Supply chain management is vital for companies to provide products and services effectively. But supply chains in the traditional sense can be complicated with multiple people involved. This causes inefficiency, lack of transparency procedures, and costly costs. What can companies do to enhance the management of their supply chains? One innovative solution is blockchain technology.
What is Blockchain and How Does it Work?
Blockchain is a digital distributed ledger that tracks transactions in a traceable and enduring manner. It allows participants to exchange data and conduct transactions without a central authority safely. Here are the most important features of blockchain technology:
- Information is distributed on multiple computers and not controlled by one entity. This enhances security and increases transparency.
- Immutable – Once the data has been stored, it is not changed retroactively. This ensures security for the network.
- Consensus-driven – Transactions are validated via a consensus mechanism before adding them to Blockchain. This guarantees accuracy.
- Provenance – Users can track the history and origins of their assets through the Blockchain. This helps to ensure accountability.
Blockchain can improve supply chain efficiency through automated processes and shared, immutable data. Blockchain could benefit various stakeholders, such as manufacturers, suppliers, distributors, retailers, and customers.
How Does Blockchain Improve Supply Chain Management?
Blockchain provides a variety of significant advantages over supply chain processes that are traditional:
Enhanced Transparency
Blockchain allows manufacturers, suppliers, and consumers access the same data. This provides all parties with access to the state of inventory, delivery status, and other continuously updated information. Participants can monitor the source of the products and confirm identities.
Increased Efficiency
Blockchain reduces the time spent in the supply chain by implementing smart contracts to automate the process of delivery, ordering, and even payment. Intermediaries are eliminated, which reduces costs. Stockouts are prevented since the inventory is continuously monitored.
Improved Traceability
Each transaction recorded on blockchains is documented. This allows traceability of components as well as products to their source. When quality issues arise, it is possible to trace the cause quickly identified. Customers can check the authenticity of the product.
Enhanced Trust
Blockchain’s immutability ensures that all users can rely on one base of fact. Transactions are only completed after consensus is achieved, which prevents disagreements. This encourages collaboration within the supply chain.
Strengthened Security
Blockchain uses encryption and decentralized record-keeping to ensure that data is secure from tampering. This helps prevent cyberattacks. Smart contracts automate compliance checks. The decentralized network is not a single source of failure.
Cost Savings
Eliminating intermediaries, delays, and manual procedures can drastically reduce supply chain costs. Blockchain improves the inventory level, booking shipment contracts, bids for contracts, invoicing, etc.
These benefits are a convincing argument for Blockchain’s adoption for supply chain management. The technology fits well with the objectives of reducing costs, increasing efficiency, and creating trust.
Where is Blockchain Making an Impact?
Many industries are already looking at supply chain solutions based on Blockchain:
- Retail Walmart utilizes blockchain technology to monitor pork, produce, and other products to ensure more rapid recalls and help prevent foodborne illness.
- Logistics Logistics UPS, FedEx, and DHL are part of the Blockchain in Trucking Alliance to collaborate on data sharing and simplify freight contracts.
- Food-related companies like Nestle, Unilever, and Tyson Foods rely on Blockchain to improve food traceability and greater transparency.
- Jewelry – Everledger provides diamond certificates and the ability to track a blockchain to ensure counterfeit diamonds are not made.
- Automotive Automobiles Ford utilizes Blockchain to track cobalt sources, a vital but controversial mineral used in electric vehicles.
- Healthcare – Many companies use Blockchain to track medications and medical products throughout the distribution network.
Over these industries, Blockchain can help reduce expenses, more fresh products, fewer recalls, sustainable certification, and shorter time for delivery.
What are the challenges associated with Blockchain Implementation?
Although Blockchain has shown a lot of potential for supply chain management, there are still obstacles to the widespread adoption of Blockchain:
- Technological maturity – Blockchain is still a relatively new technology, and many challenges exist to overcome, such as interoperability, scalability, the consumption of energy, and speed.
- Initial Investment – Developing and integrating a blockchain-based supply chain solution will require upfront capital investment and IT capabilities. The return on investment could be a long time.
- Regulative Uncertainty Blockchain regulation is not precise in various jurisdictions regarding privacy, security taxes, patents, etc. This could hinder adoption.
- Talent Shortage – There’s an absence of developers and programmers who are proficient with blockchain-related protocols, applications, and technologies. Further training and knowledge are required.
- Legacy Systems – Many established firms have systems and processes that require an overhaul to include blockchain technology. This change can be challenging both in terms of technology and culture.
- Participation Blockchain is based on the effects of networks. It may take a while for adoption to begin until a significant number of participants in the ecosystem join the system.
Overcoming these challenges requires the leadership of a strategic leader, technological advancements, industry standards, regulations, and skilled staff.
Key Takeaways
- Blockchain provides game-changing solutions to transparency, efficiency, traceability, and security in the supply chain. Benefits such as cost reduction and the development of trust are why it is a worthy investment.
- Industries such as logistics, retail food, automotive, and logistics have already begun using Blockchain technology with promising results across different use instances. It is becoming more mainstream and widely used.
- Technology limitations, investment costs, regulations in the field of talent, outdated systems, and issues with participation remain obstacles to implementing Blockchain on a large scale.
- With constant development and collaboration, blockchain technology can transform supply chain operations and relationships between manufacturers, suppliers, distributors, and consumers.
- Read also: Getting Users and Keeping Them: A Guide for App Owners
Blockchain Developers for Your Supply Chain Project
Due to the enormous potential of Blockchain in Supply Chains, you could be thinking about developing a custom solution. Hiring experts in blockchain development is crucial to ensure the success of such an initiative. Here are some suggestions for creating an effective team for blockchain development:
Define Project Requirements
Before you begin, define the objectives, scope, platform features, timeline, and scope of your blockchain-based Supply Chain Solution. This will help you form an appropriate team of expertise and knowledge. Make a list of the essential capabilities.
Search Developer Communities
Use networks like GitHub or StackOverflow to locate active blockchain developers involved in relevant projects. Present their work and check their knowledge of specific protocols and architectures you plan to employ.
Use Specialized Sites
Use specific blockchain-specific hiring platforms such as Blocktribe, Cryptocurrency Jobs, and Blockchain-Council to connect with vetted developers skilled in creating smart contracts and decentralized applications.
As a Partner of Blockchain Consultancies
Engage with reputable blockchain consulting firms that have teams of skilled designers, developers, and project managers to create and integrate advanced solutions.
Offer Competitive Salaries
Blockchain Programmer are highly sought-after. Offer benefits and pay comparable to the market to draw and keep specialized talents. Make sure to highlight exciting projects and the potential to invent.
Prioritize Understanding over Buzzwords
Be sure to look beyond the buzzwords on resumes to determine if a developer accurately understands the fundamental blockchain concepts. Examine their hands-on skills through codes, technical interviews, and trial assignments.
Check for Collaboration Skills
Examine the candidates’ communication, documentation, and teamwork abilities. Blockchain solutions require alignment between business requirements in addition to technical skills.
Build a Diverse Team
Incorporate an array of senior architects and mid-level developers, developers at junior levels, control testers, experts in security, and Product managers—diverse experiences and backgrounds, as well as strengths, result in a well-rounded group.
The appropriate resources, working environment, and growth opportunities can keep blockchain teams in the long run and help develop internal leadership. This results in sustainable success as blockchain solutions grow. With a well-equipped development team, a new generation of supply chain processes powered by blockchain technology is within reach.
