What is Blockchain Technology, and How Does It Work?

To understand how blockchain operates in supply chain management, we should learn more about this technology. It helps companies track all types of transactions and makes the process secure and transparent. Blockchain technology is a digital ledger that consists of transactions and records them chronologically in blocks linked by cryptography. Multiple parties verify these transactions before adding them to the ledger as a block. There is no way to change the blocks once adding them to the chain, which makes them very secure and tamper-proof. This enables different parties involved in a process to view all the details of this transaction without having access to each other’s data or credentials, which increases trust between them.

What is Blockchain in Supply Chain?

When it comes to the supply chain, blockchain is beneficial in many ways. First of all, it enables product tracking from the time of pickup to reaching the end customer. The technology permanently stores the digital ledger — thus preventing fraud through tracking fees. Emergen Research predicts that the global blockchain supply chain will reach USD 14,180 million by 2028. This indicates that the software is helpful in improving the processes in the industry, thus many companies adopt it to stand out in the market. We see a number of scenarios where distributed ledger technology can add real value to supply chain visibility and sustainability programs. Operating a blockchain-based solution inevitably means bringing on board a number of stakeholders who can operate the multiple nodes and are therefore willing to make the investment. This is not only about the initial investment in the platform, but also about the management and maintenance of the blockchain across all nodes. Blockchain for the supply chain is also useful in situations where there are multiple parties involved, but there is also a lack of trust between them — so, it is then essential to have your own copy of the database. With this technology, companies can trace the history of a product from where it originated to where it is now. Every time a product changes hands, the technology securely documents a transaction and creates a permanent history from manufacture to sale. Using this powerful technology, parties collaborating on a common platform could dramatically reduce the time delays, additional costs, and human errors often associated with transactions. A shared blockchain ledger provides a trusted and tamper-proof audit trail for information, inventory, and financial flows within a supply chain. This allows companies to synchronize logistics data, track shipments, and automate payments.

Iryna Deremuk

Bliss or Woe: Do You Really Need Blockchain in Supply Chain Management?

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Iryna Deremuk

Bliss or Woe: Do You Really Need Blockchain in Supply Chain Management?

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