How Blockchain is Changing Supply Chain Management?

Although the concept of blockchain stemmed from Bitcoin back in 2008, this technology has found its use cases in retail, real estate, automobiles, finance, healthcare, and other sectors. These industries require strong supply chain management to ensure that operations are secure and that the goods and components involved are easily traceable. Now, this is where blockchain technology comes in, providing strength to supply chain management by delivering its supply chain solutions. To gain a better understanding of this, we will explore the blockchain’s role in transforming supply chain management in more detail in this article. But first, what are the unique capabilities of blockchain that bring such change?

Basics of Blockchain Technology

Blockchain technology is basically a decentralised and distributed digital ledger that records transactions across a network of computers in a secure as well as transparent way.

During the transaction verification process, network participants (nodes) validate transactions, and validators add blocks to the chain. Furthermore, these blocks are added chronologically and are designed to be immutable, which means they cannot be changed or removed. Blockchain also employs advanced cryptographic techniques to prevent any changes without network participants’ consent. As a result, it ensures security within the blockchain ecosystem, protecting it from hackers and malicious actors.

In contrast to conventional central databases, blockchain is decentralised in nature and does not require middlemen. Therefore, there is no risk of a single point of failure. This way, blockchain technology provides a secure and transparent way to record transactions without the need for multiple parties or centralised control.

Challenges in Traditional Supply Chain Management

In order to understand how blockchain assists in supply chain management, it is critical to know the current challenges in the supply chain. Fundamentally, the supply chain includes numerous participants, from suppliers to retailers, making the whole system quite complex and causing issues like

• Counterfeiting is common in industries like pharmaceuticals and electronics.
• Involved goods cannot be precisely tracked at all stages.
• The lack of transparency makes it difficult to verify authenticity and detect fraud.
• Manual intervention leads to inefficiencies, delays, and higher operational costs.
• Supply chains rely on outdated systems that are prone to errors and delays.

Potential Of Blockchain In Supply Chain Management

Blockchain operates by recording transactions on a distributed ledger that only authorised parties can access. In the supply chain, blockchain functions similarly. For example, when a product moves through various parties and locations before reaching the customer. Now, if the service provider uses blockchain to record the complete product journey on a distributed ledger, it can provide significant benefits, including transparency, security, and accuracy. Additionally, partnering with a professional blockchain development company like Webcom Systems can enhance these advantages even further.

Cost Cutting

Blockchain cuts the need as well as the cost of hiring and managing excessive administrative overhead. This is because blockchain-based supply chain solutions automate tasks with minimal manual intervention.

Efficiency

Automation in supply chain management not only cuts costs but also improves efficiency in operations. Thus, the use of blockchain-based supply chain solutions eventually leads to faster and more timely product market entry.

Traceability

Blockchain technology enables the tracking of a product’s performance and movement, providing transparency and enhancing visibility throughout the supply chain. This allows authorities to easily verify each step in the process, making the supply chain ecosystem more trustworthy and predictable.

Security

Blockchain enhances the security of supply chain management by storing transactions on a decentralised ledger. Additionally, the application of cryptographic techniques further strengthens the security of the supply chain ecosystem. As a result, the data is also protected from manipulation and modification as it is safe from any alteration or deletion.

Sustainability

Blockchain promotes sustainability and integrity in supply chain management. It allows businesses to recognise the shortcomings in their supply chain management and identify ways to reduce their environmental impact. Additionally, it helps them ensure the products are sourced properly, spot any point of contamination, and eventually uphold accountability in their services.

Also Read: Future of E-commerce: – How Blockchain Technology is Shaping

How Is Blockchain Used in Supply Chain Management?

It is quite evident that blockchain has the unique potential to improve supply chain management. Here are some of the ways different industries use blockchain for their supply chain management :

Logistics and Shipping

In the supply chain, end-to-end tracking of goods is crucial but challenging to manage. Blockchain offers a secure approach to tracking goods from the point of their packing to passage through different warehouses and finally reaching the customer. For example, blockchain’s secure record-keeping can assist in transporting extra-sensitive items, such as medications that require extreme care, including temperature management.

Food and Agriculture

With blockchain, tracking agricultural products like fruits, vegetables, seeds, and more can be made easier. This advancement aids in identifying and preventing contamination and substitution issues, ensuring customers receive safe and high-quality goods.

Automotive Industry

Car manufacturers can use an immutable record to track the journey of various vehicle parts and components. It helps them to prevent authenticity problems and enhance supply chain operations.

Healthcare

Healthcare institutions can rely on blockchain technology to address supply chain management challenges such as counterfeit drugs, inefficient inventory management, and lack of transparency. By using blockchain, medication tracking from the manufacturer to the end user becomes easier for ensuring authenticity as well as quality.

Popular Use Cases of Blockchain In Supply Chain

Many businesses have already begun to use blockchain technology in their supply chain management, recognising its potential. Here are some of the leading examples:

• UPS (United Parcel Service) is a renowned multinational logistics company that offers package delivery services and supply chain solutions. To improve its supply chain management processes, UPS has used blockchain integration and built a platform called Inxeption Zippy.
• Ford, a famous automobile manufacturer, has a blockchain-based supply chain system called the “Automotive Blockchain Consortium.” It helps them track and maintain the authenticity of their products across the supply chain.
• Pfizer, a multinational pharmaceutical and biotechnology corporation, has leveraged blockchain technology to power their supply chain solutions.
• Even BMW Group uses the blockchain system to secure their multi-stage international supply chains. These advanced solutions help them easily verify the authenticity of their vehicle parts and halt counterfeit issues on time.
• De Beers, the world’s biggest diamond company, has used blockchain to track diamonds from their origin. It helps them maintain customer trust by ensuring that their products are ethically sourced and conflict-free.

Conclusion

Blockchain is transforming supply chain management by enhancing transparency, security, authenticity, and efficiency. Furthermore, as blockchain technology advances, entirely new business models emerge within the supply chain, leveraging its distinct features.

At Webcom Systems, we are pioneering innovation by providing supply chain solution development services for businesses worldwide. If you want to enhance your supply chain management with blockchain’s capabilities, let us assist you. Contact us today.

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