What is Supply Chain Management (SCM)?
Supply Chain Management is the process of managing the flow of goods, information, and services through the mechanism of getting outputs for consumers as end products from raw inputs.
The crucial elements involved in the SCM procedures are Information, Source, Planning, Production, Inventory, Goods Return, and Transportation. The fundamental structure of an organization is built through these components, but there are associated issues with these industries like fluctuating consumer needs and security concerns. Blockchain technology is the ultimate answer to all these problems. The two significant problems of fluctuating consumer needs and security concerns can be resolved through the application of blockchain technology.
The supply chain management courses include a lot of variations that will benefit differently to different people. Each course is segregated into three categories: beginner, intermediate, and advanced.
Several certification courses for supply chain management are:
- Supply Chain Foundations (LinkedIn Learning)
- Supply Chain Fundamentals (edX)
- Operations and Supply Chain Management (Udemy)
- Blockchain in Supply Chain Management (Udemy)
- Supply Chain Principles (Coursera)
Blockchain Technology Definition
Blockchain technology allows users to track digital currency transactions, where a proper record of transactions is conducted to manage the supply chains and maintain complete transparency in their operations while remaining flexible throughout the process.
This mechanism is cost friendly, provides visibility into supply chain activities, and eliminates fraud risk through increased transparency in transactions between partners (and suppliers). The proficient service facility is the increased speed services in terms of payment processing or delivery confirmation for the stock.
Also Read: Why a Professional Certification in Blockchain will Boost your Career?
Role of Blockchain Technology
Blockchain acts as a storage for information and cryptocurrencies; it is a digital ledger that is visible to the public and cannot be deleted or altered by anybody. Unlike traditional databases, it does not maintain a central copy and is distributed across several devices for accountability.
In supply chain management, this technology cannot be used for tracking shipments across borders to a greater extent because of the regulation issue in the form of privacy laws. However, new rules have been put into practice to allow the tracking of objects till they reach their owner.
The profession of supply chain management is using this technology in the following ways:
- To manage physical assets through smart contracts
- To ensure product integrity through tracking systems
- To verify shipments and packages via messaging systems
Supply Chain Management Industry Challenges
Below, we have discussed prominent problems that are faced in the Supply Chain Management field:
- Lack of a Universal Database- Most business platforms do not prefer sharing databases which cause an increased gap in communication between firms of different natures, thereby giving rise to exploiters.
- Low Asset Traceability- Despite the advanced process and improved technology in Supply Chain Management, tracing assets is a complicated mechanism.
- Unnecessary Costs- An unnecessary rise in capital and effort is due to the expenditure of funds by every firm on accumulating similar data.
- Long Assessments- The assessment of the quality of assets in the SCM process is not preferable because of the huge time length. Due to the need for an effective risk management system, the firm encounters grim consequences.
- Unrequited Consumer Needs- Maintaining a healthy amount of consumer needs is not easy but taking proper measures is more difficult.
Blockchain Technology Application
Automotive Supply chain
The need for traditional banking transactions between the payer and the payee is wiped out due to the advanced mechanism of blockchain technology that allows the transfer of funds across the globe. This supply chain management system ensures that the record-keeping process and provenance teaching about product details is accurate such that it can be easily accessed through embedded sensors and RFID tags. The issue of producing duplicate products is resolved through this technology, and it creates a customer-focused business model.
RFID-driven contract bids and execution
Smart contracts in logistics are feasible through RFID tags that allow IT systems to read the tags automatically. The RFID tags are advantageous when the below setup is followed:
- The data stored in RFID tags are accessible on the delivery location and date.
- The logistics partner operates the applications of RFID tags for a delivery contract.
- The logistics partners offer a reasonable price and services to get the contract.
- The product performance based on final delivery and tracking status is feasible through smart contact.
Cold Chain monitoring with IoT and blockchain
The asset tracking mechanism with IoT and a blockchain network is operated through Blockchain Technologies. Improved collaboration and trust in the business world with enhanced visibility and insights from the physical world are attainable via IoT for blockchain supply chain solution architecture. The record of business transactions of non-alterable nature is ensured by the shared ledger technology provided by the blockchain to the participants.
Also Read: How Blockchain is Transforming the World of Business?
Application of Blockchain Technology to support sustainable business practices?
Six ways help companies to take one step closer to the practice of sustainability.
Making the process more efficient
Companies’ efficiency is maintained through a secure and transparent record of transactions. It is a digital ledger system that considers every kind of digital transaction, from currency exchanges to property transfers. Along with this, it performs the role of tracking supply chains, verifying identities and credentials, or storing medical records or other sensitive information securely and privately.
Cost-cutting
Eliminating unnecessary costs is the foremost step towards making the work efficient. The cost-cutting process starts from processing payments and ranges to managing inventory and logistics. The transaction between two parties also contributes towards efficiency through eliminating third parties and time rendered towards reconciliation at every stage of your supply chain management process.
Let us understand this measure through an example: an individual makes sales in widgets on an online platform. The payment mode is bank or credit card. For each transaction, an amount of fee is charged. This amount can be removed through blockchain technology because smart contracts handle transactions.
Enhance product traceability
The importance of supply chain management is realized during the movement of goods from one location to another, which ensures product traceability. Putting an RFID tag on the product gives details on the location and date of manufacture. This information can be passed on through blockchain networks to restrict human intervention and make the process transparent.
Reduce fake products/counterfeiting
Blockchain Technology deteriorates the cases of counterfeiting by tracking the location and destination of the product with authenticity. This part of supply chain management verifies the fakeness of the product by allowing the public to decide whether to buy that product from the company or not.
Improves transparency
The two essential features of this technology are transparency and accountability. The record is maintained of every transaction for future generations and parties involved in cross-checking each other’s identity and interests. This will bring down fraud and corruption cases in many fields such as finance and government.
Streamline Product Recall
The process of providing a secure database that is accessible by all parties is a way to support sustainable business. In other words, the information on the products and track of the number of units produced is possible through this step. The number of product recalls has risen recently due to changes in supply management technology and regulations. Around 1500 recalls per year have been estimated in the difficult process of counting the number of products.
The average cost of a recall is estimated at around $10 million. The safety of consumers is ensured through product recalls, but companies find this process to be complicated and expensive.
Data Management and Privacy
Blockchain Technology has extensively reduced the issues associated with data management and privacy concerns by restricting sharing of information with third parties who are not trustworthy or competent enough to handle such information appropriately.
The three significant ways to streamline product recalls by blockchain technology are:
- Through blockchain mechanisms, companies have easy access to their data with zero dependence on third parties such as manufacturers or distributors.
- The sensitive data are allowed to be shared by the companies with regulators without any concern regarding security breaches.
- If any company faces an issue with its product or services, they are given leverage to access the record with the help of blockchain, which is a part of supply chain management.
Conclusion
The recent developments in the Blockchain technology field can bring about a transformation in the supply chain industry. This mechanism not only works in logistics or supply chain companies, but it also finds applications in every business vertical. The implementation of distributed ledger technology by industries to solve long-standing business problems reflects the advantage of blockchain technology. It can be safely stated that blockchain has opened the door for a smarter, faster, and more secure supply chain system.
More Information:
10 Business Opportunities for Blockchain in 2023
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