Long ago, supply chains were relatively simple because commerce was done locally; now that manufacturing is mainly global, supply chains are incredibly complex.
Nowadays, it’s awfully problematic for customers or buyers to recognise the value of products because of the lack of transparency in our systems. When mistrust of illegal or unethical practices, supply chains become extremely problematic; consequently, vendors and suppliers are looking for answers on who needs what, how, and when, and to what extent blockchain could be the solution.
What exactly is the blockchain?
- It is essentially a decentralised-distributed digital database.
- The blockchain is an information-storage system.
- It is secure and anonymous.
- It operates with the cryptography, meaning free of manipulations.
- It is a succession of text files incorporating the information that we want to save, forming a chain of blocks.
- Each block contains the data from the previous block and this one from the former one.
- he blockchain in all devices make up the network and keeps a copy of such systems. It is the feature that makes the recorded-info highly protected and impossible to be manipulated.
- The blockchain automates agreement transaction taking place in the SC processes.
- It is not a centralised-single server; each user searches on this server for info.
A cryptocurrency (Bitcoin), is the most used form of Blockchain. It has many functions, useful for any exchange, agreements/contracts, tracking and, indeed, payments. Business contracts are kept in copies of the block ledger, and then distributed over many nodes; it is highly transparent and secure, as every block links to the one before it and the other after it.
There is no one central authority over blockchain, becoming extremely efficient and scalable, positively impacting everything from warehousing to delivery to payment. Blockchain has the “chain of command” built-in it, representing accountability, reliability and integrity in the SC, plus consensus of all the parts involved, as it prevents from any heated discussion related to transactions because all entities count on the same version of the ledger.
Everyone in it can see the chain of ownership for an asset; everything necessary for reliability and integrity in a SC is provided by it. The resulting data cannot be deleted or alter, which is essential for a transparent SC.
Examples of blockchain used in supply chains today
There are already examples of micropayments through the Blockchain that sell their data, and electric cars that trade electric power between themselves at recharging points.
Given that Blockchain makes it available the transference of funds anywhere in the world through Bitcoins, without using conventional banks, it is very suitable for a global SC. For the food industry, it’s imperative to have firm documentation to track down each product to its starting source. For instance, many top companies use Blockchain to keep track of where each piece of meat come from, processed, stored and the sell-by-date from different businesses countries.
Blockchain helps a mining company to better track and record data throughout the mining process. It will both boost productivity internally while letting any company get more efficient communication with all stakeholders. The transparency related to blockchain lets consumers know they are reinforcing organisations while sharing the same values of environmental practices and sustainable manufacturing.
See blockchain as an opportunity providing enabled-solutions to improve efficiencies and reduce costs for the industry. Recognise the value of transforming your supply chain and logistics industry.
This article was originally published on the Prophetic Technology Blog.