A supply chain is a crucial part of any line of business. Big and small companies need some help from outside vendors for one thing or another. As the company gets bigger, the supply chains get more complex and inflated. Among many issues, one that plagues bigger supply chains is transparency in transactions.
There is a constant flow of information, inventory, and money back and forth between the suppliers and firm. The more layers there are, the harder it is to keep track of all intermediaries and the flow of resources. Businesses ensure transparency in their supply chains by using advancements in technologies, such as blockchain.
Blockchain has been making splashes as a technology that enables authenticated communication, sharing of data, delivery of products in a cost-effective manner, traceability of products, and better coordination.
Here’s everything you need to know about incorporating blockchain technology into your supply chain for improved transparency.
What is Blockchain Technology?
Blockchain technology was the basis for the production of Bitcoin, one of the first cryptocurrencies. Blockchain went on to support the development of many more platforms of cryptocurrency and related projects by being the underlying technology.
Blockchain is an online, open ledger that records all transactions that take place on it. People have been using blockchain technology to conduct trades in cryptocurrency. The great thing about it is that there is no intermediary when you work on this latest tech innovation. Once a transaction is made on the blockchain, it is recorded on it forever. No changes can be made to it, and this digital ledger is available for the public to see.
This direct transaction system, without the involvement of intermediaries, reduces a lot of hassle and cost. The fact that it is public and irreplaceable makes all work done under the umbrella of blockchain technology as transparent as it could be.
How can Blockchain Support Transparency in the Supply Chain?
There are multitudes of options for a single product erupting everywhere. This increase in business activity puts the control in the hands of the consumer. Most businesses don’t anymore have a monopoly to run operations the way they want. Now, companies have to answer to the conscious consumer. A conscious and aware consumer wants transparency. They want to know that the products they buy are sourced from an appropriate place.
Transparency is taking over the consumer world today. Having legit systems in place doesn’t only benefit the consumer. It also aids a business. Transparency can help you increase traceability, reduce counterfeit losses and black market products, have control over external contracts, improve visibility, and much more. The more you are in tune with what is happening inside your business operations, the fewer complications you will suffer along the way.
Blockchain is one of the ways to achieve this transparency, and it is getting strong traction pretty fast. Big-name brands experiment with blockchain to make their supply chains more efficient and open. These brands are not limited to just big financial names. All kinds of businesses are jumping in.
Nasdaq and OMX Group Inc. collaborated with a blockchain startup, Chain, sometime in 2015, to experiment and test blockchain technology for share trading in Nasdaq Private Market. Visa Europe, the Commonwealth Bank of Australia, RBS, and many others have announced their current involvement with blockchain to build their own solutions.
Here are just a few ways by which blockchain technology can help create a more transparent supply chain for companies.
Development of the Product
Your business can get open access to source material data and information to help make more informed decisions for material choice in R&D. It will also help with closed-loop designing.
Better Planning and Reduced Risks
Blockchain will enable easy sharing of data between suppliers and customers, such as forecasts for the inventory. Several risks are associated with the inventory sourced from external suppliers, like the supplier may not be able to deliver on time, and you may lose a consumer in the process. Blockchain reduces such risks by allowing for co-planning between suppliers and businesses.
Compliance and Visibility
You can have a stronghold of compliance with the guidelines and visibility of work that is outsourced for external manufacturing. You can keep a check on inventory to ensure guidelines are followed. You can get information from the blockchain technology easily for any deviations, and the return process will become streamlined too.
You can replace almost all paper contracts with smart contracts that are recorded on the blockchain platform. This will not only help keep the costs and transactions transparent but also save you money by cutting the excess administrative costs.
Transparency with the End Consumer
Besides businesses, the end consumer also gets a clear picture of all the ingredients, steps, and parties involved in building a product they are going to buy. This will build more trust with the consumer.
Benefits of Blockchain for Supply Chain Transparency
By integrating blockchain in your business’ supply chain network, you can experience several benefits of making the supply chain transparent.
Other than easy traceability of errors and deviations in your inventory and products, you also get to store consumer data in a safe place by having a sustainable data center. People are more protective of their personal information in the online world. Blockchain will help you store consumer data in separate, encrypted blocks which cannot be accessed by an outside party.
Another benefit is the decentralization of the transactions on the blockchain. Decentralization prevents transactions and other work from being duplicated. In this way, multiple stakeholders and supply chain networks can collaborate without messing up the system.
Blockchain is the future. It is on the rise, and it is here to stay. From everyday users to big companies, people are fast moving to blockchain-supported platforms and profit out of it. It is still a growing technology that hasn’t seen its prime yet. So, there could be a problem operating it across countries.
But solutions to integrate blockchain with business operations, like supply chain, are coming up, and as the pandemic showed us, we need these solutions more urgently now.
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