Blockchain Solutions Solving Supply Chain Issues
Blockchain solutions have the potential to distinctly improve supply chains, enabling quicker and more cost-efficient delivery of products, enhancing products’ traceability, improving communication, and giving help to financing frameworks. Blockchain solutions can significantly make supply chains more efficient and authentic.
Through a shared immutable ledger that can provide proof of origin, suppliers can use blockchain to record the origins of materials that they have purchased. This would allow companies to verify the authenticity of their products to their buyers. One reason for the inefficiency in supply chains is the lack of Product Provenance.
Provenance — the recording of assets across a supply chain can be done using a specialized digital distributed ledger. Blockchain technology ensures that one can quickly know the ownership of an asset since its origination. Misselling of high-value and low-value intellectual asset properties for a wrong price, theft, fraud, and many more related wrongs will be reduced.
The financial ledgers and enterprise resource planning systems currently being used do not reliably allow all the involved parties in a common supply-chain transaction to see all the relevant data and processes of information, inventory, and money. A blockchain system, therefore, eliminates blind spots.
Errors in execution, such as mistakes in inventory data, missing shipments, duplicate payments, etc. are mostly impossible to detect in real-time. Even if after a difficult process that has a high expense, a problem is discovered, there will be no fix at the source or by tracing the sequence of activities recorded in available ledger entries and documents.
Moreover, supply chain activities are often extremely complicated. Orders, shipments, and payments may not sync up neatly, because an order may be split into several shipments and corresponding invoices, or multiple orders may be combined into a single shipment.
Blockchain solutions have the potential to revolutionize supply chain management, utilizing distributed ledger technology to keep records of assets such as units of inventory, orders, loans, and bills. Bills of lading can be given unique identifiers, which serve as digital tokens (similar to crypto coins). Additionally, participants in the blockchain are given unique identifiers, or digital signatures, which they use to sign the blocks they add to the blockchain. Every step of the transaction is then recorded on the blockchain as a transfer of the corresponding token from one participant to another.
Smart Contracts will be used to cut costs and remove middlemen. Smart Contracts are essentially self-executing tasks that are coded through the blockchain and executed when a certain condition is met. Sloppy supply chains today are frequently a result of reliance on paper-based systems, which are susceptible to fraud, edits, misspellings, and more.
By using blockchain, smart contracts would eliminate the need for all middlemen and administrative steps — saving costs and removing all the chances for error.