Blockchain Solutions in Supply Chain Management
Is the Tudor watch you wear the original or replica? Are the fruits in your fridge produced naturally or chemically? Is the newly purchased T-shirt a Gucci's or made by a local brand?
These questions have become the norm these days. Consumers are becoming increasingly uncertain about the products they use. And it's not entirely their fault. In recent years, the focus has been on various fakes that have stunned customers all over the world. Many research organizations have also dealt with the matter at a microscopic level and made terrible revelations because the Organization for Economic Cooperation and Development revealed that in 2013 fake products worth half a trillion dollars were delivered. Overall, this has brought a new challenge to entrepreneurs.
The challenge of ensuring the originality of your products and building a level of trust. Something for which they are currently implementing blockchain in the supply chain management (SCM) process. But how effective is this collaboration? Is Blockchain to the rescue here? Let's start with a simple definition of SCM.
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Definition of Supply Chain Management
SCM is an approach to managing the flow of goods, resources, services, and information throughout the process of transforming raw materials into a fully-fledged final product delivered to the customer.
The supply chain process consists of seven basic elements: planning, information, source, inventory, production, location, transport, and return of goods that build the basic infrastructure of each organization. In fact, it drives the present and future of every business and therefore has huge momentum in the business world.
However, in the face of growing security threats and changing consumer requirements, traditional supply chains face many challenges, providing everyone with a highly efficient and trustworthy ecosystem.
Traditional SCM Challenges
1. Absence of the Universal Database
Despite the fact that our world is online, various organizations still keep their databases for themselves. All teams create their own records and make them available only on demand. As a result, there are various gaps in communication between the two sides that are beneficial to exploiters.
2. Insufficient Asset Traceability
Another challenge in supply chain management is the inability to track assets. They have introduced the best equipment and procedures to track their internal operations, but there is no way to track the status of products when they are ready for delivery. This makes it easier for explorers to replace the original product with counterfeit products of the same appearance. Another challenge in supply chain management is the inability to track assets.
3. Inappropriate Costs
Because each team creates and maintains an individual database, they often invest their efforts and capital in collecting the same information over and over again. This entails a drastic increase in related costs.
4. A long-term quality analysis process
Because of the discontinuity in the current SCM process, this is a large and expensive process for determining when the quality has deteriorated or the product has been replaced.
5. Inability to meet customer needs
Finally, contractors find it difficult to keep pace with the changing needs of users and make the required changes to their work strategies while working with the current supply chain management process. Due to such problems in the supply chain and growing competition, most, if not all, companies have shown interest in introducing a blockchain in the logistic. They try to understand the basics of blockchain and how to redesign various industries — be it real estate, healthcare, fintech or business. This gives insight into the actual impact of Blockchain on the global economy. Let us now determine the value at the local level. That is, looking at how blockchain technology will disrupt the supply chain.
Blockchain Benefits in the SCM
1. Real-Time Tracking
The blockchain supply chain management process works with transparency and decentralization functions. This makes it easy to get to know each activity at all times.
2. Faster processing
Blockchain replaces external agents with intelligent contracts, reducing the time required for some supply chain operations.
3. Better record management
Because all information is stored in one distributed database, the risk of having replicas of data is greatly reduced. Making changes to a specific record by authorized users is also an easy task. Because all information is stored in one distributed database, the risk of having replicas of data is greatly reduced.
Blockchain's impact on supply chain management is to reduce costs by enabling the idea to process unique data faster and more securely.
5. Healthy Relationships with Customers
With Blockchain, consumers can know everything about the product they are using. This builds trust among consumers and relevant brands.
6. Higher Return on Investment
First of all, Blockchain helps companies create a better brand image in a decentralized market and achieve a higher return on investment. Thanks to the above notes, you have gained a brief insight into the importance of Blockchain in the supply chain. For clarity, let's look at the entire Blockchain integration process with the supply chain through this picture.
In this context, the next question to be answered is: Is there a practical implementation of blockchain on the market? Does the brand support the idea of including Blockchain in the supply chain?
The verbal answer to this question is — YES.
Several brands, as mentioned in the photo below, are already benefiting from the collaboration between Blockchain and Supply Chain Management.
In addition, the blockchain supply chain is expected to grow exponentially in the coming years.
All these factors meant that it became necessary to employ the best blockchain development company and incorporate this trending technology into their ecosystem.
With that in mind, it's important to be well prepared for upcoming challenges if you want to enter the blockchain-based supply chain market.
So let's focus on the same and answer some of the challenges you'll face by integrating Blockchain with your supply chain.
Challenges of Blockchain in SCM
1. The Ecosystem is Still Immature
Blockchain has proved to be an umbrella term for various techniques, platforms, and applications. However, this is not the end.
Business enthusiasts and programmers explore the potential in various business areas and processes. They try to experiment and find better solutions, but they still have problems with scalability and other such functions.
So if you look to the future to incorporate blockchain technology into your project, you need to be prepared for such imperfections as the ecosystem is still developing.
2. Technology and Innovations
For a long time, people thought Blockchain was just buzz. Technology will soon die out, and many believe in it. As a result, despite the availability of various basic programming guides for Blockchain applications, many still do not know exactly what Blockchain is and how it can be integrated with traditional processes.
You may be asked to familiarize yourself with technology, work with various blockchain programming languages, develop business concepts and find the perfect solution.
3. Legal and Regulatory Challenges
Finally, various countries, such as China and Russia, still do not support the use of cryptocurrency and basic technology. They have strict laws and regulations regarding the choice of cryptocurrencies and blockchain technology. When they talk about others, they have not accepted the technology with open hands. Some usage restrictions have been set to ensure security.
In such a scenario, you will again find it difficult to create a blockchain-based solution that will not conflict with these laws and regulations.
As you can deduce from these challenges, it is not easy to start a blockchain journey. You will need to rethink your supply chain management model two or even three times to see how Blockchain works effectively. And this will not be possible without a blockchain expert in your corner.
It is also profitable to keep up with the latest trends in blockchain technology and a number of technologies that will ensure better results in the near future. This information will help you become a leader in the blockchain-based supply chain ecosystem.
So let's summarize this article and focus on technologies that will improve the future of Blockchain in the SCM.
Optimization Technologies for Blockchain SCM
1. Artificial Intelligence (AI)
Blockchain and AI convergence will allow the former to manage data in a simplified and efficient manner. It will also ensure greater ecosystem security by using predictive analytics capabilities and improving scalability.
2. Internet of Things (IoT)
The introduction of IoT in Blockchain, also known as Blockchain of Things, will also improve the near future in the supply chain and logistics. Dual technology makes it easy to track all activities in the chain in real-time and inform connected devices to solve problems.
3. Beacon Technology
Beacon is another technology that will accelerate the use of blockchain in the supply chain management process. In this way, companies can inform all employees and users about their products and their status in real-time, creating a sense of trust throughout the process.