Blockchain & Supply Chains: Is It the Future?

There is no denying that blockchain technology is the future. It allows increased transparency while guaranteeing authenticity. As a result, this is the perfect match for supply chains.

Now a traditionally closed system with verification difficulties can overcome some of these hurdles. Ultimately, products that utilize blockchain technology can be easily authenticated and logistics can be streamlined considerably.

That is why in this article I will be covering how blockchain technology will transform supply chains and much more.

So without further ado, let’s jump right in.

TL;DR:

Blockchain technology will improve supply chains by providing transparency and traceability while guaranteeing authenticity. Ultimately, products are tracked on a decentralized open ledger. This includes the full transaction history, manufacturing origin, and logistical info i.e delivery route, etc. 

The benefits

Combating counterfeiting 

As every transaction is recorded on a public ledger this ensures that accounts are true and fair. In turn, this helps combat counterfeiting.

Ultimately, there is a complete trail on the blockchain that can be traced to the origin of fake projects. For instance, the delivery routes and manufacturing hubs.

In turn, this increases profit margins by reducing the revenue lost to black-market products.

Complete transparency and traceability

Continuing from the previous point, the public nature of blockchain technology provides a completely transparent audit trail. Ultimately, this improves trust among consumers, stakeholders, and businesses.

For instance, specifications such as the material type can be verified improving consumer confidence. Moreover, it provides information on how goods are processed by each subcontractor.

This data not only builds trust but can also be utilized to increase overall efficiency. Businesses can use it to determine where to allocate or cut resources.

All in all, blockchain provides a complete history of supply chain transfers from the manufacturing process to the end user. This benefits both the consumer and the business.

Improved efficiency

Thanks to the nature of blockchain, administrative costs are significantly reduced. Ultimately, as tracking is digital it reduces a large amount of paperwork that is apparent in the industry.

Moreover, as mentioned previously there is a complete audit history making the process streamlined for reviews.

Lastly, as the information is available for all parties less time is spent authenticating the data. Moreover, the credibility of commutation and data transfers is increased as all parties have access to the same information.

Immutability

Blockchain transactions are immutable meaning they cannot be deleted or changed. This creates an honest system that is free from manipulation.

The disadvantages

Privacy issues 

Due to the open nature of blockchain technology, the data can be exploited. For example, the information can be accessed by other companies providing competitive information.

Whether that be to predict stock prices or market conditions there are several ways this data can be leveraged.

Therefore, to combat this all participants must be approved and verified. This can also add to the overall costs of this novel technology.

Scalability

Unfortunately, scalability is a major issue with blockchain technology. To put it into perspective, the second largest cryptocurrency Ethereum has less than 30 TPS.

Ultimately, any changes to the network need to be processed by each node and propagated among participants. Moreover, the total throughput is lower when compared to traditional supply chain databases.

Not to mention, the centralized nature of conventional databases facilitates faster transactions as there is a central authority with a large amount of computational power.

Moreover, the implementation of upgrades is easier as there is less coordination involved.

Best supply chain crypto project

VeChain

Founded in 2015 by Sunny Lu and Chengpeng Zhao, VeChain is a cryptocurrency aimed at improving supply chain management.

Currently, it is the 34th largest cryptocurrency with a market cap of over $1.5 billion. VeChain aims to provide a transparent experience for approved stakeholders.

Data on storage, delivery routes, and supply are all displayed on the blockchain to enable increased market transparency.

This is the most popular supply chain cryptocurrency and it can be bought on any of the major marketplaces. This includes Binance and Coinbase to name a few.

If you want to view this article in video format then check out my video below:

Final thoughts

As you can see, blockchain technology can facilitate both transparency and traceability in supply chains. This can help reduce costs and improve consumer confidence.

That being said, it is not without its issues. Firstly, due to the open nature privacy can be a concern. Not to mention, it often requires high computational power and scalability is a challenge.

However, in my opinion, these issues will only improve as technology develops. I hope you found this article useful and thanks for reading it.

Want to learn about 10 reasons not to invest in NFTs? Click here to read my previous article.