The use of blockchain in international trade decreases costs and delays, optimizes efficiency, and helps reduce fraud. However, have we moved past the hype cycle that is typical of an emerging new technology driving supply chain efficiency?
In this blog post, we will explore the role of blockchain in global supply chains, with a particular focus on smart contracts and decentralized ledgers. We’ll also examine the advantages of blockchain-powered supply chain management over centralized systems.
Let’s begin with 5 key benefits that blockchain can offer for supply chains.
1. Improved Supply Chain Transparency
One of the major benefits of blockchain in supply chain management is its ability to enhance transparency. Blockchain in the supply chain enables the creation of a transparent, tamper-proof, and easily auditable record of every transaction. Each participant in the supply chain has access to the same information, eliminating information asymmetry and lowering the potential for disputes. Since all parties can see the same information simultaneously, it is easy to identify and resolve any data discrepancies.
Transparency is one of the most important aspects of using blockchain. If done right, blockchain can improve the transparency of the supply chain; improving the openness of logistics. It gives companies a better reason to trust each other. If there is more openness, there will be fewer disagreements over bills, less exploitation of workers, and better auditing costs. Aside from the end customers, the B2B business will benefit because it will have more trust and integrity. Because of the inherent trust, the costs of auditing, invoice disputes, and other sources of conflict will be greatly lessened or even eliminated.
A classic example of this is Provenance, which has carried out pilot projects to discover how blockchain can improve supply chain operations.
2. Enhanced Traceability and Accountability
Blockchain technology also allows for enhanced traceability and accountability in logistics and supply chain management. Each transaction is recorded in a decentralized digital ledger, which creates an audit trail for every product. This ensures that each product can be traced to its origin, and all parties involved in the supply chain can be held accountable for their actions. This level of transparency eliminates the risk of fraud and counterfeit products, as each product can be easily tracked through the entire supply chain.
3. Automation and Efficiency
Smart contracts are a notable feature of blockchain technology that can significantly improve the efficiency of supply chain management. Smart contracts are self-executing contracts that automatically enforce the terms of an agreement once certain conditions are met. By automating supply chain processes, businesses can reduce manual errors and streamline logistics operations. This not only lowers the cost of supply chain management but also improves the speed of delivery.
For example, entries in the blockchain database can be used to speed up jobs like putting the next group of goods to arrive at a port on a certain dock or in a certain area. This automated method ensures smooth communication and the best use of resources.
The best thing about blockchain for supply chains is that it lets you see where goods are at every point in the supply chain. Combining smart contracts and digital payment systems with the timestamps in the blockchain records revolutionizes supply chain management, bringing unprecedented levels of efficiency. It gives companies the tools they need to improve operations, reduce waste, and improve the customer experience.
Smart contracts in global supply chains
4. Increased Security for Key Stakeholders
With blockchain technology, the supply chain becomes more secure. Since the data on the blockchain ledger is immutable and cannot be tampered with, it creates a safe and trustworthy system. In addition, the use of digital signatures enhances security by providing an extra layer of authentication and preventing unauthorized access to sensitive data. Blockchain also eliminates the need for intermediaries and third-party service providers, which reduces the risk of breaches and hacking attempts.
5. Better Payment Processes for Suppliers
Lastly, blockchain technology can improve supplier payment processes by providing a more efficient, transparent, and secure way of settling payments. By automating payment verification and execution, blockchain eliminates the need for intermediaries, reduces transaction costs, and improves the speed of payment settlement. As such, it provides better payment terms, which can help businesses build long-term trust with their suppliers.
The Big Question: Can Blockchain Provide a Breakthrough in Global Supply Chains?
This decentralized and unchangeable record is a great way to track a good from its maker to its retailer. Every time the owner of an asset changes, that change is recorded. This makes a complete and accurate history of the asset. With blockchain, everyone in the production chain can see the same things happening along the chain. This lets them know precisely where an object is at any given time.
Introduction of the standardized shipping contained: Podcast host and supply chain expert Mark Wilkinson suggests that blockchain technology could have as significant an impact on supply chain logistics as the introduction of the standardized shipping container. He notes that blockchain could eliminate the need for intermediaries in supply chains, thereby reducing complexity and the costs associated with intermediaries.
Blockchain in Supply Chains: A Look At Its Impact across The Supply Chain Cycle
The following table demonstrates the importance of blockchain’s transformative potential across the global supply chain, at every stage along the way.
Blockchain in Logistics
When transportation companies learn to leverage blockchain for logistics, they can do a lot more than they could before. For further reading on how its use extends to the s, check out our blog on blockchain and logistics optimization.
The supply chain can benefit in many ways from blockchain technology. It not only makes it easier to track products, but it also makes it less likely that goods are fake.
Blockchain Technology in SCM- The Road Ahead
When the logistics business uses blockchain technology, it opens up a wealth of new possibilities that will change the way supply chain management is done today.
By using blockchain’s decentralized and unchangeable ledger, logistics companies can ensure that data is correct and remove the risk of hacking. So, the distributed ledgers provide access from beginning to end, so everyone can see where and how assets move in real-time. This makes it easier to coordinate and make decisions.
Blockchain technology makes it possible to deal with paperwork problems, ease financing processes, and improve operations. This makes it possible to build supply chains that are both efficient and safe. T
With blockchain for supply chains, supply chain management becomes open, safe, and efficient. Are you ready to use blockchain in your supply chain operations for greater efficiency and transparency?
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We are a forward-thinking blockchain and Web3 solutions provider with a mission to optimize efficiency across global supply chains by leveraging the best-in-breed technology. Book your consult with our Web3 Solutions Leader and in-house expert Shaan Ray, today.