All You Need to Know about Blockchain Technology
supply chain

All You Need to Know about Blockchain Technology

Blockchain in supply chain management

Managing a supply chain network is serious work, even when you’re running a small business. If you consider larger national and international companies, their supply chain isn’t much of a chain then. It is almost like a web, full of interconnectivity and riddled with inefficiency.

Supply chain management has become such a gigantic business that all sorts of specialists have started sprouting up whose only mission is to get rid of these inefficiencies and help businesses save their dollars.

Technologies such as Artificial Intelligence and Machine Learning are being applied to the challenge of optimizing the supply chain. And while all this is great, there is an all-new tech solution around the block that is set to change the supply chain game.

It is, of course, blockchain—the tech that powers the infamous Bitcoin and other cryptocurrencies. It acts as an unhackable, decentralized ledger. Popularly described as a ‘record-keeping mechanism that makes it safer and easier for businesses to work with each other over the internet.’

This might give you an idea as to why blockchain has tremendous potential when it comes to supply chain management.

Boosting compliance

It’s a fact that blockchain was initially designed keeping only financial transactions in mind. However, over time it was discovered that this is a highly versatile technology with all sorts of potential use cases. For example, when it comes to supply chain management, blockchain has the potential to help businesses to track the whats, the whys, and the whens of every order they have on their supply chain.

This way, blockchain aims to help businesses to develop interoperable systems that allow them to get an accurate view of what’s happening beneath the bonnet of their company.

If you look at blockchain, it is basically an incorruptible ledger which makes it a lot easier to track your compliance efforts by keeping a record of every single step along the way. At the same time, this blockchain data can be made easily available to third-parties such as compliance officers or to auditors.

It’s an open and transparent system that encourages people to work within the laws and regulations that are in place to protect consumers. It helps in controlling fraud and ensures that the only people who suffer are those who don’t abide by the rules.

The good news is that the shift toward blockchain is already starting to happen. For instance, Maersk and IBM have announced a partnership wherein they are all set to create a blockchain-based electronic shipping system that will allow companies to track their cargo in real-time. A move such as this is expected to save the global shipping industry billions of dollars every year.

How blockchain would work for the supply chain

Being an incorruptible digital ledger, blockchain is capable of storing records for every product. Every time a product changes hands, it gets added to its records.

Data such as who purchased it and for how much will also get recorded. Imagine a permanent record of every single product that begins from when it was created to when it was packed, shipped, displayed, and finally sold.

The advantages of this are quite obvious. It would make the life of analysts significantly easy wherein they will be able to identify new ways to reduce delays and get rid of any human error, saving the business time and resources.

This data could be shared company-wide, allowing different departments to analyze it and work more closely together towards a common goal. A technology like Blockchain could fundamentally change the way you conduct business.

There are multiple ways in which blockchain can help with supply chain management. From recording the transfer of assets to tracking receipts, purchase orders, and paperwork associated with it.

Moreover, it could also store additional data such as whether the package needs to be handled with care or whether the fresh produce is organic or not.

The benefits of blockchain for the supply chain

One of the biggest benefits of blockchain is that it allows data to be much more interoperable. Companies could more easily share information with their suppliers, vendors, manufacturers, and couriers.

This increased transparency can significantly reduce delays and disputes, and it can prevent shipments from getting stuck in the middle of nowhere. Because how can you possibly lose a shipment if you can track it in real-time?

That’s not all—blockchain is also much more scalable. It offers an almost unlimited database that can be accessed from numerous touch-points all across the world. It provides a high level of security and the ability to be customized to adhere to more specialized applications.

The business even has the opportunity to create private blockchains to keep its data internally and to share it only with a selected group of people.

Still, private blockchains can only accomplish so much, and most of the value from blockchain technology comes from its ability to tie together multiple ledgers and data points to give one centralized bank of information. This can help fight fraud and other wrong issues.

According to Michael White, the former president of Maersk Line in North America, “One of the advantages of blockchain is the immutable record and trust people can have in it. If anything changes in a document, it’s immediately apparent to all.”

Blockchain in the financial sector

Blockchain technology has been in the news as the super-tech powering bitcoin, the popular cryptocurrency that is revolutionizing the way we conduct transactions, and more recently, supply chain management.

Simply put, blockchain is a vastly distributed ledger that records anything of value. This includes deeds, equities, contracts, rental agreements, money, titles, and realistically any kind of asset.

