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How Can Blockchain Technology help in SCM?

Supply chain management (SCM) is a crucial component of any business that deals with the movement of goods and services. It involves the coordination of all activities related to the production, transportation, and distribution of goods, from raw materials to the finished product. One of the major challenges facing supply chain management is transparency and accountability. Blockchain technology has emerged as a promising solution to this challenge. In this blog, we will explore how blockchain technology is being used in SCM.

What is Blockchain Technology?

Blockchain technology is a decentralized and distributed digital ledger that records transactions in a secure and transparent manner. It allows for the creation of a tamper-proof and immutable record of transactions that cannot be altered by any party. The technology uses cryptographic algorithms to ensure the security of the information stored on the blockchain.

Blockchain technology tools that can be used in supply chain management include smart contracts, distributed ledger technology (DLT), supply chain visibility platforms, provenance tracking, and asset tracking. These tools can improve transparency, traceability, and efficiency in the supply chain.

How is Blockchain Technology being used in SCM?

1) Traceability

Blockchain technology allows for the creation of a transparent and auditable supply chain. The technology enables the tracking of products and their movement throughout the supply chain. This ensures that all parties involved in the supply chain are held accountable for their actions. By scanning a product's QR code, consumers can access information about the product's origin, production, and transportation.

2) Smart Contracts

Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist on a decentralised blockchain network. Smart contracts enable the automation of certain processes in the supply chain, such as payment processing, reducing the risk of errors and fraud.

3) Improved Efficiency

Blockchain technology can streamline the supply chain by eliminating the need for intermediaries and reducing the time and cost associated with the movement of goods. The technology allows for the creation of a peer-to-peer network, where parties can transact directly with each other, without the need for intermediaries.

4) Improved Security

Blockchain technology offers a higher level of security than traditional supply chain management systems. The technology uses cryptographic algorithms to ensure the security of the information stored on the blockchain. This ensures that the information is protected from unauthorised access and tampering.

5) Reduced Counterfeiting

Blockchain technology can help reduce the risk of counterfeiting in the supply chain. By creating a transparent and auditable supply chain, the technology enables the tracking of products and their movement throughout the supply chain. This makes it easier to identify and prevent the distribution of counterfeit products.

Conclusion

Blockchain technology has the potential to revolutionise the way we manage supply chains. The technology offers a high level of transparency, security, and efficiency that can help reduce the risk of errors, fraud, and counterfeiting in the supply chain.

As more companies adopt blockchain technology, we can expect to see significant improvements in the management of supply chains, resulting in better accountability, reduced costs, and improved customer satisfaction.

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