Thanks to blockchain technology, supply chains are about to get smarter, faster and more secure.
Well at least that’s what Michael J Casey and Pindar Wong observe in their article in the Harvard Business Review Global Supply Chain Are About to Get Better, Thanks to Blockchain. Last week we covered how to replace manual processes in your supply chain, but today, we're discussing something drastically different; distributed ledgers otherwise known as the blockchain.
Blockchain technology is essentially a distributed database that maintains continual and ongoing changes to lists and records known as blocks. Each block is protected from tampering and revision and has a timestamp and links to the previous block.
Blockchains are inherently resistant to change and can be managed autonomously; making them perfect for logistics professionals in their quest to find the most efficient way of operating. Some people may find blockchain technology a daunting topic to read about, but this article is here to help you understant the basics and its seen as such an advantageous technology. This post looks at blockchain technology in supply chain management and how it can boost even the most digital supply chain out there.
When combined with blockchain technology will be especially powerful when combined with smart contracts because the two used in unison with each other will enable great tracking and intelligence throughout the supply chain.
You may be wondering; what is a smart contract? Smart contracts are contracts that fulfil themselves once rights and obligations of an agreement can be automatically executed by an autonomous system.
Coding is used to set the terms of the agreement and then a program runs in the background to ensure those very terms are fulfilled. For example, if the contract included terms for payment, the smart contract should be able to arrange funds to be sent to the appropriate people.
For those without a background in programing, smart contracts may be a difficult concept to grasp at first, but the idea behind it is that the technology behind means you don’t need to worry about it. The language used by the program sets a series of conditions to ensure that ‘if-then’ conditions are always fulfilled.
Integrating payments with blockchain technology
After the recent ransomware attack that took over computer screens all over the world, businesses are scrambling to ensure their valuable digital assets are protected from attacks like the WannaCry attack.
Due to the changing nature of technology and the increasing number of vulnerabilities they present. Blockchain transactions are secure, instant and often cost less than traditional payment processors because there are no processing fees occurred with blockchain.
Blockchain has the potential to change the way we do business
There is no doubt that in the future, blockchain technology will have a huge impact on the way we look at business networks. In an article in Forbes, Chief Technology Officer at SAP Dinesh Shahane states that blockchains ability to reach far and wide places securely is its biggest advantage. He states: "Blockchain reaches out to the boundary of your network, to faraway places that we are not even connected to, and brings that into a governance model where all of your processes and all your transactions are captured in the central network."
Blockchain in supply chain management means that businesses can operate from far and wide corners of the earth securely without concern of foul-play. The future of this technology looks positive, but it doesn't come without its challenges. Many businesses may not be open to trying such a drastically different technology, and if they do, adjusting a corporate mindset to function within a distributed ledger would be challenging to adjust to at first.
As more and more people begin to use blockchain technology, organisations will need to make public and private blockchains interoperable, and on top of this, users will need to adjust to changing governance and standards of a virtual community.
What do you think of blockchain technology for supply chain management? Is it the next best thing since sliced bread? Or is there still much work to be done first? Let us know by commenting below.