The increased use of blockchain technology could significantly impact supply chain management. Some experts claim it has the potential to completely revolutionize the supply chain industry.
Here’s a quick look at three ways blockchain will affect supply chain management.
1. Blockchain allows for streamlining secure transactions between logistics suppliers, manufacturers and third-party partners.
Blockchain is a ledger of records structured into blocks of data, which are connected using secure cryptographic validation to form a continuous chain. Each block references and detects its predecessor. What makes this so important in terms of supply chain management is the fact that the ledger isn’t stored in a master location. Instead, the data lives on multiple computers simultaneously, giving all vested entities visibility and access to the records. Old transactions are preserved forever, while new transactions are instantly and permanently added. This ensures that the history being viewed is exactly the same for everyone, from the manufacturers and suppliers to the third-party partners. This will eliminate the need to reconcile internal data and prevent any group from cheating the system by misrepresenting goods, shipments, etc.
2. Blockchain makes everything traceable and enhances accountability.
As mentioned above, every single aspect of a transaction is visible to every party in the supply chain. This means every single item can be traced from the very beginning to the very end, essentially eliminating fraud, waste and delays. This also ensures that no single company has complete control over access to the information. As an added bonus, once a transaction has been added to the chain of information blocks and confirmed, it cannot be removed or altered, making it a very trustworthy record (a transaction must be confirmed six times to be deemed valid.) Then, it is permanently added to the record on the public ledger. There is absolutely no way to manipulate or erase any confirmed block data.
3. Overall, blockchain makes most things easier.
When it comes to the supply chain market, the use of blockchain simplifies almost everything. It virtually eliminates fraud and reduces errors. Additionally, it becomes much easier to manage inventory, improve partner and consumer trust and identify and fix any potential problems. Courier and payment costs are reduced, and the need for paperwork is eliminated. Finally, the long process of reconciling and auditing separate ledgers from different entities in the supply chain is eliminated.
The unique features of blockchain have the ability to positively affect all industries on a global scale.
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