Why blockchain increases trust in supply chains. Source: Shutterstock

Why blockchain increases trust in supply chains. Source: Shutterstock

Why blockchain increases trust in supply chains

BLOCKCHAIN technology is constantly evolving — and it’s making a big impact on tomorrow’s supply chains today.

However, in order to cause the major disruption it intends, blockchain needs to do more than increasing efficiency and reducing liabilities for operations.

Why blockchain increases trust in supply chains

Data collected and analyzed in modern supply chains are astronomical. In the event that abuse of data occurs, the organization would be exposed to serious risks.

Blockchain became popular via its application in cryptocurrency. It provides a transparent distributed ledger technology that promotes trust in the system.

With the same technology incorporated into the supply chain, it builds the foundation of trust between trading parties like never before.

What blockchain introduces is a singular source of truth that’s able to bring accountability to a system.

With multiple parties having the same copy of data, respective parties will be able to view the record of who did what and when. This makes it virtually impossible to manipulate the data without check and balance.

Supply chains are as mature as they are complex. Although its workflow is extensive with multi-tiers of suppliers and distribution channels, the supply chain relationships have little visibility.

This sets the perfect ground for a blockchain-based application to recreate healthy working relationships. This applies for all parties within in a supply chain as well as stakeholders for the supply chain business.

Innovations of blockchain in supply chains

Blockchain in supply chains has the potential to transform business models through its innovations.

The technology promises transparency and visibility to supply chains, with operations monitored closely and transactions settled quickly. Naturally, the need for high working capital will also be reduced.

Blockchain solutions are even greater help when errors occur. A quick root-cause analysis will find the cause and resolve it in a short period of time. Without unnecessary delays, disputes between trading partners would be easily prevented.

Newer business models that sell products-as-a-service are also possible due to the blockchain application.

‘Servitization’ is an avenue that’s highly favorable for manufacturers to open up to. With the reliable usage-data collected from end-users, manufacturers will be able to sustain a consumer lifecycle for longer too.