There is quite a buzz about the Blockchain technology in the tech industry. Although it is not a new technology, the recent boom in cryptocurrency has put the blockchain in the spotlight. The majority consensus is currently interested in the ‘value & future’ of various cryptocurrencies which recently flooded tech space unexpectedly by leveraging the benefits of the blockchain, but there are some visionaries who have a completely different perspective and goals.
These visionaries are not very much interested in the cryptocurrency but the technology. There are people around the globe who sees the true potential of blockchain technology and are devising different ways to implement & reap the benefits of this not so new but undermined technology.
Supply Chain Management is one such domain where this ‘Blockchain’ will certainly dominate the space and will prove a game changer.
The problem with current supply chain management systems
1. Too much-centralized information, finding a needle in haystack
The biggest problem with the current system is the centralization of whole data which is associated with it. It may seem very convenient but when the time comes to take an audit or to track something, the system provides a galaxy of digital data and very few stars of relevant information.
At the time of production, the information may be maintained digitally within an organization, but one the shipment is initiated, they don’t have the endpoints to look out for their own product. Products have their own digital identity, but when they are shipped, the product as an entity is now considered as a shipment.
Different shipments agents have their own shipment data, adding more digital information about the shipment. Where the shipment information is available in the discreet system, it is not directly associated with that product and the manufacturer does not have the direct access to track it.
A plethora of data is there in the whole process, but it does not implicitly add any trackable relevance to it.
2. The game of middlemen – No transparency to the different hops of shipments
An involvement of middlemen is always viewed with skeptical vision, no matter of their benefits or the process. Right now, the only way through which you could get all the actors and entities on a common consensus so that they agree on a shared valid data, such as who has the shipment, who is responsible, was to have a neutral entity who can process and account for all transactions happening in the system.
Current system entertains limited users having roles to access the particular type of data making the system opaque at each step of shipment movement. The end user may not have any idea about the initialization of the whole shipment process, from where it started or even the hops from where it went through. The same can be said for the initialization user, who may have no idea how the shipment process is going forward in case multiple shipment agents are involved.
This leads to a cumbersome process to track in case of discrepancy which might have occurred during the shipment process, moreover, a security breach can lead to a dominos effect and the end result may incur a huge loss. The more the hops, the less is the overall transparency.
Blockchain to disrupt the whole opaque system
The biggest benefit of blockchain is the decentralization of whole data. All the transaction can be stored and maintained across different nodes of the network which are updated in real-time. Transaction data are secured across the network with powerful advanced encryption and access provided to only relevant entities.
Each node of transaction offers proof of how the goods were procured, how do they comply with regulations, all the legal work associated at the transaction and how & when they are shipped, where they are shipped.
1. Removing the middlemen – A robust, trackable and transparent system
Blockchains make it possible for enterprise ecosystems who deals with suppliers, manufacturers, distributors, partners and end users to share and agree upon key pieces of information. By implementing blockchain they can do it without having to appoint any neutral entity to deal with all the complex calculations about the negotiations, transactions validations that come by the rules before handing over critical business information. Instead of having a central neutral entity, blockchains synchronize all data and transactions across the network, and each participant verifies the work and calculations of others.
The above verification task needs a huge amount of redundant cross-checking as all the transactions are updated in real-time across thousands of network nodes making the system reliable and robust even if the number of transactions amounts to tens of thousands every week.
The beauty of blockchain lies at this point, where even with so much data and transactions to handle, each transaction can be backtracked to its point of origin.
2. No room for errors – Valid transactions updated in real-time
In the traditional system, whenever the shipment reaches the destination it needs to be updated manually. These are the key points where a mistake can take place or even if the shipment details are not updated at the correct time the shipment can be seen at two different places at the same time. This is a major problem when multiple shipment agents are involved with their own discreet & opaque systems are involved in the game
With blockchain, all the nodes are updated in real-time, all the players will have access to the latest transactions, eliminating the condition where a single shipment exists at two different locations
Blockchain implementation with help of advanced QR code or barcode automatic tracking can update the nodes of the transaction for each shipment in real-time and all the players will get updated instantaneously with no margin of errors.
The benefit of distributed ledger system is of remarkable significance here.
One of the major points of emphasis for every system is the security, let it be for financial services or any other service where the transactions play a major role. With conventional systems, where all the data is stored and maintained on a single place or server poses a huge threat of someone tampering the transactional data which can affect the ongoing transactions rendering them meaningless or may pose a higher threat.
With a distributed system, where all the transactions are maintained over thousands of nodes, tampering with a few nodes does not impact the system as each node validates each other’s transactions. In case any discrepancy in the updated records at any node, the system would isolate that node and won’t allow it to make any changes in the system. With time, that node can be rectified and will be kept back in sync with the system and also alert the system admins to track about the disrupting node to make necessary steps.
The ability to isolate and track the tempered nodes provides a huge security upgrade to the conventional system used to manage the supply chain.
The key to any successful supply chain management is to maintain a robust and transparent end-to-end communication.
With blockchain, the transparency can be added to provide the proof of how the product was conceived at the source, how they were handled, complied with the regulations in real-time and reliable manner. Keeping transparent and robust records of all transactions and communications with comprehensive traceability in a few minutes.
Blockchain in supply chain management will prove itself as a gamechanger, benefiting all entities from the source to the destination agent. It still has a long way to go, but the pioneers in the industry are constantly devising ways to take on the current system vulnerabilities and inefficiencies.
The blockchain is just one of those many ways with promising future.
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