The logistics industry is essential for any business to thrive. Logistics manage the movement of goods and services between points of origin and final destinations as well as secondary destinations along the way. In a world where e-commerce is booming, this sector has become increasingly important.
However, there are still various issues that plague this industry. These include fragmented data management processes, lack of trust and transparency among partners, inefficient collaboration practices due to disconnected ERP systems, and growing cyber security concerns. In light of these challenges and opportunities, blockchain technology could be the perfect solution for the modern supply chain management. Below are ways blockchain technology can influence logistics and supply chain management.
What is Blockchain Technology?
A blockchain is a decentralized and distributed digital ledger used to record transactions. It is a digitized, verified, and mutually accessible record of transactions between parties. It is accessible to all parties involved in a transaction, but nobody else.
Blockchain technology allows multiple parties to create a shared and distributed ledger recording information and transactions between them. It offers trust, security, and transparency among the involved parties. It also reduces the risk and cost of transactions, increases the speed and efficiency of interactions, and helps create new business opportunities. This article explores more information about blockchain technology for your SCM and its impacts on business.
Use in Supply Chain Transparency and Traceability
Since blockchain is a distributed ledger, it creates a single and complete record of the supply chain. All participants (from suppliers, manufacturers, distributors, and retailers) can view the status of any product and its source authenticity, quality, compliance, and other characteristics and features. With this transparency and traceability, the risk of counterfeit products is reduced, and trust between partners is established.
Blockchain in Warehousing and Inventory Management
One of the most challenging aspects of logistics is managing and optimizing inventory. This is particularly complex when dealing with multiple parties and different locations across the supply chain. To solve this, blockchain creates a centralized ledger where all parties can access information about inventory and logistics activities. This allows for more efficient and transparent management of inventory and assets.
Inventory management becomes more efficient due to automated notifications and real-time updates across the supply chain. It also reduces administrative costs, as less paperwork is required, and minimizes the potential for human errors.
Blockchain in Supply Chain Finance and Payments
Another area where blockchain technology could make an enormous impact is in supply chain finance and payments. A major issue in this area is the lack of trust and terms between the parties. This can result in late payments and affect the smooth flow of operations.
Using blockchain technology, parties can make their terms and conditions available on the distributed ledger. This allows all parties to view the contract and decide whether to enter into the contract. This mutual knowledge and information reduce the risk of late payments between partners.
Blockchain, Logistics, and SCM
For logistics and supply chain management, blockchain technology is a promising solution. It offers benefits such as improved supply chain transparency, trust, and collaboration between parties. This could help improve global trade and have a positive impact on the world economy. Blockchain technology has revolutionized the commercial and technology industry, especially in the logistics and supply chain management sector.
