Many supply chain leaders across different sectors mention transparency and efficiency as the quintessential standards. Even after understanding this, many businesses continue to use traditional systems and databases for supply chain management. However, with these systems, organizations might encounter a range of complexities and fail to achieve better productivity. For example, lack of traceability and transparency are the predominant challenges caused due to traditional supply chain systems.
To overcome this, businesses should consider investing in Blockchain-powered supply chain app development. The Blockchain SCM apps not just act as a digital record-keeping platform, but also offer the ability to monitor and regulate the whole lifecycle through automation. They resolve all the problems and reduce the repetitive processes in supply chain operations.
Challenges in Traditional Supply Chain Management Systems
- Incompatibility with Data Sources - Most of the traditional SCM products are legacy ones and they fail to connect with different data sources and reliably collect supply chain data. This limits the possibility for supply chain managers to maintain an extensive record of purchase orders, finance transactions, goods storage conditions, and provenance.
- Non-formalization of Business Rules - Traditional tools do not support writing rules and conditions for automated supply chain transactions. This inability can result in inaccurate data and payment flow between supply chain parties.
- Inadequate Data Storage - A supply chain environment generates a range of non-transactional data, like vendor quotes, media files, and purchasing documents. All these data are too large to be stored in the traditional SCM systems. Also, not all supply chain participants can be authorized to access these data.
- High Costs - The lack of centralization in traditional SCM necessitates creating and maintaining separate databases. This results in duplicated data gathering and a huge rise in data management costs.
Blockchain app development is an effective approach to eliminate all these challenges. Blockchain networks support a range of potential integrations with relevant supply chain systems (ERP, vendor platforms, accounting software). This helps businesses in forming a centralized base for supply chain management.
Blockchain App Development Use Cases in Supply Chain Management
Monitoring and Traceability
One of the standard use cases of Blockchain app development in the supply chain is observing product status at each stage of its lifecycle. The application helps supply chain managers monitor processes starting from the primary stage of production to the final stage of user feedback/fulfillment.
For example, the commercial leader Walmart built and launched a Blockchain application for monitoring sales of electronic gadgets in the US and other continents. The application shows where the gadgets come from, updates each step of its movement to a customer, and registers everything in the Blockchain network up to the sale date. Consequently, gadget manufacturers or vendors can access information about their product sale performance in markets, which can be valuable in peculiar scenarios.
Automation with Smart Contracts
Blockchain networks help users write smart contracts within supply chain applications and automate agreements or product conditions. Smart contract incorporation also eliminates fraud or other disruptions in supply chain management. Smart contract programs are stored on Blockchain so that it remains untampered and the supply chain app functions accordingly. The smart contract program automates the supply chain process and triggers specific events only when the conditions are met. For example, after receiving product delivery data from end-users, the Blockchain SCM app can trigger payment.
Another incredible use case of smart contract incorporation in supply chain apps is the Transactive Grid. By incorporating this Blockchain-based mechanism in supply chain apps, business users can monitor the chain of custody, automatically make payments upon criteria fulfillment, and maintain an open database for stakeholders. The use of standard Blockchain platforms like Ethereum and Hyperledger enables businesses to add this mechanism within their supply chain apps.
Establishing Trust
Forming trust between all parties is key to the organized supply chain functioning. By hiring experts from a recognized Blockchain application development services provider, businesses can build SCM apps that offer every participant a copy of a ledger and better transparency into the product flow. Raw material suppliers, supply managers, logistics workers, and end-users can equally have access to information related to supply chain management. In short, Blockchain-based supply chain applications enable all participants to see the provenance of products (from the source aspect to end consumption). This also helps in promoting trust between the brand and target audience.
Permission and Consensus
Blockchain-built supply chain applications act as the single source of truth for all network participants. The distributed ledgers help in capturing proof of money transactions like bills of lading and balance certificates.
The application regulates all stages of the supply chain – from material acquisition, and shipping to reception and user installation - each is monitored automatically. It’s because the application is completely built on principles of audibility, trust, and transparency.
All participants have access to the same facts and figures. In case, when one of the participants attempts to execute fraud or counterfeiting, then Blockchain’s consensus mechanism automatically flags them as a threat and excludes them from the system. It functions as an effective deterrent to value-chain malware behavior.
Crypto Transactions
With the help of Blockchain software development services providers, businesses can build decentralized supply chain apps that support crypto transactions. This enables organizations to remain maximally transparent anywhere in the world without the interference of financial intermediaries. Financial exchanges can be easily executed between a supplier and manufacturer within a few seconds. Supply chain teams can easily overcome the longer payment waiting times with a Blockchain-based system since everything happens faster and much more securely.
Tesla is an optimal example of this use case. This giant vehicle manufacturing organization uses cryptocurrencies to pay its vendors and makes all agreements with them based on smart contracts. The advantage of using crypto transactions is the cost savings. The company considers cryptocurrency as a great way to substantially save costs. Fortunately, cryptocurrency is international; most governments have legalized it for cross-border transactions.
4 Advantages of Embarking on Blockchain-based Smart Contract Development
1. Improved User Relationships
With Blockchain as the core technology, the supply chain applications offer users the ability to access product’s manufacturing details, check authenticity, and monitor shipment. This helps businesses in improving the user experience and trust.
2. Augmented Security
Blockchain-based supply chain applications use cryptographic techniques to make transactions secure and transparent. This mechanism also makes the application’s business logic tamper-proof or unaltered. This improves the data privacy/security of the supply chain and lessens the risk of fraud.
3. Higher ROI
Blockchain technology utilization in the supply chain helps organizations largely minimize costs related to manual processes, errors, and other disruptions. It also supports accurate inventory management, resource allocation, and waste reduction. This helps leading supply chain businesses to form a better image in the decentralized space and obtain greater ROI.
4. Maintain Quality
Blockchain-supply chain apps effectively adhere to industry standards, quality control measures, and regulatory requirements. This further helps businesses remain compliant, risk-resistant, and maintain greater quality.
Wrapping Up
Many organizations face the challenge of convoluted supply chain management that weakens the productivity of processes. However, Blockchain has the potential to resolve anomalies in traceability and transparency along the chain. It improves productivity across all stages of the supply chain cycle. The results are augmented collaboration, restructured inventory management, and better resource utilization.
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