Managing supply chain has become complicated. Depending on the product, the supply chain can span over hundreds of stages, a multitude of invoices and payments, many geographical (international) locations, have several individuals and system involved, and expand over months of time. Due to the lack of transparency and complication of our current supply chains, there is an interest in how blockchain transform the supply chain and logistics industry.
How is the supply chain broken?
Today's supply chain is broken in several ways. Over a hundred years ago, supply chains were relatively simple because at that time commerce was local, but they have grown complex. All over the history of supply chains, there are innovations such as the shift to haul freight via trucks rather than rail. It's difficult for payer and payee to know the value of products because there is a lack of transparency in our system. In a similar way, it's hard to investigate supply chains when there is suspicion of illegal or unethical practices. They can also be inefficient as vendors and suppliers try to connect on who needs what, when and how.
How did blockchain help in supply chains?
The most prominent use of blockchain is in the cryptocurrency and bitcoin the reality is that blockchain is a distributed, digital ledger had many applications and can be used for any agreements/contracts, exchange, tracking and of course payment. In that, every transaction is recorded on a block and across many copies of the ledger that are distributed over many computers, it is transparent and secure since every block links to the one before it and after it. There is no central authority over the blockchain, and it's extremely efficient and scalable. blockchain can increase the skill and transparency of supply chains and impact on everything from warehousing to deliver the payment. Chain of command is crucial for many things, and blockchain has the chain of command built in.
The things that are necessary for reliability and integrity in a supply chain are provided by the blockchain. Blockchain provides consensus there is no controversy in the chain of transactions because all entities on the chain have the same version of the ledger. Everyone on the blockchain can see the ownership of chain for an asset on the blockchain. Records on the blockchain cannot be removed which is important for a transparent supply chain.
Supply chain's using blockchain
In short, blockchain is a record-keeping mechanism that makes it safer and easier for businesses to work together over the internet. Blockchain technology allows us to track all types of transactions securely and transparently. In the food industry it' is essential to have solid records to trace each product to its source.
BHP Billiton the world's largest mining firm announced that uses of blockchain to better track and record data throughout the mining process with its vendors. Not only it will increase efficiency, but it allows the company to have more effective communication with its partners. blockchain is also decisive for transparency to allow consumers to know they are supporting companies who share the same values of environmental leadership and sustainable manufacturing. This is what the project history hopes to provide with its blockchain record of transparency.
Diamond-giant uses blockchain technology to track stones from the point they are minded right up to the point that they are sold to consumers. This verifies the company avoids 'conflict' or 'blood diamonds' and assures the consumers that they are buying the genuine article.
Blockchain can transform industries, supply chains, and ecosystems. Interestingly, even organizations like banks, that would appear to be losing out to the new technology, can see opportunities to exploit it in the streamlining of their operations.
Changes in supply chains will not happen overnight. Yet, in some areas supply chains can already start using the blockchain of their operations. Smart contracts can help to end costly delays and waste generated by manual handling of paperwork. From there, new doors may open to faster, more secure and more intelligent processes throughout the entire supply chain.