What is a blockchain in supply chain management?

Blockchain is presently one of the notable innovative advancements that are transforming the face of digital supply chain management. The growing complexity of supply chains, along with a rising number of external intermediaries and different stakeholders, is one of the prominent concerns in supply chain management. So, the applications of blockchain in supply chain management have the potential to streamline the exchange of data, communication, and documents in the supply chain landscape.

However, blockchain is a comparatively new technology that emerged almost over a decade ago for supporting Bitcoin transactions. Will it be reasonable to implement blockchain solutions for supply chain management? So, let us dive into the following discussion to find out the significance of blockchain in supply chain management.

Potential of Blockchain for Supply Chain Management Applications

One of the first questions that come forward when thinking of applying blockchain in supply chain management relates to feasibility of the same. It is important to understand how blockchain is suitable for supply chain operations before moving towards the applications. The distinct features of blockchain show how it can be a suitable instrument in transforming supply chain management.

1. No Intermediaries

The foremost feature of blockchain is the lack of intermediaries such as banks. Therefore, it can help in faster settlements with better transparency, with automatic updates of the ledger. Managers could pre-program the payment conditions along with transaction visibility for ensuring that transactions are visible only to authorized individuals.

2. Immutability

The support for audit trail in blockchain also ensures that no one could modify, tamper or hide any information. Therefore, the transparency in blockchain could help in ensuring immutability of supply chain transactions.

3. Reliability

Another important factor that influences the possibilities for applying blockchain in supply chain management refers to reliability. Blockchain is distributed in nature and does not feature a single point of failure. On the other hand, you also have the assurance of immutable and irrevocable transactions on blockchain. Therefore, blockchain can help in removing the risks of fraud in supply chain transactions by a huge margin.

Actual Influence of Blockchain on Supply Chain Management

With an impression of the potential of blockchain for applications in supply chain management, it is important to find the ways in which blockchain can change supply chain. Here are some of the ways in which blockchain can influence supply chain operations.

1. Improved Tracking

The foremost application of blockchain in supply chain management refers to provenance tracking. Bigger organizations have highly complicated supply chains. Therefore, they face many struggles in tracking the records of multinational companies. The lack of transparency could impose considerable influence on multinational organizations.

With the help of blockchain-based supply chain management, businesses could access product information through embedded sensors and RFID tags. As a result, blockchain could simplify provenance tracking and record-keeping by considerable margins.

2. Developing Trust

The use of blockchain in supply chain management will also play a critical role in establishing trust. The development of trust in large supply chains with many participants could support smoother operations. For example, manufacturers could have trust in the supplier for following factory safety standards.

3. Cost Reduction

Another promising approach for leveraging blockchain in supply chain management practically is cost reduction. Blockchain can support real-time tracking of products in supply chain, thereby reducing the total cost of transporting items through the supply chain. According to a survey by the Digital Supply Chain Institute, more than 33% of supply chain workers perceived cost reduction as the top benefit of implementing blockchain in supply chain management.

Examples of Blockchain in Supply Chain

The real-life examples of blockchain applications in supply chain management also showcase the significance of blockchain for supply chain management.

1. Renowned pharma giant Glaxo Smith Kline (GSK) has leveraged blockchain-based supply chain systems for regulatory compliance.

2. A blockchain-based trust platform, Treum, is offering a platform for developing supply chains of the future with a focus on tradability, traceability, and transparency.

Conclusion

On a concluding note, it is clear that blockchain has the capability for revolutionizing supply chain management. The potential of blockchain for supply chain management and its actual influence present long-term prospects for blockchain in supply chain management. With more enterprises slowly turning towards blockchain solutions in supply chain management, you can benefit from blockchain expertise.

It is reasonable to start learning about the fundamentals of blockchain in supply chain management right now. You can explore the Enterprise Blockchains and Supply Chain Management Course for learning about enterprise applications of blockchain in supply chain. Begin your first step in learning about blockchain in supply chain ecosystem right now!