Blockchain Technology Set to Revolutionize the Supply Chain
Many businesses know that supply chain management is vital to success.
After all, if you can’t get your inventory where it needs to be — as quickly as possible — you could be in trouble.
Being able to manage your supply chain in an open and easy manner is vital. You want to streamline the process as much as possible for maximum efficiency.
Interestingly, blockchain technology offers some help in this area.
Rather than thinking of blockchain technology in terms of cryptocurrencies like Bitcoin, it’s time to consider other applications. While currencies based on blockchain technology offer their own advantages, few of us think of other applications for this development.
However, there are scientists and others looking into various uses for blockchain technology. And one of those uses is in supply chain management.
Blockchain Technology = Perfect for Supply Chain Management
Blockchain technology is all about the distributed public general ledger. This is what makes it perfect for supply chain management.
In a recent article for Harvard Business Review, you can read about how well blockchain works when it comes to the supply chain.
One of the biggest problems faced by companies with complex supply chains is a lack of transparency. Sometimes, if you have multiple suppliers across multiple states and countries, it can be hard to keep track of everything.
Pinpointing issues can be difficult because of all the moving parts. This is where something like blockchain can shine, according to the Harvard Business Review article.
Because of the way transactions are recorded and tracked using blockchain technology, it makes it much easier to see everything happening in real time. It’s possible to monitor transactions, and the general and public distributed ledger means that you get updates and see what’s happening every step of the way.
Members of the network can see what’s going on as it happens. Plus, this system helps keep all those involved accountable for their end of the bargain. It’s a great way to get the whole picture, as well as drill down to individual aspects of the supply chain.
Smart Contracts and Using Blockchain Supply Management
One of the reasons blockchain technology is so great for supply chain management has to do with the fact that smart contracts are a major part of the system.
There are several potential business applications for blockchain technology. One of those applications is the use of smart contracts.
With smart contacts, all the interested parties can see the terms of the agreement. On top of that, the agreements enforce themselves. In order to move forward, certain expectations have to be met. When the signatories meet those expectations, the contracts can be fulfilled.
This is a great way to enhance your supply chain management. With the use of smart contracts, you can make sure different suppliers are meeting their obligations. You can see deliveries at multiple locations, and track shipments based on the fulfillment of smart contract terms.
And, because it’s all managed with a public distributed ledger, it’s easy to see what’s going on. In many cases, current supply chains still operate using reams of paper.
While some things are tracked in computers, you often need humans to go in and update systems before you can see what’s happened.
The combination of paper and the need for someone to update information in a system can mean that you might not have the most recent transactions. It might take hours — or even days — before a system is updated.
Smart contracts help eliminate some of that uncertainty and lag. Smart contracts are autonomous and automatic. That reduces the potential for human error and increases your access to timely and valuable information.
Integrating Payment with Blockchain Technology
For most people, the first introduction to blockchain applications was the popularity of Bitcoin. And financial transactions are still one of the bonuses of working with blockchain technology.
Blockchain transactions are secure and instant. On top of that, they often cost less. Traditional payment processors charge fees and it can take multiple business days to complete a transfer of funds.
With the help of the blochchain, these transactions happen faster and cheaper. You don’t even have to be working in Bitcoin or other cryptocurrencies to get this to work. Some countries in Asia are testing out payment possibilities with blockchain technology.
It’s possible to upgrade supply chain management with the help of blockchain. Smart contracts could be arranged to take care of payment automatically, at the same time deliveries are made. The whole thing becomes part of the same transaction that is executed in an efficient and transparent manner.
Are Business Owners Ready for Blockchain Supply Chain Management?
It seems like using blockchain technology for supply chain management would be a no-brainer.
However, there is some resistance to this adoption. After all, this is a public ledger. It means that some business owners would have to be willing to let others get a peek at what’s happening.
Just because blockchain offers a distributed public ledger, however, doesn’t mean that you have to share everything with everyone. It’s possible to use blockchain technology to set up private and closed ledgers.
If you want, you can create a distributed ledger that is more private. You still have access to the information and can make smart contracts, but the distribution is limited. You only have it sent to the interested parties.
Business owners need to see that the benefits outweigh some of the drawbacks. Once business owners and entrepreneurs see what blockchain technology can do to help them streamline their businesses, they will be more likely to adopt it in a way that allows them to get the most out of their supply chains.
What about Government Regulation?
A growing number of states are recognizing smart contracts and intelligent signatures as digital signatures — and therefore legal and binding.
However, even with this growing acceptance, there are still some regulatory hurdles to clear.
Regulations and adoption vary by country. So if you are an international country, you have to consider how that impacts your ability to use the blockchain as part of your supply chain management.
And it’s not just the government you have to worry about. Industries are prone to figuring out best practices and developing their own standards. The way blockchain is used in business will need to move forward with industry-wide standards, as well as take into account regulation from various government entities.
Of course, there is also likely to be some pushback from the established financial industry, especially as payments are incorporated into smart contracts used in supply chain management.
However, the wave of the future appears to be blockchain technology. There’s so much that can be done, and done faster, that it’s hard to ignore the benefits of the blockchain.