Supply Chain Management can be a pain in the head for supply chain managers, product procurement managers, raw material manufacturers, and all others associated with the supply chain of products.
Counterfeiting and tampering with original goods have been a menacing problem in the world trade ecosystem with crooks using the inefficiencies of the current supply chain system to their benefit.
The inherent issue is that too many parties are involved within any supply chain ecosystem, making it hard to track the fault or the party to blame in case of delayed order delivery, authentication of goods, etc.
That’s why we need the intervention of technology to solve this debacle within the supply chain management process. Blockchain technology seems to be a suitable contender that can enhance the effectiveness of supply chain management systems and reduce errors that happen in the process.
In this article, we’ll demonstrate how blockchain technology helps mitigate current challenges encountered in supply chain dealings and how they bring in core aspects that revolutionize the supply chain process for the good.
Current Challenges Encountered in Supply Chain Management!
Lack of transparency, delayed overtime of product delivery, increase in counterfeit goods are some of the major challenges that are posed by the current supply chain management systems.
Major companies such as IBM, Mastercard, Emerson, Hayward, etc.. operating across various industries have testified that supply chain management can become as tedious as unwinding a chain of intertwined strings of metal.
It’s the way the current system works. There’s supposedly no real-time ledger that updates supply chain movements and authenticates transactions between multiple parties. In order words, there’s a lack of transparency and traceability wherein trust issues can go unsettled.
For large-scale businesses dealing with high-value goods such as diamonds and luxury fashion, it’s necessary that the company QA managers and other designated managers get a full-proof report of the entire movement of the supply chain involving details of each subcontractor and every other minute transaction details.
The authenticity of products comes into question in every retail segment and most companies don’t have sufficient statements to declare real proof that testifies it. To make matters worse, the product can be counterfeited during any given stage of the supply chain process, and without stringent security measures, it would be hard to prevent such a mishap.
Another common issue faced with current supply chain ecosystems is traceability. Due to schedule changes, and other real-time constraints, order delay becomes inevitable but the painstaking fact is that companies don’t have a real-time and authentic update of the current stage of the supply chain.
How Blockchain Enhances The Effectiveness Of Supply Chain Management!
Realizing that the current supply chain system needs innovation to amass the underlying problems encountered with it, major companies are incorporating blockchain technologies to revolutionize the entire spectrum of the supply chain.
There are potentially various ways a blockchain solves current supply chain issues due to its parent nature. In a blockchain, new inputs of data are validated with previous blocks of data to create a distributed and immutable ledger of digital data.
With this mechanism in place, every dealing and transaction associated with the supply chain system remains verified and updated. Let’s take a deeper look at how the technology enhances the effectiveness of the SLM system.
1. Ensures Authentic Traceability
At any given instant, companies deploying blockchain SLM applications can trace the entire route of the supply chain and get a detailed understanding of the major transfers between parties, the timestamp of the process, and supplier information. This enables them to get a proper estimate of when the product will reach their establishment after moving from various verticals such as manufacturing houses, warehouses, QA boards, etc.
2. Builds Trust and Enhances Transparency
There’s a greater degree of transparency involved with the integration of blockchain technology as every piece of data concerning the supply chain movement is available to all the participants in the blockchain. With the digital ledgers being immutable, it facilitates trust between the parties involved in SLM and enables them to function smoothly.
The blockchain ensures that no faulty goods or counterfeit products enter the supply chain throughout the process as each block of data is validated before it is added to the block. No amount of tampering can be done with the blockchain in function thus ensuring authentic goods and establishing mutual trust.
3. Optimizes Speed of Operations
As smart contracts are integrated into blockchain applications, they validate product transfers and transactions automatically without the need for a human intermediary. The pace at which each individual step carries forth with the enforcement of smart contracts is remarkable.
The vendor who receives the order sends the information to the manufacturing house, packs the products and places the shipment order wherein there’s a QA check and then moved to the supplier plant and henceforth. Every procedure is automated and transactions are validated instantly to regulate a smooth operational process of the supply chain.
The Future of Blockchain SLM!
The future of supply chain management is promising as blockchain technology matures and more companies are adopting it to build an effective SLM funnel. It’s only a matter of time before every company with complex supply chain management routines incorporates blockchain and its inherent applications.
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