While blockchain technology is usually synonymous with cryptocurrency, it is a boon for supply chain management. The biggest problem that plagues companies now is the lack of transparency. Business with large inventories and a complex supply chain is caught in a web of multiple suppliers from different states. Blockchain management technology makes it easier for companies to keep track of and manage their suppliers with ease. It helps to identify and pinpoint issues and monitor transactions. Being an open-source technology, blockchain enhances traceability and transparency to all the participants of the distributed ledger, so let’s define the future of blockchain technology.
The increase in global connectivity and globalization has made the companies entangle themselves in a complex supply chain network with stakeholders such as suppliers, distributors, and customers. Because of such complexity, the companies are subjected to different risks such as fraud and code of conduct.
Advantages of Blockchain Technology in Supply Chain
- Blockchain technology enhances the continuity of information effectively among the different stakeholders to ensure traceability and reduce inherent risks that come with a supply chain.
- Blockchain increases accessibility to efficiently leverage the enormous amount of data flowing through the supply chain.
- It has appropriate technology for effective fraud detection to lower business risks. It also makes emphasizing human rights and code of conduct easy.
- Blockchain makes it possible for a business to share and negotiate businesses and deals with suppliers without a middleman. This makes the process less cumbersome and more efficient.
Smart Business Contracts
Whipping up efficient and flawless contracts can be a daunting task. A good contract is a backbone of a business, and making one can be quite a task. One small error can prove to be of great danger to the business. Blockchain makes it easy to make flawless smart contracts. These smart contracts enforce themselves. Smart contracts ensure that different suppliers meet their obligations. It enables shipment tracking and checking deliveries at multiple locations. Blockchain is a distributed public ledger, makes it easier for all signatories to know what is going on. Smart contracts enable the integration of the blockchain and payments among various logistics partners and financial institutions.
It makes sure that there is no delay in payment by invoking an automatic digital invoicing and payments, thereby doing away with analog payments and the disturbances that come with them. This simplifies financial operations and working capital requirements, thus reducing the overall operation cost.
Fraud Prevention
Since every participant in the supply chain has a digital ledger and all transactions and movements are recorded in the ledger, there is absolutely no scope for fraud. Any attempt to perpetrate fraud or manipulate the system will come to the fore and show up on the ledger immediately. This instills fear and deters anyone from carrying out fraudulent activities.
Future of Blockchain Technology – Integrating It Into Business
Blockchain technology can be integrated with many business processes to make them easy. Adding a blockchain to your business infrastructure increases accuracy, gives better visibility of procurements, and delivers reliable data for analytics. It is not a prerequisite, but the blockchain is an integrative technology that provides a better technological solution. The blockchain acts as a supplement to your enterprise resource planning software.
The visibility of the business process and the user interface remains the same, but the inventory view is wider. You get to see other inventory levels as well. Also, the price shown will not be the placeholder price but the product’s actual price based on your consumption. When blockchain installation is on, it seamlessly fits into your existing infrastructure and spares you the hassles of learning a new one.
Government Regulations
In India, several states have come to accept smart contracts and digital signatures. Therefore, it is very much legal and binding. However, there still are many regulatory hurdles in its implementation. With different countries having different kinds of governance and rules, businesses with dealings and establishments in international countries should consider its impact when using the blockchain as a part of their business. Business is also likely to face some pushbacks and reservations from the established financial industry because of the integration of payments with smart contracts.
However, the future of blockchain technology with supply chain management appears bright. The speed at which business can function with its integration. Blockchain technology reduces cost and time and makes management of the complex and never-ending business process transparent, efficient, and hassle-free.