An outmoded environment – and a cutting edge solution
Needless to say, tech-innovation should translate to superior transparency in the supply chain.
However, in tandem with movement in technology, supply chain pathways are now more complex, often hindered in efficiency by defunct systems and processes – reducing accessibility and transparency.
In fact, a giant centralized system designed to manage the flow of goods and data, can no longer support the demands of today’s complicated and geographically scattered supply cycles.
Further, the absence of an open and trustworthy information chain - caused by multiple issues such as trust, technology and legacy practices – exacerbates the situation. There are bottlenecks and gaps, disjointed insights and consistent trust erosion. The landscape is therefore, largely disconnected driving all-round data and visibility dissonance.
Given the above scenario, Blockchain technology could fundamentally address these supply chain challenges.
Blockchain makes use of an open permissioned ledger system to create an ecosystem where information flows openly. This helps reduce assumed risks while minimizing total costs and driving agility and adaptability.
Inside the tech – and how it could change everything for good
Before we discuss the impacts of this revolutionary tech, let’s try and unravel the gears and wheels behind Blockchain:
Blockchain, in its essence, is a digital ledger of transactions that operates on a global peer-to-peer network. Advanced cryptography allows each participant on the network to manipulate the ledger in a secure way, without the need for authority. Unlike traditional businesses where most relationships are bilateral in nature, the Blockchain information exchange is disintermediated, propelling democratic and free access to information – across users.
Once a block of data is recorded in the Blockchain ledger, any change or removal is difficult to execute. When a user intends to add data, members in the network run algorithms to evaluate and verify the proposed transaction. If the majority agree with the validity of the transaction — the new entry is approved and added to the chain.
In traditional supply chain functions, the only information the customer has access to, is the product shipment.
Through Blockchain, the customer can access a host of new and extended information - product origination, specific supplier data and advanced tracking services.
Simply put, Blockchain removes all the fog and cobwebs around systems and pipelines - every participant can enjoy unadulterated and end-to-end access to the entire product movement pipeline.
Blockchain technology owes its origins to the development of the payment system - Bitcoin. Bitcoin records every motion in a long chain of events, instead of merely initiating deviations between accounts. This makes every transaction easy to track, right from its point of origin.
Small wonder then, that Blockchain is looked at as a tech tour-de-force - touted as the fifth pillar in the IT revolution after mainframes, personal computers, Internet, and social media.
In an article on Blockchain, the Wall Street Journal comments that over forty top financial institutions have already begun experimenting with distributed ledger technologies as a secure and transparent way of digitally tracking asset ownership, bolster transactions speeds, reduce costs and lower fraud-challenges.
Change-agents – outcomes that could overhaul enterprises
Here are a set of tangible impacts on supply chain scenarios, once a clearly outlined Blockchain framework is in place:
Greater Obedience and Pellucidity
Pellucidity and transparency are the primary benefits of Blockchain. The technology eliminates existing organizational silos, driving organizational unification, process simplicity and leadership empowerment.
Efficient Order and Asset Tracking
Blockchains offer greater visibility and tracking capabilities across the operational blueprint. Companies can now readily produce detailed information about a product’s life cycle, including supplier data, manufacturing details, and logistics information.
Reduced Auditing Errors
Occasionally, banks may be incapable of identifying all the possible overbillings or overpayments. Blockchain can address a convoluted situation such as this, by creating finite paper-trails, and isolate key impediments. Companies can now verify all operating systems that were affected and improve preventive capacities.
Easy Identification of Endeavored Fraud
Blockchain offers reinforced security and monitoring potential – firms can identify frauds easily, amid the massive data volumes. Prompt recognition of fraud, manages costs, controls possible attempts with the Blockchain’s patch-based approach further fortifying the transaction matrix.
Better Retention of Consumer Trust
Enhanced clarity into the supply chain and knowing the origin of a product is a great trust-builder – reaching beyond supplier information, by offering real-time, ‘live’ and consistently ‘connected’ updates.
Enhanced Real-time Consumer’s Response
Real-time customer response is a key takeaway for Blockchain technology. For instance, a customer may seek to place future orders on an item after it drops below a specified rate. Steady feedback, conveyed to providers, retailers and manufacturers would help create more accurate forecasts.
It’s immensely important to understand how Blockchain technology ensures scalability.
The technology can be leveraged to identify future trends, help organizations plan future business strategies and keep the sector as a whole, free of pernicious activities – allowing new entrants to easily enter the space.
Blockchain is clearly a game-changer – with the power to disrupt the way goods are produced, marketed, purchased, or consumed - while also transforming tracking and customer feedback flowcharts.
Finally, the road ahead is brimming with possibilities; Blockchain could combine synergistically with the Internet of Things, advanced logistics, and supply chain management systems, paving the way for heightened connectivity.