How Blockchain Can Re-Invent the Global Supply Chain
Over the past few years, Cryptocurrency has become the new buzz word! The supply chain is becoming more and more tedious to handle. Two entities exchanging payments can now eliminate the need for a third party and do the transactions in a more secured, transparent and easy manner. Although the term Cryptocurrency was coined many years back, its use and value started growing at an unstoppable pace in past and current year. Cryptocurrency is tomorrow’s currency and it will surely re-invent the global supply chain! Let’s see how and why Blockchain will influence the future of global supply chain.
1. The underlying technology
Cryptocurrency is trusted immensely by its users because of the underlying technology called Blockchain. Blockchain’s key characteristics include a distributed database, ledger and an incorruptible and transparent layout of entire financial or business workflow. So let’s say when a transaction begins, the Blockchain network will have centralized servers called nodes that will validate the transaction status. This transaction can be verified using a cryptocurrency and will go on to create a block of data which will be added to an existing blockchain after which the transaction will be marked complete. The entire process remains transparent and secure because you cannot redeem the cryptocurrency against any money or physical entity. Everything stays on the network and the network is completely decentralized.
2. It can Reduce the paperwork
It’s commonly known that in a supply chain the paperwork is very tedious. Further, the legal compliance and need for future references make keeping track of all documents mandatory. Now imagine the pain, cost and time it takes in doing this manually using paperwork. If we have an alternative where a blockchain can be used to track each and every detail and a digital signature is issued in the transaction, the need for authenticity, physical entity, and compliance can all be taken care easily. Thus it would be time and money saving! Many big companies have already started using cryptocurrency and it is going to surely reinvent the global supply chain!
3. Security
The cryptocurrency is safe and secure as everything is encrypted. If you are aware of cryptocurrency, you must have heard about bitcoin and places where you can earn bitcoin online. The confidence and fearless use by people of bitcoin are due to the encryption that is done using hash algorithms which cannot be decrypted. Thus there is no fear of corruption or damage by theft.
4. Traceability
Since blockchain is incorruptible, the status of a product at various stages can easily be done using blockchain. In fact, bigger companies like Walmart have also started using cryptocurrency in the meat industry where it does the meat traceability using blockchain. The advantage of having this in the supply chain is to be easily able to fetch all data regarding the origin of the product, its distribution, and end scale supplies. This can prove to be handy in case of any irregularities.
5. Change is inevitable
Back during the 90’s the supply chain was completely different from what it is now. Many people and organizations were skeptics about the new revolution that was about to come. Internet undoubtedly changed the way supply chain worked but that was the thing and progress of past. With new technology and advancements, we cannot rely on past working methodology. For example, one very genuine reason why we have centralized agencies like Banks today is that of the trust it gives us as a ledger. However, it is centralized and there are instances where the hackers have weakened the trust of consumers by stealing data and in some cases money as well. This is where the change in the encrypting technology will be useful because it won’t be possible to complete the transaction without a confirmation on the validity of the transaction, besides the hack-proof nature of the cryptocurrencies itself.
In the end, the blockchain is going to revolutionize the global supply chain and the day when this happens is not very far. It’s better to stay well upfront about the term, its advantages and usage in your businesses too.