The records stored here can be moved between two parties sans any intermediary. To put it in a few words, Blockchain is a peer-to-peer transaction took that works independently of an intermediary’s verification or identification of the involved parties.

Despite being relatively new, blockchain has established itself as a tech that is here to stay. One of the most admired factors of this technology is its ability to power decentralized cryptocurrencies, and there are a good number of them at the moment—Bitcoin being one of the most notable of them all. 

While blockchain technology has proved to be a game-changer with its potential to get bigger and better in the future, there are certain roadblocks that need to be tackled before it can establish its supremacy over the financial sector by achieving the “number one” currency status for financial services.

This seems like a fair possibility because a lot of big guns in the world of finance have shown their support and willingness to back blockchain technology for widespread acceptance as a tool of exchange in business-related transactions.

With this article, we’ve highlighted how blockchain has impacted financial services and the global financial sector.

Certain banks such as the National Bank of Abu Dhabi, Santander, CIBC, UniCredit, etc. have enabled the movement of money through blockchain technology. Many tech startups have sprung up to work with banks to enable them to seamlessly carry out international payments through blockchain technology.

The blockchain startup to initiate this revelation was Ripple—it made blockchain technology available to financial institutions and provided them with the unique solution of a secure end-to-end flow of money and transactions that could be verified immediately.

Introduction of smart contracts

Smart contracts allow the automatic execution of commercial transactions and agreements. These smart contracts are a lot more secure when compared to a traditional contract.

The reason for this is because it eliminates the middlemen and this also means that the transaction costs reduce to the bare minimum thereby benefitting both the parties.

The potential of blockchain in financial services

In the present day, Bitcoin is the most accepted form of blockchain technology and as mentioned earlier, financial institutions are keen on exploring the power and ease of this technology.

Here are a few ways in which blockchain can assist in changing the status quo when it comes to conducting business transactions.

Elimination of fraud (almost)

Despite being a fairly new technology, blockchain promises to prevent frauds from occurring across financial transactions. The technology works on a decentralized system compared to traditional systems which are centralized. Because of this, it is tough for a blockchain system to suffer cyber-attacks.

Moreover, traditional media platforms are keen on adopting this technology as a means of payment for traditional media buying. The traditional media buying sector is rife with fraud due to the presence of intermediaries, complicated processes, and lack of transparency in transactions. Blockchain can significantly simplify this process and make it a breeze.

Blockchain technology can be used securely by using cards with a contactless interface with a higher security level. Smart cards help secure private keys through the use of hardware. These cards give user-controlled and untethered access to cryptographic keys, and that makes blockchain transactions easy.

A smart card can be any form of a regular card, a USB device, a microSD card, and other forms of portable card technology that can work with blockchain applications.

Safer mode of payment

One of the promises blockchain technology makes is a better and more secure way to trade alongside reduced transaction costs and trade settlements within a short time.

The technology will allow individuals to transact and connect with each other in a far more efficient way. They won’t have to fall prey to issues such as zero transparency or unfair barriers that are common with traditional methods.

Reduce Insurance Woes

Insurance has been a cause of issues for many. And this can be changed entirely with blockchain technology. From filing an insurance claim to premium payments, investigation to the settlement of claims, legal contracts can be replaced by smart contracts.

Settling unclaimed files will also get easier as the dots will be connected through the use of a blockchain registry.

Simplify KYC Regulation Processes

Know-Your-Customer Regulation is one of the most crucial policies that all financial institutions follow. The KYC regulation is a means for banks and other financial institutions to know who their customers are and it helps to minimize financial frauds and money laundering activities.

With this tech, every customer will be verified independently and the identity of the customer can be availed easily since the customer has already been confirmed on the blockchain network. This process saves everyone a lot of time, money, and effort.

Final thoughts

The blockchain is an up-and-coming technology and it is inevitably going to transform all sorts of industries.

There will come a point where industries will be forced to make a choice and the long-term benefits of blockchain will outweigh the short-term adaptation hassles. It’ll be the supply chain teams that are the fastest to react who will reap the maximum benefits including a boost in overall performance.

Looking at the sheer number of transactions that are carried out on a daily basis in the banking sector, blockchain technology can bridge the gap of missing security and transparency in regular transactions.

This will help instill faith in the banking system since every transaction will be fast and transparent. In the coming years, it won’t be a surprise if blockchain dominates the financial sector.

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