Blockchain: Revolutionizing the Supply Chain Management
Blockchain plays a very vital role in supply chain management. This technology allows companies to gain a real-time digital ledger of transactions and movements for all connection points in their supply chain. The benefits of using this technology will save money, time, and a lot of operational efforts. Also, this technology has the potential to redefine your entire business.
1. Procurement
Procurement is one of the biggest challenges a company faces. Most of the times, there are several points included in the value chain due to which its hard to keep track of the volume across subsidiaries, business partners, and everyone else in the supply chain. Blockchain makes it easier with a distributed ledger shared in real time with all the parties involved. The company can easily see how directed the purchase activity without manual input from various users.
Without blockchain, companies hire auditors to calculate the total value captured from the entire supply chain. Dozens of professionals spend weeks on such audits but blockchains can do this task without the external help of such auditors in less amount of time and money. So definitely a huge potential!
2. Digital Contracts & Payments
It usually takes 30–60 days for companies to get paid after completing a task or delivering a product in the real world. Companies with complex supply chain and hundreds to connection points. The gap between contracts and actual payment is huge because of the absence of the digital payments. Most of the work is still done manually. The invoice is generated and then sent via email. Confirmed by the seller, moves on the credit line and so on.
As a result, we have suppliers calling in for their payments, while customers aiming to cash in on the float by entering and processing invoices at a snail’s pace and occasionally “losing” them. Blockchain can put an end to this by real-time payments in the form of digital smart contracts. Blockchain can eliminate the need to involve banks, third-parties in for payments.
Using smart contracts, proof of delivery will automatically trigger digital invoicing and payment, either in the form of tokens or through banking channels. The result is a very fluid supply chain and reduced working capital requirements.
3. Transparent Operations
Transparency is the core element of the blockchain technology. Ever connection point within the supply chain will have a copy of the digital ledger, transactions and the movements of products. If any node (connection point) tries to game the system, will be punished through the consensus mechanism laid down in the blockchain architecture. The punishment in the blockchain is usually higher and often, there is no economic incentive to the game the system in the short or long run.
To sum it all up, we can see the benefits that blockchain can bring to the entire supply chain management. With blockchain, the payments can be automatically digitized, there will be no incentive to game the system and overall, there is a very high level of transparency achieved.
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— the JURA team
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