- February 27, 2020
How Blockchain Technology Is Transforming the Supply Chain Industry
Thousands of years ago, supply chains were fairly simple. People gathered and sold raw materials to skilled craftsmen who used the resources to create finished goods. These artisans then traded them to individuals or merchants who resold the items for profit. It was relatively easy to trace the flow of products, even without supply chain software.
Fast forward to the present, an industry’s supply chain has become more complicated. On a global scale, millions of key players are taking part in producing finished goods. This makes it difficult for company owners to track where different components of their products come from.
It’s crucial for any business to keep track of how, when, where, and under what conditions their goods are made. This allows them to mitigate certain financial risks, follow ethical standards, and improve their operations in numerous ways. Fortunately, there’s an innovative solution that can help companies with that.
Understanding Blockchain Technology
Every time an item changes hands within the supply chain, its transaction details can be documented to maintain a complete product history, from manufacture to sale. These are stored in a centralized database known as the blockchain.
This technology is essentially a distributed, digital ledger. While it’s strongly associated with cryptocurrency, it can also be used in many applications. These include exchanges, agreements, tracking, and payments, which is why it’s a perfect tool for managing your supply chain.
Public vs. Private
Most retail supply chain software like blockchain technology operates as public networks, although there are private ones, as well. Anyone can access these unrestricted domains as long as they’re connected online. Visitors can view most information related to the product’s transaction history, except for the personal details of the people involved in the exchange of goods. This level of transparency allows users to make more informed business decisions in a shorter time span.
Meanwhile, private or permissioned blockchains are often owned by a single entity. The information available in the network is only shared with authorized players in a certain supply chain ecosystem. And, since there are fewer participants in this domain, it processes transactions faster than public ones.
Permissioned blockchains can be customized for company use. Incorporating them into your system allows your workforce to receive real-time information on stock and shipments. They can quickly identify when, where, and by whom orders are issued. As a result, managers can easily address issues across the supply chain while protecting highly confidential data. This leads to more efficient and lower-risk processes that simplify business operations, from warehousing to delivery and payment.
How It Changes the Supply Chain Industry
Without blockchains, companies spend more on learning about the availability of desired products and the demand for these commodities. They put money in extra inventory to always make sure that an item is in stock. Those goods are cheaper than lost sales, but they’re still far from free.
Using blockchains enables businesses to have real-time updates on transactions and movements from all the participants. They can forecast product supply and demand better to reduce unnecessary expenditures in their operations.
The technology also facilitates efficient collaboration since it streamlines the speed and security of information exchanged among suppliers, partners, manufacturers, and vendors. This ultimately leads to the creation of more innovative ideas as relevant knowledge is spread across the supply chain.
Many major corporations are exploring the benefits of Retail Order Management and blockchain technology, and your company should, too. Get in touch with CBX Software to learn more about integrating this innovative solution in your everyday business operations.