The supply chain is now a more daunting task than before. Gone are the times when this sector was relatively simple because the business was local. But over time, the advent of the internet and globalization have made this industry incredibly complex. Depending on the products, the whole process can be long due to hundreds of phases, more geographical locations, too many invoices and payments, and different people and entities involved. Given that so many entities are involved in the industry, transparency and accountability always come as a question mark. In this scenario, to ensure transparency and accountability in the supply chain, Blockchain can be the perfect solution. This revolutionary distributed ledger has immense potential to change the supply chain landscape. In this article, we will discuss how Blockchain technology can transform the supply chain and what is the size of the Blockchain technology market in the supply chain. But before this we will discuss the problems that exist in the supply chain.
Lack of transparency:
The lack of transparency is one of the main problems of the current supply chain management. Due to globalization, the supply chain is now incredibly complex. Here companies and customers do not have a clear visibility of the whole person in the management. Every time a product is ordered by customers, it is reached by several intermediaries and by different geographical locations and it is very difficult to trace each channel crossed by the product. Because of the lack of visibility, companies have no idea about the intermediary during this whole process, resulting in increased expenses for businesses, which in turn hinder customer satisfaction.
Long delivery time:
The time between the start and the execution of the production process is known as lead time in the supply chain. Above all globalized companies face longer lead time problems because their supply chain network spreads all over the world. So when the demand for the product arises, businesses are not able to meet demand, so they can not manage their business efficiently.
In order to send any product to various geographical areas, the supply chain is subject to serious uncertainty due to the political and economic instability of that region. Furthermore, the company that manages the suppliers in the various countries must consider factors such as weather, connectivity, etc. To manage the supply chain efficiently without hindering the business.
Due to the lack of transparency, security in the supply network is the biggest problem. In the current system, companies do not have a clear visibility on the management system like who is managing what and how the particular order is executed? In this scenario, the product could be subject to various risks such as theft and piracy. Furthermore, if the company is getting technical support from a poor IT management system, the entire supply chain could be subject to computer piracy.
How can Blockchain technology change the supply chain?
Blockchain is a distributed master book that works according to the principle of cryptography, a complicated mathematical algorithm that records information in such a way that people on that network can view that information but can not alter it once they have been registered in the system. It is a decentralized network that works without a single central authority. This revolutionary distributed ledger has immense potential to eliminate the third party from the supply chain network, manage the huge amount of supply chain data and guarantee transparency, security and responsibility in the entire supply chain network. Following are some key features of Blockchain that can prove to be extremely effective in the supply chain system.
The decentralized ownership of the Blockchain can be very effective in ensuring transparency in the supply chain. Because of the decentralized property, the recorded information will be shared and saved in thousands of nodes or computers and all information is verified by users on the network, so there is no room for incorrect information. For example, the company can record position, price, date and other relevant information of items in the supply chain and this information will be shared and saved in thousands of computers on the network.
This is an amazing feature of the Blockchain which will prove to be very effective in preventing theft and fraud in the supply chain. The information recorded on the Blockchain is immutable, simply put once the information has been recorded in the system, so no one can change it. In the case of a supply chain, authenticated and verified data ensures that stakeholders maintain trust between partners.
The intelligent contract is a feature of the Blockchain that allows two parties to enter into a contract and automatically execute the terms in the contract once an event is triggered. Smart Contract is a piece of code that is encoded in a block and distributed across the network. In the Smart Contract supply chain it will prove to be highly effective and able to handle all financial transactions between multiple parties instantly and easily.
The potential benefits of using Blockchain in the supply chain:
- The adoption of Blockchain technology in the supply chain will improve the transparency and accuracy of the system. This technology will allow users to track their order at any time.
- Smart Contract will allow companies to automate their purchasing process by reducing costs, saving time, improving transaction flow and security in the supply chain network.
- Blockchain will allow sellers to easily access their data. With this technology, the seller can store all product data such as product origin, product cost, product certificate and registrations etc. On a single ledger. This system not only guarantees transparency in the system, but also reduces the possibility of possible manipulation.
- Due to the immutable character of the Blockchain, the data will remain secure on the system. No one can change the information once it is registered in the system. Blockchain will store sensitive supply chain information in a better way than any other system and will be safe from tampering or changes.
- The implementation of the Blockchain technology in the payment system will reduce the friction in payment and eliminate the commercial dispute.
The size of the Blockchain technology market in the supply chain:
According to the research and statistics of a renowned market research organization, the current Blockchain supply chain market is $ 145 million and in 2023 and the market will exceed the staggering $ 3,314.6 million. Now the following companies use Blockchain in their supply chain network.
- The retail giant Wallmart uses Blockchain technology to track its product.
- Unilever, Nestle, Tyson and Dole use Blockchain technology for similar purposes.
- The world's largest mining company, BHP Billiton, uses Blockchain technology to track and record data during the extraction process with its suppliers.
- The world's leading diamond company De Beers uses Blockchain technology to track the stones from where they are extracted and to where they are sold to customers.
Literally, the supply chain is a huge industry and it is not possible to expect revolutionary changes in the existing system from one day to the next. Here, the positive thing is that the leading brands of the world are understanding the potential of this revolutionary ledger distributed and implementing it in their organization. The Blockchain market in the supply chain is increasing exponentially and in the future this technology will change the whole system landscape and will ensure smarter, faster and safer supply chains from one side to the other.
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