The Top Five Benefits of Blockchain
A blockchain is a cloud based spreadsheet or diary that contains a digital record of specific transactions. The origin of the term blockchain is attributed to its structure which is a combination of individual records, referred to as blocks, linked together to make a centralized list, referred to as a chain.
The basic steps of a blockchain are-
1. The initiation of a secure transaction
2. Transaction verification in the supply chain
3. Encoding of additional data within the blockchain
4. Data archived within distributed blocks
5. Compensation sent and confirmation received
Blockchains offer an automated and digital process of storing data that is immensely beneficial to supply chain management processes. The top 5 benefits blockchain offers supply chain management include-
1. Increased Automation
Case studies reflect that up to 10% of freight invoices contain inaccurate information. Not only do these inaccuracies lead to miscommunications and are potential sources of conflict, but they are also supply chain and management system inefficient.
Blockchain can be used to automatically log product activities throughout the supply chain. As each step that a product takes through the supply chain is automated using blockchain the potential for human error is significantly decreased.
Additionally, case studies have shown that increased automation and fewer errors can increase delivery speeds. Increased delivery speeds in turn result in better customer service experiences and increased customer retention rates.
2. Improved Collaboration
With over half a million trucking companies in the United States alone, data silos, differentiating technology levels, weak transparency, and nonstandardized processes are commonplace. Blockchain helps combat collaboration issues by increasing data transparency and supplying a centralized platform for data.
One common issue that exists in the logistics industry is the need for intermediaries. The need for intermediaries arises while working with different third party providers ranging from alternative supply chain partners to real estate brokers.
Blockchain helps negate intermediary requirements, saving businesses both money and time, while improving relationships. Blockchain used throughout the logistics industry decreases miscommunications and errors, allowing for different suppliers within the global supply chain to work together more efficiently and effectively.
3. Global Supply Chain Compatibility
As the global supply chain continues to expand, raw materials and finished products pass through more third party hands than ever before. In fact, case studies estimate that a simple shipment of refrigerated items traveling from East Africa to Europe may pass through 30 third parties and necessitate over 200 interactions or communications.
Refrigerated food supply products passing through so many different third party providers could result in food safety issues that are difficult or impossible to identify and trace. Remedying this, blockchain provides real time updates as food supply travels through the global supply chain to its final destination.
4. Traceability and Transparency
Blockchain helps supply chain management processes by creating a traceable digital record. If any issues occur throughout the global supply chain it is much easier to pinpoint where the offense was committed.
Traceability and trackability are especially beneficial when a food safety or medication safety issue arises and may event prevent safety issues from ever occuring. For example, cold chain tracking technology uses sensors to confirm that products were maintained at an appropriate temperature throughout the entire supply chain, providing consumers with the safest and highest quality product possible.
Blockchain technology combines increased supply chain transparency with smart contract technology. Additional benefits blockchain offers businesses include distributed ledger technology and management systems compatibility.
Blockchain helps both companies and consumers to be more knowledgeable about the products they purchase. Businesses can use blockchain technology to confirm that materials were shipped from a specific location and decrease the likelihood of fraudulent purchases.
For consumers, blockchain can supply information about preservation techniques utilized and the ethicality of any raw materials sourced. As consumers become increasingly more concerned about ethical sourcing and production, blockchain solutions may become more widespread.
5. Optimized Security
Security should always be a top business priority. Blockchain helps supply chain professionals keep data secure throughout the entire global supply chain.
Blockchains are incredibly difficult to falsify which decreases the likelihood of fraudulent activity or forgery. In fact, top financial services use blockchain to securely transmit data.
The security that blockchain provides businesses improves their reputation and boosts credibility. Supply chain malpractice is greatly minimized, decreasing the liklihood of costly and damaging public relation risks.
- A blockchain is a cloud based digital record of transactions recorded on a diary or spreadsheet. The use of blockchains can transform supply chain management processes by utilizing tools such as smart contracts to increase efficiency and productivity.
- Case studies conclude that over 10% of freight invoices contain inaccurate data. With over 500,000 trucking companies in the United States alone, blockchain provides a centralized and less error prone data platform.
- With so many third party providers in the global supply chain, blockchain increases traceability, transparency, and collaboration while maintaining security.