How the Blockchain Technology is Changing the Supply Chain

Some things trend for a while, then become history, while some others trend in a continuous loop. An example of a trend stuck in a continuous loop is the internet, and now, the internet has a trending protégé called “Blockchain”. Blockchain is basically a digital ledger with a collection of records or data kept safe and secure by using high-level cryptography. With the Blockchain technology, businesses can work together over the internet with ease and assurance of data safety.

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The supply chain has always been known for slowly picking up trending innovative technologies, as it is, the supply chain system is still trying to come into terms with how data is used, mobile platforms, and the use of the social media. However, it will interest you to know the supply chain does not intend to sit and fold its arms while this groundbreaking technology called Blockchain flies past.

The Connection between Blockchain and Supply Chain

The blockchain technology is being used and implemented by various companies and businesses from various industries. There is the prevalence of the technology especially in banking and fintech where its application is defined. Blockchain and Supply chain both deal with data interchange, movement, trust, reliability etc. Hence the application of blockchain to supply chain should seem like a mutual relationship. A lot of startups are beginning to embrace the technology to help solve certain challenges in the industry, such as verification and transfer of transport documentation, improvement in payment methods/systems, and verification of authenticity of products, among others.

Applications of Blockchain in Supply Chain

A lot of industries have adopted the use of blockchain technology for their businesses; here are some examples where blockchain has been applied in the supply chain:

• Meat Traceability
• RFID-Driven Contract Bids and Execution
• Automotive Supplier Payments
• Blockchain and Internet of Things
• Electric Power Microgrids
• Cold Chain Monitoring

Challenges

Every system has its challenges, how the challenges are dealt with determines how efficient and reliable that system is. The blockchain is not free from challenges, developers keep working to improve and make it better. Entities intending to use blockchain technology for their supply chain need to consider these:

• Technological Knowledge: Developing blockchain programs/applications requires special skills plus the technical know-how. Any enterprise looking to apply blockchain technology to their supply chain may need to hire people with blockchain developing skills or train their staff to learn the skills. However, your choice depends on your requirements and financial stand.
• Volatility of Currency: Exchange rates with cryptocurrencies and fiat currencies constantly fluctuate and this should be considered. Also, a loss of the passcode (digital key) to the crypto reserve could mean the loss of the contents.
• Mindset: The original aim behind the creation of blockchain was to create decentralized operations and applications; it was intended to make people see they did not need to depend on centralized systems like banks which make dependency obligatory rather than being optional. It will take time for people to get used to the mindset banks have already created in people’s minds.
• Working Ecosystem: More parties may need to join the blockchain community for effective functionality.
  Blockchain has the ability to completely change supply chains, different industries have already started implementing the blockchain technology in their systems. However, a total transformation will not take place immediately, as it is a gradual process.