Blockchain technology is a revolutionary new system for managing and tracking digital transactions. In recent years, it has gained a lot of attention for its potential to completely change the way supply chains are managed.
In this blog post, we will explore the functions, importance, and working of blockchain technology in supply chain management, as well as real-life illustrations of its use.
Functions of Blockchain Technology in Supply Chain
Blockchain, at its core, is a digital ledger that records and verifies transactions in a decentralized and secure manner. This makes it ideal for managing supply chains, as it allows for real-time tracking and transparency of goods as they move through the supply chain.
1. Transparency and Traceability
One of the key functions of using blockchain in supply chain management is its ability to increase transparency and traceability. By recording all transactions on the blockchain, companies can easily track the movement of goods from the point of origin to the final consumer. This allows them to identify any issues or bottlenecks in the supply chain and take action to correct them.
2. Improved Efficiency and Reduced Costs
Another important function of blockchain technology in supply chain management is its ability to improve efficiency and reduce costs. By automating many of the processes involved in supply chain management, blockchain can help companies save time and money. Additionally, the use of smart contracts can also help streamline the supply chain and reduce the need for intermediaries.
Importance of Blockchain in Supply Chain Management
Now let’s move on to the importance of blockchain technology in the supply chain. In today’s fast-paced and highly competitive global economy, supply chain management is more important than ever.
With the help of blockchain, companies can improve the speed, accuracy, and transparency of their supply chain operations. This can help them gain a competitive advantage and improve their bottom line.
Furthermore, blockchain technology can also help to improve the security and integrity of supply chains. By providing a tamper-proof digital record of all transactions, it can help to prevent fraud and errors in the supply chain. This can lead to improved consumer trust in the products and services that companies provide.
How Blockchain Technology Works in Supply Chain Management
Blockchain is essentially a decentralized and distributed ledger that records and verifies transactions.
This means that instead of relying on a central authority to manage transactions, it relies on a network of computers to validate and record them.
The transactions are grouped into blocks and linked together in a chain, hence the name blockchain. Each block contains a unique code, called a “hash,” that links it to the previous block in the chain. This creates an unbreakable link between all the blocks, making it impossible to tamper with the information stored in them.
It is due to this reason that several multinationals and conglomerates are paying close attention to the technology and even adopting it.
Who’s using Blockchain for Supply Chain Management?
1. Walmart
Let’s take, for example, Walmart which makes use of blockchain to track the movement of goods in its supply chain. With the tech, it is able to track goods from the point of origin to the final consumer. This helps to improve transparency and traceability of the products being sent by Walmart, all the while creating a positive brand image.
2. De Beers
In addition to the examples mentioned above, there are several other industries where blockchain technology is being implemented in the supply chain. One such industry is the diamond industry.
The Diamond Blockchain Initiative led by De Beers, one of the largest owners of diamonds in the world, is using blockchain technology to trace the origin of diamonds and ensure that they are ethically and sustainably sourced.
Since ethical diamond sourcing has become somewhat of a political and social topic, this practice actually helps to improve transparency and consumer trust in the diamond industry. Wouldn’t it be so cool if the same model is applied to cocoa bean plantations in third world countries? I think so.
3. Mediledger
Lastly, blockchain is also being leveraged to improve supply chains in the pharmaceutical industry. Mediledger, for example, is using it to automate and track the movement of medicines through the supply chain and ensure their authenticity. This helps to prevent very similar-looking, counterfeit medicines from entering the market and improves patient/consumer safety.
Conclusion
It’s safe to say, blockchain is revolutionizing technology and all other sectors including supply chain management by increasing transparency, traceability, efficiency and security.
As more companies and industries adopt it, we can expect to see even more improvements in supply chain management in the future.
