7 Ways how Block Chain will synergize your Supply Chain
- April 8, 2017
- Posted by: Upinder Singh
- Category: Block Chain, Supply Chain
The Blockchain is the technology which enabled the use of the payment system and digital asset called Bitcoin. The Blockchain technology has a lot of potentials to synergize your supply chain. According to some of the Block Chain Experts, the invention of Bitcoin is one of the prominent inventions after the Internet.
The question is what a Blockchain technology is? It is the distributed database which holds all the digital events and data in such a manner that the database remains tamper-resistant. The internet helped us to communicate with people from all over the world, and Blockchain gives us the power to access the information of any event on the database while also adding information to the database. However, the users cannot alter or delete the data in the database. The original information remains the same while leaving a public and permanent trail of information or the transaction chain occurring.
For instance, in the case of banking transaction, the single statement is a block in the blockchain database. And no bank or organization controls or is responsible for these operations. The information on the operation will only change if the majority of users agree to the modification. The blockchain is a mechanism of record-keeping which makes the businesses over the Internet safer and quicker.
When it comes to the question of how will the Blockchain technology improve the supply chain, there are many good reasons. Here are seven ways to name the ways in which Blockchain is going to provide a great help.
Provides transparency and security
One can think of the many possibilities that the Blockchain technology provides to the supply chain with its transparent and secure transaction. Every time there is an operation of a product it gets recorded in the database which creates a permanent history of the product from its manufacture to the sale. The recording reduces the extra costs, delays in time, and also the error caused by humans which usually takes place at present transaction process.
Blockchain database is unhackable
Blockchain shows potential to fix the problems with the current supply chain problems. In the blockchain paradigm, there would be registration of the goods transfer on the ledger when the parties involved will identify themselves. And the other relevant information such as the location, price, state, quality, and location will get added to the ledger as well.
And due to the availability of the database publicly, anyone can trace the product to its origin as raw material. The structure of the database is decentralized which makes any party to get the ownership of that database impossible and they cannot use it to their advantage. The immutable and cryptographic nature of all transaction makes the controlling of ledger impossible. According to some Block Chain Consultant, Blockchain technology is not hackable.
The Smart Contracts for smart transactions
Another great thing about doing the transaction through the Blockchain is the smart contracts. Through the smart contracts, the transaction would only occur if it satisfies all the conditions of the operation. The rules of the business would be present in the database and systems can check if all the conditions are okay and then the transaction would proceed.
For example, the supply of tulips seed requires the box of the seeds to remain below some threshold temperature. And if the temperature rises above this temperature value, the seeds would no longer be useful. One could add the Blockchain technology in this situation. If we make use of the IoT devices such as a thermometer in the box we could check the temperature condition all the time with the public database of Blockchain. And if there is a rise in temperature, the thermometer would indicate in on the ledger. The system would check that there is exploitation of the condition and hence cancel the deal.
The smart contracts have proven to give the blockchain companies with visibility at a granular level for every stage and saved the industry from any fraud and theft. The IoT devices connected to network helps to track all the movement of goods. And Walmart is in the process to adopt this technology for the pork supply from China.
Elimination of the third party
The network of peer to peer in the Blockchain technology excludes the third party in the process of procurement and transaction entirely. But it does not imply that the Blockchain allows any two sides to have the power of authenticating any transaction among themselves. The Blockchain technology does not require a third party to confirm the transaction between the parties. At present, to initiate any transaction such as money transfer with the second party, we would first have to notify about it to the bank and the other concerned authorities. And after the authority checks, if you have enough balance, the authority would authenticate the transaction. Then the money transfer would take place to the second party. But the Blockchain does not require the bank to confirm the transaction. In this way, the process would get faster, and you would not lose money on the bank services.
Trust from the consumers
By providing the details on the supply of the products, the supplying party can retain the trust of their customers. The consumers will be able to know and trace the origin of any product. The Blockchain technology provides such power to the users. By providing consistent live and connected updates on the real-time operations, the customers can make sure of the product they are using is the same as promised by the contractors. The tracing would not have been possible without the Blockchain technology. And since the data is permanent which means no one can change the data easily, the consumers can remain assured of the authenticity of the data.
Reduction in the auditing errors
Banks might be not capable of identifying the possibility of overpayments or the overbilling in some cases. But the Blockchain technology can easily address to such convoluted situation. The technology can solve such cases of confusion by generating a finite number of paper-trails and then isolating the key impediments of the combination of information. Now, the company can check all the operating systems which were affected by checking the data and use it to improve the preventive capacities of the systems.
Improvement in scalability
The block chain technology can help the organizations to plan for the future strategies for their business, remain free of any malicious activities, and the best part is it allows the newcomers to enter the space efficiently. One can leverage the technology to get a view on the future trends of the business system.
Clearly, the Blockchain technology is a game-changer. It holds power to disrupt the ways of goods production, marketing, and consumption. And the technology also provides the users with efficient tracking and customer feedback. There are a lot of possibilities with the technology in the future. It could heighten the way of connectivity by combining with the Internet of Things, supply chain, and the advanced logistics.