Although it has been said for a long time that applications of blockchain technology are limitless, up until now we have seen it used mostly for transactions. Consequently, people started to expect the financial sector to be the first to adopt the technology for its services. It turns out that supply chain management is also a great candidate for integrating the blockchain technology. Being a ledger of records, blockchain can be used to keep account of products, their origins, paths, and destinations as well as many other details in between. There are several benefits the new technology offers for the supply chain management process.
Cisco, an American technology conglomerate manufacturing and selling networking hardware as well as various other products, has been interested in the blockchain technology for a long time. Like everyone else, the company first started to consider the new technology for its financial processes. According to Anoop Nannra, a head of the company’s blockchain initiative, Cisco stopped researching the applications of blockchain to the financial sector because other participants in the market are not likely to adopt the technology soon. Instead, the company considers blockchain for its supply chain management. According to Cisco’s research blockchain will become widely adopted in the supply chain management in the next 10 years, while the same indicator for the financial sector is 25 years.
What is it that makes blockchain technology attractive for the supply chain management?
In the modern world supply chains can be extremely complex. It is often the case that retailers get their products from many different distributors and producers from different parts of the world. Keeping account of all of this processes can be difficult and oftentimes transparency has to be compromised to manage the chain cost-effectively. This is where blockchain comes in.
First of all, using blockchain to keep accounting is a lot cheaper and faster. The new technology was designed to eliminate the need for third-party providers and middlemen. Consequently, there are no associated fees that have to be paid and the time is cut considerably as well. Secondly, the degree of transparency and traceability is much higher. The distributed ledger is owned by multiple different members and there is no single authority that has a total control over it. Thus, the reliability is very high. In addition, as all processes are stored on a single chain, it is easy to trace the individual products back to their origins, something that was impossible for large supply chains up until now.
Scalability is another benefit of the blockchain technology. Oftentimes, when a supply chain needs to be modified or increased it is associated with long procedures with current technologies. Blockchain can accommodate a very large amount of information and still maintain all of its benefits. Thus, changing the supply chain will not be costly and time-consuming.
If researched, blockchain has the potential to change the way businesses manage their processes.
If until now producers were able to get away with low-quality products because there was no way to determine that it was their products out of the bunch that were sub-par, with blockchain this problem will be completely eliminated. In fact, Walmart already uses blockchain to track the pork it imports from China. This way the company has the ability to connect each product with its origin.
It is up to the companies now to see the benefits of the blockchain technology and start using them for their internal processes. As big part as the cryptocurrencies played in popularizing the technology, they are only a small part of the blockchain. If businesses realize the potential of the new technology beyond transactions and start investing money into research, we could see blockchain being integrated into many different sectors very soon.