply chain have access to the same blockchain records, allowing them to track ownership history for products and cryptocurrencies.
Supply chains have to undergo a couple of challenges such as time, quality, and cost. Blockchain can easily tackle these problems in the supply chain. The disruptive technology will assist in preventing fraud, misunderstanding, and needless agreements. The general supply chain sector makes headway with blockchain technology’s assistance and sheds more clarity on businesses and the end-users.
Disclaimer: The content in this report is from the open source and for educational purposes only, therefore should not be considered as financial advice. We all know that the cryptocurrency market is highly volatile. Therefore, all the financial decisions should be made after doing your wide spectrum research.