In the last decade, the world has been going through globalization. With that, a lot of tech advancements have been introduced. Although this is a great step toward business growth, it also comes with a lot of challenges. One of the most affected areas has been the supply chain.
As companies can now trade with countries from all around the world, they struggle with maintaining visibility, accurately tracking their goods and services, and being fully transparent. Luckily, you can now easily get over these issues.
By relying on innovative blockchain technology, you can develop a safe and transparent network, which will help you avoid any challenges. Briefly, it allows all of the parties on the network to gain insights in real-time.
Today, we will go over the uses of blockchain tech in supply chain management, its benefits, as well as challenges. So, let’s not waste time and get down to business!
What Does Blockchain Technology Stand For?
Blockchain refers to a decentralized digital ledger that has been around since 2008. It first appeared on the market as Bitcoin’s backbone, but it is now available in various sectors. More precisely, it is recognized for the secure and transparent recording of transactions.
What helps it stand out from other technologies is its decentralized nature, meaning there is not only one entity that controls the database. In fact, anyone who is part of the blockchain can verify transactions without the need for a central authority. This significantly reduces the single-point failure. This is regulated by cryptography, which protects data from unauthorized access.
Regarding transparency, you can create public blocks that anyone can access and browse through the information. This is what makes this technology transparent and pretty valuable for individuals in the business realm, especially in the supply chain management sector.
Benefits of Blockchain Uses in Supply Chain Management
If you combine your smart business tools with blockchain technology, you will definitely enhance your transparency, goods tracking, and visibility. However, there are a few other perks that come along, so why don’t we check them out?
Enhanced Transparency, Trust, and Traceability
Being visible and transparent on the market gives you a great advantage. People will always be up to date with your work and security practices, which leads to earning more trust from your loyal and potential customers. If you ask marketers, they’ll tell you that you will need to update your site and campaigns regularly, use a signature maker so that you can stamp your documents, etc.
However, this is a bit different from the management side. By depending on blockchain technology, you will be able to be transparent by showing records of all your transactions within one network. Also, it allows you to oversee the products from their initial to the final destination. Due to this, the number of risks and fraud will indeed decrease.
Furthermore, the traceability of goods and the tracking of your organization’s performance happens in real-time. So, your partners will always be aware of the supply process and gain more trust.
Reduced Operational Expenses
If you want to have a supply chain that works properly, you will need many intermediaries and administrative requirements. This is where blockchain comes in handy! In other words, this innovation will help you simplify the planning, making, and delivering of your products.
All of this is possible with the automation that it offers. So, instead of completing all these tasks on your own, the technology will do it for you. However, blockchain also stores and shares data by eliminating all human mistakes throughout the process. Due to this, you won’t need to spend more time or money on resolving any issue.
Don’t forget that the overwhelming administrative work will also become part of the past. You will have access to everything from the same platform.
Improved Speed and Efficiency
As we already mentioned, using blockchain technology equals automated procedures. For example, you can implement automated payments, streamline logistics processes, or monitor inventory. This not only helps you be more efficient, but it also saves a lot of time.
By being aware of everything at all times and tracking your goods accurately, you will be able to minimize any delivery or development delays and achieve faster time to market.
Enhanced Security
Although blockchain provides a high level of transparency, it doesn’t forget about your data security. Blockchain technology utilizes distributed ledgers and cryptographic practices. So, all of the data that you store will be permanently safeguarded and out of reach for unauthorized changes. Therefore, don’t confuse visibility with weak security.
Better Customer Experience
So far, we’ve been talking about the benefits of blockchain for SCM. However, there is one key advantage for consumers, too. Because this technology enables you to deliver all of your products quite faster, customers will have them in no time.
On top of this, your buyers can also track them through the whole delivery process and find out where to expect them. As a result, consumer trust will soar, as they’ll get accurate insights.
Challenges and Limitations of Blockchain Technology in SCM
Blockchain is really a revolutionary practice for many businesses, including the supply chain management sector. However, as with other innovations, it comes with some limitations and challenges. Here is everything you should keep in mind:
- Integration with already-existing systems: ensuring that all of the systems you use are properly connected to the blockchain can be pretty tricky and time-consuming.
- Privacy concerns: Without taking necessary precautions, malicious actors can still interfere with your confidential data.
- Regulatory issues: Blockchain technology is pretty new, so many countries still don’t know how to regulate it. This may affect your business in the future if there are significant changes.
- Scalability problems: The current level of blockchain infrastructure might not be able to process vast amounts of transactions, leading to performance issues.
- Associated costs: You should take into account that implementing this type of technology can be pretty costly in the beginning, especially if you are a startup.
Wrapping it Up
Blockchain is an innovative and rapidly growing technology. Since it came out a few years ago, it has expanded in many areas. However, one of its most significant uses is in the supply chain management.
Thanks to the benefits it offers, such as enhanced visibility, tracking, transparency, lower costs, and more, businesses simplify repetitive administrative tasks and gain more trust among collaborators and customers.
