Blockchain Overhauling the Supply Chain Industry

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    By Krunal Soni
    Mar 8th, 2019

    Do you ever wonder about the authenticity, safety, and legitimacy of the shirt you wear, the imported wine you enjoy, or the food you purchase from the mart? Despite your best efforts, the answer is likely no. It boils down to trust.

    You trust because there's no legitimate means to answer these questions definitively. So, you trust and choose to use the product. If the quality doesn't meet your expectations, you have the option to opt-out or compromise and use it. But what if there was a way to eliminate these options and instead enjoy things with guaranteed safety and fairness?

    Indeed, it's surprising.

    Blockchain technology makes all of this possible. For the uninitiated, Blockchain technology made its debut with the breakthrough cryptocurrency Bitcoin. Simply put, a blockchain is an open and shared ledger that is tamper-proof. While it began with Bitcoin, the applications of Blockchain go far beyond that, especially in areas like Supply Chain Management (SCM).

    Understanding Supply Chain Management

    In commerce, supply chain management (SCM) involves managing the flow of goods and services, encompassing the movement and storage of raw materials, work-in-process inventories, and finished goods from the point of origin to the point of consumption.

    Within SCM, a supply chain is a connected network of individual resources, organizations, and technologies involved in the manufacturing and sale of a product or service. It starts with the origin of raw materials and ends with the delivery of the product or service to the consumer.

    Properly implemented SCM can:

    • Increase Revenues
    • Decrease Costs
    • Improve Quality
    • Increase Sales
    • Accelerate Production, Distribution, and Sales

    Blockchain Revolutionizing Supply Chain Management

    Supply chain management on the blockchain addresses many legacy challenges. Consider this example: You need a rare and expensive medicine for cancer treatment. The packaging contains IoT chips (microchip sensors) that record every detail from the manufacturing unit to your hands. This information is securely stored on a blockchain ledger.

    Now, you can scan the medicine to trace its entire journey. This integration of IoT with Blockchain allows verification, eliminating blind trust in the process. This transparency not only increases sales but also provides valuable data for manufacturers to enhance their operations.

    Another real-life example is Everledger, which uses blockchain to create a diamond provenance protocol. Consumers can scan diamonds to know their entire history, ensuring authenticity and ethical sourcing.

    Applications of Blockchain in Supply Chain

    • Automotive Supplier Payments: Blockchain enables secure and rapid funds transfer globally, reducing costs and reliance on traditional banking transactions.
    • Meat Traceability: Companies like Walmart use blockchain to track the sales of pork in China, ensuring transparency in the supply chain.
    • Electric Power Micro-grids: Blockchain, through smart contracts, facilitates the redistribution of excess power from solar panels, contributing to cost savings and pollution reduction.
    • RFID-driven Contract Bids and Execution: RFID tags store information about products, automating bidding for logistics contracts based on real-time data.
    • Cold Chain Monitoring: Blockchain-based sensors on sensitive products record environmental conditions, ensuring compliance and triggering corrective actions.

    Benefits of Blockchain in Supply Chain

    In summary, Blockchain offers several benefits in Supply Chain Management:

    • Improved Transparency
    • Greater Scalability
    • Enhanced Security
    • Increased Innovation

    While Blockchain won't eliminate all SCM challenges, it effectively addresses many legacy issues. Combining blockchain with AI, smart contracts, and IoT can further revolutionize supply chain management.

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