A Non-Technical Guide To Understanding The Power Of Blockchain For Supply-chain
It has passed through multiple processes, people, geographical frontiers, languages and other factors to finally reach you. From being just a raw ingredient to a tangible product that serves a purpose, the product that you hold in your hand has gone through a phenomenal chain of processes and stages. This is what we call supply-chain.
This is perhaps the most layman definition of supply-chain out there. What was just a probably a click away would have gone through rigorous phases of manufacturing. Multiple companies and their networks would have come together, signed contracts, exchanged goods and services, put the raw materials on a conveyor belt, transported it to another manufacturing division, distributed it in markets and then finally be displayed for purchase. When we start noticing and appreciating the minute things in life, we would realize that supply-chain is — again — nothing less than art.
To delve a little deep into what supply-chain is, let’s understand that it involves the following components:
● Planning
● Information
● Source
● Inventory
● Production
● Location
● Transportation
● And return of goods
For a business to be self-sustainable, it should have a solid supply-chain management system in place. Imagine walking into your nearest Starbucks and finding out your favorite coffee is unavailable. This could be bearable for a day. But imagine if this happens every single time.
This translates to the reality of poor supply-chain management, where any one or more of the components were compromised. The steward did not anticipate the crowd that would turn out every day, or anticipated too many, the transportation that delivers the required ingredients went on a strike and more.
So, for you to have your favorite latte, a lot of people have to work in tandem with each other.
Sounds interesting, right?
However, modern developments and requirements are gradually changing the way supply-chain has been conventionally functioning. Due to increasing threats and changing consumer behaviors, this industry is plagued with challenges that hamper the delivery of a trustable and efficient ecosystem to everyone involved.
Challenges In The supply-chain Industry
● The absence of a centralized database of vendors and suppliers
● No proper tracking mechanism of products that are out for delivery, making them vulnerable to adulteration
● The lack of a centralized database forces them to invest in fetching similar information over and over again
● A tedious quality assurance process that is also time-consuming
● Fluctuating consumer demands and behavior and more
Is There A Solution?
Now, if you notice, you would realize that at the fulcrum of all this domino effect of consequences lies anonymity — the anonymity of information, of products transported, quality assurance and more. In every stage of supply-chain management, there is a loophole that is leveraged to the fullest by a few.
This results in undesirable consequences involving the wrong delivery of products, delayed delivery of products, delivery of counterfeit products, delivery of materials that are damaged or spoilt and more. In the end, it’s the aggregator who takes the blame for this.
However, there is an ideal solution that is mostly a buzzword in today’s day and age. It’s called Blockchain development. How can this technology help battle the plaguing concerns in supply-chain? Let’s find out by first understanding what blockchain is.
Blockchain Technology — The Hero We Deserve
Blockchain seals a lot of loopholes we just covered. First of all, this is a tamper-proof decentralized ledger that has a record of all the transactions that happen among peers. Everyone knows about every single transaction that happens on a network in blockchain. To help you understand how it works, pay attention to the sequence here:
● The first step is you requesting a transaction in a blockchain network. This transaction could be anything from cryptocurrency and contracts to records or other similar pieces of information.
● Your request is broadcast to a peer-to-peer network of nodes. Nodes are nothing but interconnected computers.
● These nodes validate your transaction and your status with the help of special blockchain algorithms
● Your transaction gets verified.
● Once your transaction is verified, it is merged with other similar transactions.
● A new data block is created for the ledger.
● This newly-created block is added to the blockchain to prevent adulteration and alteration
● Your transaction gets completed.
If you’re still unconvinced, understand that blockchain runs on three foundational principles:
● Decentralization
● Transparency
● Immutability
Because of its features and security assurances, blockchain is hailed as the modern virtual savior of our times. It has already begun influencing some of the core industries out there like banking, healthcare, fintech, manufacturing, education, real estate and more. Blockchain holds a special place in banking and fintech especially because of the involvement of money and money’s worth.
Where Does Blockchain Fit In supply-chain?
By now, I’m confident that your mind has already started figuring out the probable concerns blockchain is solving in supply-chain. If not, here are the areas of concern that can be fixed almost immediately with this disruptive technology.
Real-time Tracking
Like we shared, a primary concern in supply-chain was the lack of supervision in the delivery and transportation of goods and raw materials. With blockchain, however, this can be overcome seamlessly.
Because of the principles of blockchain such as decentralization and transparency, real-time tracking of products and goods can be made possible. In a blockchain ecosystem, every stakeholder involved in supply-chain has an idea about everything.
Overcoming Delayed Processing
Blockchain can also be used to keep 3rd party intermediaries at bay by implementing smart contracts. This further saves operational time and expenses.
Optimized Record Management
The decentralization of records paves the way for optimized records management. This also eliminates unauthorized modifications or maintaining replicas of information and further strengthens authorized modifications.
Informed Customers
Customers love transparency and blockchain is born out of this principle. When customers know all the information they need to know about a product or service they’re using, it only enhances the customer experience and relationships.
Does This Sound Too Futuristic?
When I started reading about blockchain, the technology was too good to be true. It took a while to come to terms with the possibilities of this technology. So, I definitely feel you. Besides, I also assure you that blockchain is being implemented by companies as you read. Companies like Oracle, Amazon, Maersk, IBM, Walmart and more have incorporated blockchain into various aspects of their businesses.
A report published by Deloitte on blockchain in 2018 also revealed the stats that over 53% of the surveyed companies believed this technology to be critical and that it’s one of their top 5 priorities. Fast forward two years and those companies would have already implemented them.
What’s The Starting Point?
If you feel empowered already and you want this thought to translate into actions, I understand. Now is the right time to implement this technology. With the simultaneous rise of similar technologies like artificial intelligence, machine learning, Internet Of Things and more, blockchain will only evolve for the better. And I’m not even sure if you’ve read how IOT helps in automated supply-chain management.
However, the implementation of this technology comes with its own set of sweet challenges. As a business owner, you should understand that this technology is still a buzzword for many and a lot of them see this as an immature ecosystem.
Besides, it also involves several legal and regulatory hindrances that need to be worked out depending on your region of operation. For instance, countries like Russian and China are completely against cryptocurrencies and its powering technologies.
By default the tech learning curve comes with it. While this post can make you understand the concept at a foundational level, there are multiple and complex layers you need to understand before you sign this technology off.
What’s the Remedy?
That’s why we recommend getting in touch with experts and veterans who know the ins and outs of blockchain technology. People who have invested thousands of hours understanding and implementing this technology to several companies out there.
We recommend getting in touch with X-Byte Enterprise Solutions that will help you out on multiple levels. From understanding your needs and recommending the right approach to airtight implementation, we can take care of it all. If optimizing supply-chain is your goal for 2020, get in touch with us now.
