The Impact of Blockchain Technology on Supply Chain Management

Supply chain management has developed over the past 50 years to become one of the largest and most intricate sectors operating on a worldwide scale. This does not seem surprising in a number of industries.

 

After all, as a byproduct of rising globalization, supply chain management complexity has risen sharply. However, the usage of blockchain in the food supply chain is advantageous since it quickly addresses all the aspects for process ease and lowers the cost of the farming processes. 

 

Fortunately, the use of blockchain in the supply chain just might be the answer to fixing the poor situation of the existing ecosystem. For instance, the use of blockchain technology in the food supply chain is showing promise in quickly resolving all the concerns associated with process ease and lowering the cost of farming operations.

 

What is Supply Chain Management?

 

In plain English, Supply Chain Management (SCM) is a strategy for controlling the movement of products, services, information, and resources as raw materials are transformed into finished commodities that are supplied to customers.

 

The supply chain process consists of seven fundamental elements that together constitute the foundation of any organization: planning, information, sourcing, inventory, production, location, transportation, and return of goods.

 

The process genuinely gives any business energy for the present and the future, giving the corporate world a lot of impetus. But because of escalating security risks and shifting customer demands, traditional supply chains are encountering new difficulties in providing a highly effective and reliable ecosystem to everyone. Several of which we'll discuss in the article's next part.

 

Also Read | Supply Chain Analytics: Features, Benefits and its Types | Analytics Steps

 

What Are The Supply Chain Management Challenges?

 

1. No worldwide database

 

In spite of the fact that our globe is now connected, some organizations nevertheless keep their databases private. Each team keeps its own records, which it only shares with other teams upon request. This leads to a variety of communication gaps between any two parties, which is advantageous to the exploiters.

 

2. Insufficient asset tracing 

 

The inability to trace assets is another problem in supply chain management. They have put in place the best tools and procedures for monitoring internal operations, but there is no way to track the condition of products once they have left the warehouse for distribution. This makes it simpler for exploiters to substitute "lookalike" fake goods for the genuine article.

 

3. Extra charges

 

Every team builds and maintains its own collection of data, thus they frequently expend time and money acquiring the same data repeatedly. The accompanying cost will significantly increase as a result.

 

4. Protracted quality analysis procedure 

 

Determining when the quality has been compromised or the product has been replaced is a time-consuming and expensive effort due to discontinuity in the present SCM process. Additionally, a centralized structure exposes a company's processes to several dangers like fraud and code of conduct breaches, emphasizing the critical need for strong risk management procedures in supply chain systems.

 

5. Failure to meet client demands

 

Last but not least, while using the current supply chain management procedure, entrepreneurs also struggle to keep up with changing user needs and incorporate the necessary modifications into their working strategies.

 

Due to these supply chain problems and the increased rivalry, the majority of businesses, if not all, have begun expressing interest in the idea of implementing Blockchain in the supply chain. They are working to comprehend the fundamentals of blockchain and how it is reshaping several industries, including real estate, healthcare, fintech, and enterprise.

 

How does blockchain affect the supply chain?

 

A blockchain supply chain is a cutting-edge response to many different issues. A typical supply chain involves a number of procedures, such as purchasing raw materials, manufacturing, finance, and so forth. One or more transactions may involve these processes. These one or more transactions are recorded on various blocks in a blockchain supply chain.

 

The information is subsequently widely available and transparently distributed over a network of computer systems in the blockchain as a result of these recordings. Each stakeholder becomes an active participant in all supply chain interactions since every transaction is recorded on the blockchain and reflected in real time. Let's focus our discussion on the influence of blockchain on the supply chain by going through a list of advantages now that we are aware of what it entails in terms of supply chains.

 

Also Read | How Is Blockchain Enhancing The Supply Chain Transparency? | Analytics Steps

 

Blockchain in Supply Chain: Advantages

 

1. Instant tracking

 

Transparency and decentralization are features of a supply chain management system powered by blockchain functions. This makes it simpler for one to be aware of all activities occurring at any given time. The value of this is not only seen in the manufacturing industry, but also in how blockchain increases transparency in the fashion industry

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2. More rapid processing

 

Supply chains can manage complicated and big data sets, but some operations, particularly those in lower supply tiers, are slow and largely reliant on paper, which is something that happens frequently in the shipping business. The existence of intermediaries makes the process worse. Smart Contracts, a component of Blockchain, save operating time by doing away with third-party middlemen and eliminating the need for paper and pen.

 

3. Improving traceability

 

Significant change is occurring in the supply chain sector as a result of legislation and growing need for provenance information. Better traceability brought about by the adoption of blockchain technology in the supply chain results in the creation of additional value through the reduction of high-cost problems related to quality, such as brand damage, product recalls, and revenue loss as a result of gray or black market products.

 

4. Stable client relationships

 

Consumers can learn everything there is to know about the product they are using thanks to blockchain technology. By making the order tracking process transparent, blockchain for order management significantly improves the client experience. Customers can also verify the authenticity of their purchases. This involves fostering trust between consumers and the corresponding brands. 

