Blockchain technology is fairly new in the business world and its applications are just emerging in the commercial arena. Experts believe that it may be possible for businesses to use this technology,despite its infancy, to create a greater edge over competitors. But what is this blockchain technology? In short, it is a distributed ledger that can permanently record verifiable transactions between two parties. A distributed ledger means that it is not limited to a central party. Anyone can see and add entries (blocks) to the transparent and decentralized ledger. These blocks cannot be deleted or altered.
On a practical basis, how would this transparency be a revolutionary element as modern technology analysts claim it is? Let’s dive into one of the use cases where the blockchain technology applies:supply chain management. Although there are numerous applications in supply chain management, we will only discuss how it solves three supply chain problems:
We are familiar with scenarios where counterfeit products make their way through supply chains. This also creates issues surrounding customer satisfaction with poor quality or fake products. Blockchain makes it possible to mitigate these situations as all of a product’s supply chain history is traceable from the start.Because blockchain stores tamper-proof tracking history of the products, counterfeiting is more difficult. This means businesses can provide their customers with better verifiable products as well as buy verified goods for their own use.
Traditionally, suppliers find themselves embroiled in fragmented systems of data storage silos, resulting in delays, or worse, customer dissatisfaction. If the entire system would be decentralized, all parties would have access to the blockchain, resulting in more transparency, increased trust, and less burden on the suppliers. This means blockchain technology enables all parties to access ledgers involved with the supply chains, making the whole system more decentralized. The ledgers are not simply accessible—anyone can also add entries to the records by consensus.
Although contemporary supply chains can handle the complexities of manufacturing processes, they are still extremely slow, expensive, and inefficient. When each supplier and manufacturer have their own infrastructure, tracking products in real time is difficult in a fragmented system. Product delivery delays are usually caused by lack of access to up-to-date data. This can be mitigated using blockchain technology, which increases supply chain efficiency while speeding up time to market.
Blockchain technology clearly is revolutionary, but is still in its infancy. However, it is projected to have far-reaching impacts on many business realms, including supply chain management. Nevertheless, it cannot be expected to be a magic bullet. Blockchain has strengths and weaknesses, but it can be used to preserve trust and transparency. It is also efficient and very useful for businesses that need to deliver faster to customers whose demands increase with each passing year.