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Why is Blockchain mandatory for supply chain management?

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A good supply chain is the one who fulfills organizational goals efficiently, providing maximum value to its customers and enhancing the network relationships. Also, an ethical supply chain has to effectively track raw material sourcing, the process of converting raw materials to finished products and monitoring the distribution network as well.

 

What is supply chain management?

Supply chain management is the process of managing the movement of goods and services; including the movement of raw materials to finished products and managing inventory at every stage. It’s not limited to only keeping track of the goods and services, but also helps organizations plan, forecast and control activities to help them achieve the global requirements on time.

Where is the catch?

Most of the existing supply chain management software and programs are fairly reliable and are helping small businesses or even corporations solve their relative supply chains. But, a supply chain also helps companies make forecastings with reference to their historic demand and supply trends.

Now, traditional supply chain management systems run with the help of different stakeholders in their respective levels, regions and efficiencies. Dependency on all these stakeholders would reduce the visibility and reliability of the entire supply chain management system.

 

Also, a supply chain system does not only affect organizations. It affects end users, suppliers and banks. As they also play a crucial role in any supply chain. So, when a risky supply chain has been deployed there are chances a company would end-up making losses as procurements, supplies distribution and inventory shortage might take place in the system.

 

Above that, a primary concern of the supply chain is to reduce overhead of the payments and invoices load. As a supply chain always has to deal with a huge amount of supplies and suppliers, they often struggle to meet the needs and payment cycles.

 

So, how can Blockchain save our supply chain management?

 

As we know that a supply chain would keep a track from raw material supply to production and distribution. When we talk about the raw material supply in the system; many frauds and improper implementation of the system take place. These tiny errors increase overhead costs and issues in the calculation in the entire system resulting wastage of man-hours, resources and cash-flow.

 

Here are some benefits Blockchain could bring to Supply Chain Management systems:

 

  • Transparency

 

A Blockchain allows all the authorized participants to see data and transaction history of the system. In our current systems, an end user can never track the actual origin of the good and whether the trade was made with the government provided compliance or not. Or, similarly the middle man would not be able to identify if the producer has maintained the compliance standards while producing the goods and so on.

 

In that case, Blockchain can come as a saviour. All the data would be stored in the form of Blocks, which would make sure that the process which tool place to produce final goods would be there and no changes are made in the data.

 

Blockchain is an open-source technology plus it does not allow any hidden accounts to take access to our data in the system. Which makes sure that it stays transparent in all means to the actual users. Plus, Blockchain generated ledgers are useful when you are looking for an error in the entire system, as they do not carry any issue with them and are maintained via your system only.

 

  • Better collaborations

 

Blockchain based supply chain management systems would establish a better collaboration between buyers, suppliers, workers and banking systems. Where normal supply chain management systems would not make all the stakeholders a part of the system, Blockchain would allow every stakeholder to check the process and be a part of it.

 

  • Lowers Cost

 

Blockchain does not only help to increase the visibility in the system, it also helps minimizing human interaction and resource wastage to validate small things. When lesser human effort is required and lesser intermediates are there to hinder the process flow, costs would surely go down compared to our current supply chain management systems.

 

  • Relatively faster 

 

Lesser intermediates and connecting links reduces delays in the system. Once the system is implemented properly, the entire thing would run automatically making things faster and reliable. At both the end of the system, the transactions take place simultaneously decreasing the amount of time spent on it. Also, Blockchain allows you to update the ledger automatically taking the gap of implementation and making records away.

 

  • Trust 

 

As Blockchains are developed fundamentally to become irrevocable store immutable transactions in the system, it increases the reliability of a supply chain management system. A human cannot make changes in the system without making the system aware of the transaction and nobody can wipe out the inserted data. 

 

How would Blockchain and supply chain management go together?

Blockchain is already bringing a positive shift in the world. Even the United Nations used it to fight world hunger and many more Blockchain use cases are going live in the world.

 

Some of the automobile giants have already initiated using Blockchain in their supply chains to know how they can control CO2 emissions from their suppliers to final products to decrease their carbon footprint. Also, when we talk about sustainability in the supply chain systems, Blockchain’s transparency would bring fair wages to workers, help us track the source of corruption and ethical sourcing of goods.

 

But, what about Blockchain in supply chain management systems? Well, although Bockchain is reliable and looks cheaper from the shore, the actual cost of running a system with the help of Blockchain is not clear yet. Setting up an in-organization Blockchain is easy, though with n-number of unknown third parties, Blockchain might become more complex than its alternatives.

 

Overall, Blockchain is the technology which would bring a positive change in the supply chain management system. But let’s see how fast and efficient things work.

 

50 thoughts on “Why is Blockchain mandatory for supply chain management?”

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