Role of Blockchain Technology in Supply Chain Management

Blockchain and Its Role in Supply Chain?

Before jumping into Blockchain role in Supply chain, let’s have a quick understanding of Supply Chain management, where it is lacking and what are often done to bring it on track.

What is Supply Chain Management?

Supply chain management includes integrated planning and execution of varied processes within the supply chain from source to destination during a prior period of your time. It includes following processes:-

• Material flow

• Information flow

• Financial capital flow

The management of the flow of products, services, and knowledge involving the storage and movement of raw materials, building products also as full-fledged finished goods from one point to a special are mentioned as “Supply chain Management”.

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The components of Supply chain are:

1. Natural Resources: All the natural resources like water, land etc are the prime need of the chain management.

2. Materials: The assembly or procurement of materials like steel or an alloy.

3. Retail and E-commerce: The merchandise has been made, now it must be shipped to shops and listed on e-commerce websites.

4. Transportation and Warehousing : Transportation and warehousing will help within the method of getting resources, materials, components and finished goods to the right place at the right time to remain the supply chain operating efficiently.

5. Customer: Finally, the customer gets their hand on your product either within the shop or online.

Lacking of Supply chain Management?

Our present Supply chain is broken a couple of alternative ways. Quite 100 years back, these chains were generally straightforward on the grounds that trade was neighborhood; however they have become unimaginably amazing. Since the commencement of gracefully chains there are developments just like the move to tug cargo by means of trucks instead of rail or the increase of personal PCs inside the 1970s that prompted sensational movements in supply chain management.

Basic Problems or Limitations of Supply Chain:-

1. Hard to Trace Goods

Delivering of certain goods and tracing and having its records are two various things. Currently Supply chain management is facing problem of tracing the on-going goods accurately.

2. Corruption

The problem with running a complicated supply chain is that you simply will get to trust all the participants to undertake to their job. We might wish to trust them to deliver quality while following standard safety standards. However, citizenry aren't really that trustworthy and are vulnerable to corruption.

Certain suppliers in your supply chain may get preferential treatment by variety of your procurement officers thanks to a personal relationship. A supplier may delivered the item on time and in fitness but is saying extra expenses and additional costs, forcing a renegotiation of the deal within the method.

3. Costs

There are four main factors that increase the worth in traditional supply chains:

Procurement Costs: Paying for products throughout your supply chain. One thing to remain in mind here, if you've an outsized company, it won’t be possible for you to personally attend the supplier and buy all the components, so hire procurement officers to need care of this for you.

Transportation Costs: the essential component which involves delivering of the fine goods to the destination which needs a full proof transportation.

Inventory Costs: Most companies finds borrowing money from banks to shop for the inventories. So, not only do they have to need care of the loan, they have to need care of the interest rates also.

Quality Costs: You expect any product that you simply buy to satisfy a specific level of quality. After all, getting defective products will lead on to problems afterward down the chain. However, so on attempt to these quality checks, you'll need to hire properly trained experts.

4. Globalization

Globalization is that the method by which your company becomes large enough to possess international influence or it starts operating on a world scale. As you'll guess, globalization exposes several challenges to supply chain management.

Many companies need to run their supply chain through multiple countries to accumulate different parts of their products. However, this brings during tons of over complications. Confine mind that your suppliers are in vastly different geographic locations which makes it really hard to co-ordinate and collaborate. In other words, it's really hard to know whether or not they're literally doing their jobs or not.

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What is Blockchain Technology and its role in Supply chains?

Basically what we think about Blockchain Technology is that, it is completed based on cryptocurrency and Bitcoin applications which is true but we are unaware about its other general applications and it’s wide technologically scenario which is applied in many different sectors.

Blockchain is a distributed digital ledger that has its own documentation and  many applications and will be used for any exchange, tracking ,agreements/contracts and, of course, payment. As, all transaction is recorded on the network and has multiple copies of its ledger record in it which are distributed over the system and hence, it's highly transparent and auditable. Its Chain of command is significant for several things, and blockchain has the chain of command inbuilt.

So, the basic advantage over Blockchian Technology is the creation of Smart Contracts features. This feature governs the basic necessity of Blockchain, which states that as soon as the required terms and condition is been meet, the contract get automatically completed. 

Therefore, with respect to Supply chain management, which usually is the supply of goods and services from source to destination in a prior time and hence it completely get fitted with Blockchain’s smart contract feature. This will not only makes things easier but also help in tracking of the services and without the condition gets satisfied, complete supply of goods will not take place.

Supply chain traceability is one among the simplest use cases for blockchain technology. Replacing the normal processes with distributed ledger technology could increase trade volume by 16 percent and U.S GDP by up to 5-6 percent. Blockchain provides the power to trace any digital or physical product throughout its lifecycle.

Transparency in process tracking gives producers a bird-eye view into their value chain, allowing them to form sure the right handoff of third-party goods and final product labeling.

Blockchain can track the progression of assets, record the knowledge, and show previous asset records. Smart contracts are wont to enforce the asset tracking processes on the Ethereum Blockchain.

Regulatory and compliance reporting could even be a severe concern for pharmaceutical companies given many patients’ reliance on prescribed drugs. The availability chain must remain efficient while avoiding under or overstocked medications.

Blockchain provides consensus, which suggests there's no dispute within the chain regarding transactions intentionally. All entities on the chain have an equivalent version of the ledger, giving it the unique potential to trace ownership records for land, automobiles, and digital assets.

Blockchain Technology enables efficient ownership and licensing. Verifying past ownership through standardized licensing procedures is critical for various industries.

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Blockchain Features within the supply of Supply Chain?

There are several key ways during which blockchain is beneficial within the supply chain. These are:

1. Auditable: All the transactional exchange that are observed within the network of blockchain are immediately visible to authorized parties, meaning nobody can tamper, delete or conceal any information added to the series of blocks in blockchain.

2. Reliable: As its distributed nature, blockchain doesn't have one point of failure and hence, blockchain are immutable and irrevocable.

3. Cost reduction: Real-time tracking of a product within the supply chain through the assistance of blockchain can reduce the general cost of moving items during a supply chain.

4. Establishing Trust : Developing trust in complex supply chains with large numbers of participants is critical to smooth operations.

5. International Transaction fees :  In case of international payments with Swift, the commission for the transaction is deducted only after the transaction completion.

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Role of Blockchain's Supply chains in Today’s Scenario?

Blockchain adaptation in Supply management or the places in which it is directed applied for day to day usages:-

• Traceability Management : Increasing consumer demand for provenance information and hence  improving traceability also adds value by mitigating the high costs of quality problems, like reputational damage , recalls, or the loss of revenue etc.

• Replacing slow, manual processes: Although supply chains can currently handle large, complex data sets, many of their processes, especially those within the lower supply tiers, are slow and rely entirely on paper, like remains common within the shipping industry.

• It is additionally inspired many articles and prompted established IT players and start-ups to initiate promising pilot projects, including:

       1. UK based Startup Company, just raised $900,000 to adapt blockchain Technology to trace food while maintaining complete supply chain.

2      2. Walmart tested an application that traces pork in China and produce within the US, to authenticate transactions and thus the accuracy and efficiency of record keeping.

3    3. Maersk and IBM are performing on cross-border, cross-party transactions that use blockchain technology to assist improve process efficiency.