What is Blockchain in Supply Chain Management?
Article Source: Blockchain in Supply Chain Management
Why you should care
Blockchain technology could revolutionize supply chain management by improving transparency, efficiency, and security. With its decentralized ledger, blockchain ensures that data cannot be tampered with, providing trust in supply chains. In a $40 trillion global market, the potential to reduce fraud, expedite processes, and eliminate intermediaries is groundbreaking for businesses and consumers alike.
Answering the question… What is blockchain in supply chain management?
Blockchain in supply chain management refers to using a decentralized, distributed ledger to record and verify transactions within the supply chain. The technology enhances traceability, ensuring that products are authentic and accurately tracked throughout their journey. Blockchain can eliminate the need for third-party verification, allowing for more direct, transparent transactions between suppliers, manufacturers, and consumers.
How was the study done?
The study examined the potential of blockchain in supply chain management by analyzing its application in various industries, including food, pharmaceuticals, and manufacturing. Researchers explored how blockchain could improve the traceability of goods, reduce paperwork, and enhance transparency. They also evaluated the challenges of integrating blockchain into existing supply chain structures, such as scalability and the verification of physical products.
What was discovered?
- Blockchain reduces paperwork and transaction times in supply chains, with lead times shortened from 7-10 days to just 4 hours in some trade-finance deals.
- Using blockchain can cut transaction costs by 20-30% by removing intermediaries and streamlining processes.
- Blockchain enables full traceability of goods, allowing consumers to verify the authenticity of products like organic food or pharmaceuticals in real time.
- The combination of blockchain with RFID tags or sensors improves real-time tracking, helping reduce fraud and ensuring that products meet quality standards.
- Current blockchain systems struggle with scalability due to the large amounts of data required, and there is a need for improved integration with external markets and existing supply chains.
Why does it matter?
Blockchain in supply chain management offers the promise of greater transparency, faster processes, and reduced costs. By ensuring data accuracy and eliminating third-party verification, blockchain can transform industries that rely on complex supply chains. However, challenges remain in terms of scalability and linking digital ledgers to physical products, which need to be addressed for blockchain to reach its full potential in revolutionizing the supply chain.