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The introduction of Bitcoin not only brought the cryptocurrency, but also brought a new technology, which has the potential to disrupt the business process from banks to supply chain industries. Disruptive technology is nothing else; it is a blockchain technology. The implementation of emerging technologies in the business process is a challenging task. On the other hand, the benefits of new technologies are immense and create value for customers and organizations. Furthermore, the goal of the new technology is to minimize noise and improve the signal in the existing process or system.
What is the blockchain?
Blockchain is a distributed database system in which data can share, encrypt and decrypt through the multiple channels that make the warehouse of information or transactions indestructible and irreversible. Once the data has been entered into the system, it can not be changed, which means that the data is immune from further modifications and exploitation. These characteristics of blockchain make it favorable to the management of the supply chain.
Why implement blockchain in the supply chain?
The entire supply chain from manufacturer to supplier is dynamic in nature. The dynamic nature of the supply chain makes the mistake vulnerable, which costs time and money to correct it. The transparency of the entire supply chain is an important factor in preventing the supply chain process from failing. Blockchain technology can improve the transparency and traceability of the entire supply chain. Furthermore, the monitoring of the supply chain through the blockchain helps the organization to prevent illegal activities, which derive from unfair practices such as the use of child labor, environmental issues and mismanagement of raw materials in the process of supply chain.
What are the advantages of blockchain technology in supply chain management?
The greatest advantages of blockchain are transparency, traceability and verifiability. The distributed register system of the blockchain makes it visible and verifiable through the entire supply chain. The transparency of the supply chain manifests itself with the decentralization of the process. The blockchain provides a more efficient workflow for the supply chain. For example, it improves tracking, linking, sharing and registering products in the supply chain. Each time the product moves to the next stage of the supply chain, there is a transaction cost associated with each step. Blockchain reduces cost, time and the supply chain transaction error. Improve the scalability of the supply chain through digital contacts and payments. Facilitates the supply chain process quickly and effectively as the Internet has done for communication.
How to implement blockchain in the supply chain?
The implementation of the blockchain in the supply chain process can be similar to Bitcoin extraction. When a two-party transaction event occurs in the supply chain, it would be mine by mine. As a result, the transaction event will be permanently documented as a verified block in the blockchain network. The miner will be rewarded with the Bitcoin for mining the supply chain transaction and creating an irreversible block in the supply chain network.
Most companies use a company resource system (ERP) for the supply chain and operational management. Companies can add blockchain to their existing ERP as an additional layer, which will provide transparency, traceability and visibility of products in the supply chain in real time. There are several companies that have started blockchain as a service (BaaS). For example, IBM and Microsoft Azure provide the blockchain service for integration into the current business process.
What are the complications of blockchain in supply chain management and what are their solutions?
Because blockchain technology is new and complicated, most companies are reluctant to adopt technology in their business processes. The use of blockchain in supply chain management can raise a regulatory and legal problem because the technology is new and practically accessible across borders and geographical territories. In addition, the different geographic region has different laws and regulations, which require careful evaluation before implementing blockchain in the existing business process, as in the ERP system.
The cost of implementing new technologies may be greater than its benefits. Therefore, a careful evaluation of costs and benefits is an important factor for the implementation of the blockchain. The transparency of the blockchain could be a problem for the competing company. The issue of transparency can be corrected by customizing the blockchain system, where the blockchain service provider could allow access to the ledger system open to the close group in the supply chain. Nevertheless, the cost and complications of blockchain technology the future of the blockchain is brilliant to modernize supply chain management.
Note: This is a guest post, and the opinion in this article is of the guest writer. In case of problems with one of the articles published on www.marktechpost.com, contact [email protected]
