Blockchain is a distributed ledger technology which keeps the digital data record of transactions in safe and efficient way and it is rapidly being integrated into various industries with multiple functions. World’s leading companies have computerized enterprises resource (ERP) and systematic supply chain management software. Supply chain management is one function that holds heavy traction from the technology. Areas of supply chain management such as product traceability and transparency, supplier payments, contract bids and execution are the main attributes which will witness the integration of blockchain. Blockchain has the potential to become a worldwide supply chain management system. Through blockchain, companies will gain a real time digital ledger of goods transaction and movements.
Supply chain management involves multiple supplier and manufacturers at each stage. Some challenges associated with supply chain are lack of end to end visibility, operating cost, obsolescence of technology and lack of information transfer, manufacturing cost, and inventory cost. It is very difficult to have the visibility at each point where goods move from one point to the final point hence, visibility is observed to be the most important challenge in supply chain management. Lack of coordination between the manufacturing and production increases the supply chain cost and if the product is not manufactured as per the company’s demands it will increase the transportation and inventory handling cost.
The supply chain is interlinked and at every point it is put to test for its effectiveness and efficiency. For example, if the production slowdown it will further delay the delivery, which effects upstream supplier. The downtime delays further affects the distributor and it results in product shortages at retailers end. Thus the end user needs are not met which further impact the company brand value. This constrains can be reduce by combining blockchain into artificial intelligence.
The major drivers of supply chain management are production, inventory, location, transportation, and information. In these areas as mentioned above, blockchain system will provide a method for the objective calculations of profits and bring transparency in the business. It can also eliminate friction and increase transaction speed between the partners.
Blockchain will transform and simplify the supply chain management and it will register the transaction in decentralized manner. Transactions will be maintained in secure and transparent manner. There are number of companies such as Fluent, which is supplychain based startup raised an amount of funding $1.65 million. Provenance offers transparent business and traceable products has accounted the funding of $ 1.1 million with $800K of lead funding by Humanity united, and Blockverify is a blockchain based anti-counterfeit solution has total funding amount of $52.8K with the lead funding amount of $25K, SKUChain is operating this sector. Adopting blockchain in supply-chain would open the door to more corporations between logistics companies and manufacturers.
Supply-chain industry is increasingly reckoning on technology to cut cost, improve the process and transparency. Blockchain will be the solution to all of supply-chain issues and improve the management and business growth. It will reduce fraud and errors, paperwork delays, improve in inventory management, identify and resolve the issues quickly and lead the faith of customers and stakeholder trust that will be an exciting time in industry that has not seen major advances in technology for a few decades now.