How Blockchain is Changing Supply Chain Management
“Blockchain technology is the core concept behind cryptocurrencies like Bitcoin, Litecoin, Ethereum, and others”. For at least a decade, the highly complex cryptography that is the basis of secure financial transactions has been used primarily for making alternative forms of money, coins, a negotiable, widespread form of doing business.
What Is Supply Chain Management?
It’s a long process with two distinct endpoints. The entire network in between those points consists of various activities, tech, information, resources, people, organizations, and goods. All those in-between components sit somewhere along the pathway between the supplier of the goods and the end-user, or customer.
Today, the same technology that underlies cryptocurrency is helping many areas of the business world in the same way. No longer do producers, manufacturers, traders, retailers, and consumers have to rely on non-digital forms of doing business.
The concept of supply chain management is not new but it has become increasingly important for the last few years. With the shifting of business focus from manufacturing to customer value, companies are not much concerned about manufacturing costs or producing high-quality products.
Rather the major challenge is to deliver the correct product, at the correct location, at the time the customers need, in the appropriate quantity, and at the lowest possible cost. Meeting this challenge entails the need for supply chain management (SCM).
Supply chain management (SCM) is a business and technology discipline that refers to the ways of coordinating the activities involved in purchasing, designing, building, and selling a product. It used information technology to create a cross-functional inter-enterprise (involving more than one organization) system called SCM information systems.
These systems integrate the business processes of suppliers, purchasing firms, distributors, and custom logistics in order to improve the efficiency and effectiveness of manufacturing and distribution. They automate the flow of information between a company and its supply chain partners to optimize the sourcing and procurement, manufacturing, and delivery of products or services.
In supply chain management, for example, there are unique challenges that encryption and shared, secure information can address.
Here Are Some of The Things Blockchain Tech Can Do For The Supply Chain Management.
1. Allow for Geographical Spread
Encrypted information blocks know no geographic boundaries. One of the key advantages of encrypted systems is that they can deal with business transactions all over the globe simultaneously.
Because they are securely coded, there’s no need for multiple human managers to follow the data and keep it from falling into the wrong hands.
2. Track the Entire Flow of Goods
There’s a lot of distance between a manufacturer, or a supplier, and the end-point consumer. Imagine the levels of transit from a plant in India, for example, to a purchaser in a small town in Maine, in the U.S.
Not only does the item need to be properly packaged, invoiced, and shipped, but the shipping company has to track it from its intake point to delivery.
It’s not an exaggeration to say that as many as 100 people interact with a single item on its journey to the buyer. A fully-encrypted, diverse, chain composed of data blocks can assure that each step of the process takes place as it should.
3. Handle Contracts Seamlessly and Quickly
In a typical international sale, there are dozens of contracts between producers, shippers, sellers, drivers, financing agents, and others.
The technology at the root of trading cryptocurrency can create and execute contracts whenever they’re needed. Both ends of the agreement are verified and coded into the data block for verification.
4. Offer Complete Transparency
Because all the data created along the way is parked in a central location, there’s never a question of transparency. Anyone on the chain can check to verify that a particular step took place or that a certain contract was executed.
This high level of transparency is one of the hallmarks of an effective flow of goods around the world.
5. Provide High Security
Encryption offers an extra layer of security. In fact, two of the most crucial factors within any system of commercial transport are security and tracking.
Because no one can tamper with data blocks at any point in the movement of the supplies, there’s a very high level of security. As for tracking, blocked and encrypted data contains every piece of information about a given product as it moves to the purchaser.