Supply chain management has witnessed a growing blockchain application in recent times. Zion Market Research says that by 2028, the market for blockchain technology in supply chain management will be worth more than $3.1 trillion, growing at a rate of 51.3% per year.
This technology could make it easier for retailers, wholesalers, and financial institutions to work together by speeding up product delivery, lowering costs, and making it easier to track products.
Blockchain is thought to have a revolutionary effect and could change how supply chain management systems work.
What Is Supply Chain Management
The goal of supply chain management (SCM) is to streamline the process through which raw materials are acquired, processed, stored, transported, and ultimately supplied to consumers.
Supply chain management is responsible for the production process, from getting the raw materials to delivering the finished goods. Planning, sourcing, production, shipping, and after-sale support are all typical components of conventional supply chain management systems.
In modern times, supply chain infrastructure has changed from just a physical and functional system to an extensive network of assets, data, and activities that are all connected. The digital supply chain is updated with new technologies like artificial intelligence (AI) and blockchain. AI systems have made much progress in business processes and robotics, making it easier to analyze business data.
How Blockchain Works
Blockchain technology is a distributed ledger technology that stores digital data records, or “exchanges,” in a manner that renders them tamper-proof.
The technology is used in cryptocurrencies like bitcoin and Ethereum. It works as a shared peer-to-peer network that contains nodes. Every input, piece of data, or transaction made in the system by an authorized user is converted to blocks and shared across the network nodes for authentication.
Once a block has been checked and confirmed, it is added to the chain and distributed to everyone on the network. If the transaction can’t be verified or doesn’t correspond with the existing information in the nodes, the system singles it out and discards it.
A Peek at Blockchain’s Widespread Application
By using blockchain technology, businesses can keep track of every transaction, like transferring files, private information, and digital currency. Technology has also seen a wide and massive application in the entertainment industry.
The explosive growth of the online gaming industry is one such change. Some 3D online games hosted on the metaverse, like Decentraland, are powered by blockchains. The rise of cryptocurrency is another consequence of the world “becoming digital,” Its popularity has coincided with the rise of online games.
Most casino online and igaming sites utilize blockchain technology to process payments and transactions. For example, cryptocurrencies have boosted fan engagement in eSports. Fans can receive collectables or tokens as a reward for engagement. The technology makes it easier for sports fans and movie enthusiasts to buy and track tickets online.
Logistics companies use blockchain to monitor the whereabouts of items as they are transported. That’s one of its key applications in supply chain management, as it boosts transparency in the system.
Challenges of Supply Chain Management and Processes
There are several bottlenecks to supply chain management, especially as it involves a lot of physical processes. One of the major issues facing the system is transparency and traceability. This necessitates tracing and reporting information from all supply chain participants.
Companies need help to properly track and document every process involved, from acquiring raw materials to production and product delivery. The fact that blockchain technology is tamper-proof comes in handy as we move toward digital supply chain management. This is where Blockchain helps improve Supply Chain.
How Blockchain Technology Solves the Supply Chain Problems
Blockchain technology aims to build on the efficiency and openness of traditional supply chain management systems and make them even better.
Enhances Monitoring and Traceability
When a change is made to a blockchain-based supply chain, the data transaction records are updated right away. This makes the supply chain as a whole more transparent.
Blockchain technology allows businesses to track products from their inception to their present location. From the moment a product is made until purchased, every step is recorded safely, establishing an immutable record.
That can also help track and identify counterfeit products. For example, in 2018, NITI Aayog, in charge of monitoring SDG operations in India, teamed up with Oracle to use blockchain technology and IoT to track fake drugs.
Companies in the supply chain can integrate blockchain into their RFID tags to track and monitor goods. These are often used to record a product’s data and confirm when ownership or possession has changed. The parties will sign a smart contract, which gets fulfilled when the radio frequency identification tag (RFID) is scanned and confirmed at the destination.
Efficiency in Trading
Several industries are starting to accept Bitcoin and other cryptocurrencies to pay for goods and services and do business. Thanks to the ease and security the system provides. To streamline logistics, organizations may use a distributed blockchain to exchange shipment tracking information and process payments instantly, without any room for crooks or intermediaries.
After a transaction is done, the money is put into the company’s blockchain wallet account. This makes it only possible for money to be taken out with permission.
Peer-to-peer payments are made possible by smart contracts. These payments speed up the transfer of money, which shortens the time businesses get paid for goods or services.
In conclusion, customers’ demands for transparency in product origins and compliance with ethical norms have fueled interest in blockchain-based supply chains. Despite its adoption, it’s obvious we have not yet maximized the use of blockchain technology in supply chain management.
As we continue to move towards digital supply chain management, we will likely see more blockchain solutions replace traditional supply chain procedures. This is how Blockchain helps improve Supply Chain.