 

Supply Chain Management Converging with Other Technologies

 

1. Artificial intelligence

 

Blockchain and AI will be able to manage data more efficiently and effectively because of their confluence. Using the strength of predictive analytics, it will also increase security for the ecosystem and enhance scalability.

 

2. IoT (Internet of Things)

 

IoT integration, also known as Blockchain of Things, will enhance blockchain's near-term prospects in the supply chain and logistics sectors. The two technologies will make it simpler to monitor each activity occurring along the chain in real time and to alert the connected devices for diagnostic purposes.

 

3. Beacon Technology

 

Beacon is a different piece of technology that will encourage the usage of Blockchain in supply chain management. Businesses will be able to inform all of their employees and customers about their product and its current condition, fostering trust throughout the entire process.

 

Connections Between Blockchain and Other Technologies

 

The continued development of other disruptive technologies including the Internet of Things (IoT), artificial intelligence (AI), cloud computing, and big data analytics is interconnected with the implementation of blockchain. An internet-connected network of devices that allows for communication between them as well as between them and people is known as the Internet of Things.

 

It offers the ability to minimize manual engagement with the data while automatically collecting information throughout the whole supply chain. Large volumes of data are gathered and managed through big data analytics in order to identify pertinent information and streamline procedures. Big data improves demand forecasting and supply chain process optimisation in the consumer products sector.These disruptive technologies are a part of the fourth industrial revolution. 

 

Technological advancements are what fuel innovation and economic growth, and in the near future, the value of pertinent data is anticipated to rise. In the so-called "Big Data era," information is continuously gathered and analyzed, which raises the need for a secure, decentralized database.

 

These emerging technologies support supply chain decision-making and demand-supply variations management, which enhances supply chains' overall performance.

 

Sustainability in Supply Chain Management

 

Due to recurring reminders of both global disparities and the environmental devastation of our planet, the discussion of sustainability is one that gains momentum every year.

 

These facts cannot longer be disregarded or treated impartially by individuals or organizations. organizations are under pressure from both internal and external stakeholders to change their practices to be more sustainable, which has led to organizations being evaluated not only on their economic success but also from an environmental and social standpoint.

 

It is difficult to meet the criterion of having a sustainable supply chain. Sustainability is a multifaceted objective that is challenging for a single organization to achieve, as was previously mentioned.

 

A healthy supply chain, however, necessitates effective communication and cooperation between the many participants because it originates from independent entities from suppliers to end users, which is a challenging challenge for all kinds of supply chains. SSCM has numerous definitions. But they all share the same fundamental significance. 

 

Impact on the Environment

 

Traceability is a feature of blockchain that businesses view as advantageous for supply chain environmental transparency. It has always been challenging for businesses to guarantee and confirm that their products are environmentally friendly.

 

However, firms have been forced to discover ways to create more traceable supply chains due to the push from environmental activities and customers to have accessible product records. The shift towards more supply chain transparency is being driven by rising environmental consciousness and consumer demand for products made responsibly.

 

By enabling widespread data exchange, blockchain technology has the potential to improve a supply chain's transparency and traceability. As a result, it guarantees that the information given is reliable and cannot be altered for personal gain. As a result, from the standpoint of sustainability, it has the potential to revolutionize supply chain management. 

 

As a result, only trustworthy data may be shared and an environment where actors are responsible for their own actions is facilitated. A customized coin that converts its value into environmental data instead could be used. When emissions exceed the agreed-upon emission ceiling set by the supply chain, the data transaction may then be linked to carbon emissions and triggered through smart contracts.

 

The Role of Blockchain in Social Responsibility

 

As previously indicated, one of the difficulties with social responsibility in the supply chain is keeping an eye on the partners and having faith in the veracity of the data they provide. This is related to the lack of transparency that many supply chains experience, as the insufficient knowledge of the methods used by other actors makes it challenging to secure a chain that upholds social responsibility. As a result, if supply chains want to demonstrate that they are socially conscious, this problem must be resolved.

 

The literature claims that blockchain has the ability to validate social responsibility along a supply chain. Distributed data sharing makes the information more trustworthy and unchangeable.  Blocking can also deter criminal activity and make people and organizations answerable for their deeds.

 

As a result, it is simpler to ensure that the supply chain complies with human rights and fair working conditions. Even in multi-tier global supply chains with several retailers and third-party service providers, blockchain allows transparency. Retailers may demonstrate their sustainable practices to their customers by providing information regarding social sustainability certificates and acceptable working conditions in tamper-proof records across the supply chain.

 

Conclusion

 

One of the numerous industries affected by blockchain technology is supply chain management. However, it's crucial that you stay current with the latest Blockchain technology developments and a set of technologies that will produce better results in the near future if you want to successfully integrate the technology into your supply chain management. Additionally, it is crucial to work with the top blockchain development companies who can make the adoption of blockchain throughout your whole supply chain profitable and smooth.

 

Also Read | Step-by-Step Guide to Blockchain Security | Analytics Steps