Supply demand balance is something that every business should have, if it wants to see good growth and development. To enable this, the supply chain has to be optimized. Lack of attention to ensuring seamless supply chain management can land businesses in big trouble. And this applies to both new and well established businesses.
Yodel, one of the largest parcel delivery companies in the UK is a stellar example of how even established businesses fail to manage their supply chain. During 2014 Christmas season the company had to stop its delivery, as it could not meet the growing demand.
There are many more instances in the past that indicate the importance of good supply chain management. The absence of accountability and transparency across the supply chain can wreak havoc with the business operations. Now with blockchain technology, it is possible to avert supply chain disasters.
Blockchain to the rescue
Blockchain integration in supply chain is a solution with far-reaching impact. Blockchain technology is used to transfer title, record permissions and the activity logs. This helps to track goods and services flow between businesses as well as across borders.
The shared ledger concept of block chain, which is the core idea behind bitcoin, is a system that allows following of a proper cryptographic protocol by individual entities to authenticate updates on the ledger. The important benefits of the system include
- Resolves issues with accountability and disclosure between institutions and individuals whose interests are not necessarily the same.
- Enable real time update of mutually significant data
- Eliminate the necessity of reconciliation with the internal records of the concerned parties which is usually cumbersome and error prone
- Better visibility of entire operation for every member in the supply chain network
The Block chain system explained
Blockchain embodies selective transparency and trust. While its application is widespread in various financial spheres, it finds equal significance in global supply chain. In fact, the intricate nature of block chain technology is apt for the challenging diversity in interests and complexity of supply chain.
The new technology is capable of revealing otherwise hidden information. It enables users to form digital tokens (which are nothing but a negotiable digital asset form like bitcoin) for intermediate goods as they pass through the supply chain. Businesses thus can have more flexibility in finding price risk and markets by identifying the value they have invested in the supply chain at any point of the process. In short, block chain turns the erstwhile rigid supply chain system in a dynamic demand chain that provides highly efficient resource for everyone involved.
Transforming business operations
Many big names have taken up Blockchain technology and are using it successfully. IBM one of the first to embrace the technology with the help of Stellar, a blockchain startup and Kickex, a payment company has managed to reduce time of settlement, lower cost of global payments for consumers and businesses in banks. There are others such as Syncfab, which has recently announced its blockchain token to enable more efficient supply chain management. BHP Billiton, the mining giant is using blockchain to track the analysis of minerals that are outsourced to third party vendors.
There are several other such instances where blockchain has brought in a tremendous change to the way business operations are performed. It has reduced errors and risks, lowered costs and made operations and transactions more transparent and streamlined.