A supply chain is a system of organisations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities involve the transformation of raw materials and its components into a finished product that is delivered to the end customer.
In simpler words, the supply chain is a link that facilitates the supplier/manufacturer to transfer his product or service to the ultimate consumer.
Supply chains are quite complicated and obviously, efforts are made to simplify this process and reduce costs. Just because so many middlemen are involved in the supply chain management process, the biggest barricade becomes uncertainty, especially of payments. It usually takes a lot of time for transfer of money between the manufacturer and the supplier or the ultimate consumer and the supplier. Be it for industrial equipment, food products, consumer goods, or digital offerings, supply chains usually face this loophole.
The blockchain is one solution that has come to light especially after the popularity of Bitcoins. Blockchain is a distributed electronic database that holds records of digital data and makes them tamper-resistant. While many users may access, inspect, or add to the data, they can’t change or delete it. The original information stays, leaving a permanent and public information trail, or chain, of transactions,
In short, blockchain is a record booking mechanism that makes it easier and safer for businesses to work together over the internet.
The effects of blockchain in Supply Chain Management
If blockchain technology allows us to more securely and transparently track all types of transactions, imagine the possibilities it presents across the supply chain.
Every time a product changes hands, the transaction could be documented, creating a permanent history of a product, from manufacture to sale. Blockchain in supply chain management could dramatically reduce time delays, added costs, and human error that plague transactions today.
The impact of blockchain in Supply Chain Management
- Recording the quantity and transfer of assets – like pallets, trailers, containers, etc.
- Tracking purchase orders, change orders, receipts, shipment notifications, or other trade-related documents
- Assigning or verifying certifications or certain properties of physical products; for example determining if a food product is organic
- Linking physical goods to serial numbers, bar codes, digital tags like RFID, etc.
- Sharing information about the manufacturing process, assembly, delivery, and maintenance of products with suppliers and vendors.
In a nutshell, blockchain in supply chain management can transform the supply chains, industries, and ecosystems. Interestingly, even organisations like banks, who would seem to be losing out, can see opportunities to use blockchain to streamline their own business. In-depth transformation of supply chains will not happen overnight. However, starting to use blockchain in supply chain management for small portions of their operations can help eliminate costly delays and waste currently due to manual handling of paperwork. From there, the door is then open to smarter, faster, more secure supply chains from one end to the other.
About the author;
Jyoti is a budding and aspiring blogger who’s area of interests are Supply Chain, Logistics, Retail Logistics, International Freight etc. Jyoti tells us ‘being a writer by profession and by choice I like to contribute to various quality websites especially those who talk about my area of interests. We grow by making people happy and successful’.
Jyoti Sharma, Consultant/Writer