How could blockchain revolutionize supply chain?
Along with some of the more revolutionary inventions since the spork (spoon fork) comes a virtual technology, with real-life applications known as blockchain.
Blockchain has managed to revolutionize many industries. It’s secure and has the ability to track and store lots of information. We know that in today’s world, the supply chain can span over hundreds of stages, locations, have several people involved, and be financially complicated. With the lack of transparency in the supply chain, there are questions as to whether blockchain might be able to transform the supply chain industry. This article will attempt to break down what blockchain is, and also explain the use of blockchain in supply chain and the links involved in creating and distributing goods.
What is blockchain?
Simply put, blockchain is a technological system, or a whole suite of distributed ledger technologies that can be programmed by a computer to record, store, and track anything of value. It allows data to be distributed but not copied, and was originally intended for digital currencies. Now, these valuable things can range from financial transactions (as it’s best known for) to smart contracts such as medical records or land ownership.
Historically, financial transactions were written and stored in a ledger. A ledger can be a book, or a computer, or any other thing that has a record of financial accounts. Each block within a block chain is a ledger. Blockchain stores information in blocks that are linked together in a line to form a chain of transactions that have been computed and stored very securely in a way that makes it very difficult for anybody to change or manipulate it.
What is so revolutionary about blockchain?
If you’re one of the blockchain buffs among us, you’ll know that we haven’t yet discovered its full potential – unlocking its full potential may provide benefits we never imagined…and this is just the beginning. Blockchain is so revolutionary because of the way it tracks and stores data. It’s decentralized, which means it cuts out the middleman, or central authority ie banks and lawyers so you can save your time and money. Cutting out the middleman also ensures that your message is being sent directly from you to the other party involved. Decentralization reduces the likelihood of tampering for this reason.
The security of data within the blockchain is second to none. For a new block to enter the system, each participant within the blockchain has to approve and update the new entries. If all participants validate and confirm the information, the block can enter the system. Information is shared, rather than copied. Every participant within the blockchain controls the system, so validity and security come from all members agreeing on the same thing.
And how exactly does logistics & supply chain come into all of this?
The conscious consumers among us will be happy to hear that blockchain will strengthen visibility and traceability of products from start to finish. As such, the use of this digital technology in logistics could have a very positive impact on society, much like the use of CSR in logistics. It will help us decide whether products have been ethically made, and will maintain complete transparency of where their products originated.
Blockchain technology could be used to track and record product status at each stage of production. Imagine if each block within the blockchain was a shipment. Each block could log and track a shipment from point A to point B to point C etc. This theory could also be applied in the pharmaceutical industry by tracking medicine through its whole production cycle as well as in food production – sourcing origins of food by strengthening traceability.
Blockchain has the potential to improve what we eat. For example – the American chain, Walmart use it to trace its lettuce supply chains. This could be an indispensable solution in food safety regulation. Eventually, the technology could track ingredients inside of a product – such as the beef inside a lasagne (yum) – back to its origins. No doubt we will see progressions in this area. Blockchain will have a positive impact on the supply chain, from production to delivery to payment.
In a nutshell, blockchain will revolutionize supply chain for these key reasons : It’s trustworthy and can detect fraud, it’s immutable, it has the ability to track origins of products and has improved data visibility.
Trust and fraud protection
A single shipment or any type of delivery often involves dozens of parties meaning lots of interactions and increased chance of tampering or theft of the goods, or details on paperwork changed. Both buyer and manufacturer will benefit from this protection as blockchain can detect and prevent fraud because each step of the supply chain is tracked and validated.
No information within the system can be changed, edited, or deleted.
Tracking origins of products
Using blockchain can detect faulty batches and provide proof of a products manufacturing and origin.
Visibility and transparency
In terms of delivery supply chain, the technology will provide everyone with access to the same data. Such data could include information on where the shipment is, and no one will be able to tamper with the information. This would result in total transparency and insight into what stage the delivery is at.
So, if you’ve made it to the end of this blog and you decide you’re probably more of a visual person, click here to watch a video that breaks it all down very nicely – it also includes images.
Or read this informative blog!