Blockchain technology has brought revolutionary changes in the SCM processes and networks by amplifying efficiency, traceability, and transparency. It helps you in improved communication, collaboration, a better payment system, and encouraging sustainable sourcing. The development in technology would replace the traditional SC processes. Today, we’ll discuss supply chain management blockchain; how blockchain works, and its benefits.
How Blockchain Works?
Blockchain comprises of technology distributed ledger that maintains the record of exchanges or digital data that would make them tamper-resistant. When you make a request for a transaction on the system, then you send it to a peer-to-peer network consisting of nodes (various interconnected computers). However, it resolves equations to analyze and verify transactions for consistency across the network. You can create a group of transactions with other transactions after validation to develop a data block for the ledger.
Businesses and companies employ blockchain technology to analyze and track any type of transaction, and it allows them to share cryptocurrency, personal information, and documents. It is nearly impossible to corrupt the ledger, once you distribute it across the network. In order to make changes in the ledger, it requires you to make changes in every node across the network simultaneously. If you don’t do it, the network would identify the one unmatched transaction and declare it as corrupt.
Example – Google Document
Google document is a similar example of blockchain technology; it allows many people and users to edit and view the document simultaneously. Instead of having the ownership of one person and locking the document, it allows every node in the network to make changes in the system, and you could always track changes.
What is Supply Chain Management Blockchain?
Supply chain management is the method of managing and controlling the flow of production and movement of material. It comprises of procuring raw materials and supplies and delivering the finished goods to the end consumers. Along with managing the flow of materials and goods, it also manages finances and information relevant to the products and services.
Blockchain SCM has the capability to automatically update the record of data transactions while making any changes, amplifying traceability along with the overall SCM network. It is possible that the blockchain SCM network is private, closed, and only offers permission to the limited parties; contrary to the public blockchain financial applications and bitcoin. However, the blockchain SCM network has got four elements that play a significant role and they’re as follows;
The network comprises various actors and they have got separate and distinct identities.
Various companies develop standard schemes, tech specifications, or blockchain rules like fair-trade for environmentally friendly SC networks and processes.
As the name implies, here you would offer certifications to the individuals for their involvement in the SCM network.
The registered certifier or auditor would offer certification to the actors or participants like buyers, sellers, or producers to maintain their credibility in the system.
Benefits of SCM Blockchain
Some of the main benefits and uses of supply chain management blockchain are as follows;
Transparency & Tracking
Companies could easily track the flow and movement of goods and materials in various stages of SCM networks and processes when they implement blockchain technology along with IoT devices. Transactions are always time-based and up-to-date, and it allows companies to analyze the location of products in real-time.
When it comes to the reliability and quality of the product, provenance is the main element. Blockchain technology allows SC partners to track the flow of goods throughout the SC network, and they could easily validate the uniqueness of the product. Ultimately, it decreases the counterfeiting of goods.
Managing Food Safety Issues
Limited transparency and data in the SC network make it difficult for businesses and companies to quickly respond to the issue when it comes up. The integrity and reliability of blockchain technology would make it easier to resolve various types of issues. For instance, it allows you to recognize the origin of the food and amplifies the overall reliability and quality of products in the food industry.
Ethical Sourcing & Sustainability
Blockchain technology helps companies and consumers to make sure of the sustainable and ethical sourcing of products and materials. It validates the origin of the material or product and lets customers know and decide whether they should buy the product or not.
You can immediately pay the invoices with the help of blockchain smart contracts. It allows you to distribute the infrastructure of the blockchain system and develop a transparent payment system by allowing all the parties to perceive all payment transactions. However, it decreases the risk of fraud and human error.
Collaboration and Communication
SC network and process require a lot of back-and-forth communication and collaboration relevant to order requests, contracts, and invoices; it results in the form of delays and disagreements. Blockchain technology improves communication and collaboration among various parties and stakeholders.
Conclusion: Supply Chain Management Blockchain
After an in-depth study of the supply chain management blockchain; we have realized that the SCM blockchain is highly significant for your company’s growth. If you are learning about SCM blockchain technology, then you should keep in mind the abovementioned elements and benefits.
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