A Practical Application
You can talk about the importance of technology for hours, which is what many people do with blockchain. However, without any practical examples, the tech will always seem like snake oil. Sure, it’s futuristic and promises a lot but what can it actually do for smaller businesses? Is blockchain even applicable outside of fintech?
To subvert the trend of building blockchain up without any solid ideas on how to adopt it, we’ve decided to talk about an unusual use-case. Today, we’ll be discussing the integration of blockchain-based systems in supply chain processes as a means of control, recording, and security. That way we aim to show the viability of blockchain in the industry of commerce and highlight all the reasons why we’re excited to develop solutions with it.
Man of the Hour
What Is a Supply Chain?
The supply chain contains all processes between a company and its suppliers that are required to create, deliver, and distribute a product. In other words, it’s more than just the process of getting a good from the warehouse to the store. Instead, it’s a far-reaching network that involves manufacturers, distributors, customers, and more. With that kind of span, it’s no surprise that supply chain management is a major headache for companies. Since it involves days of work, there are quite a few gaps where unnecessary expenses might crawl through and hit your bottom line.
But good management isn’t about stressing over problems, it’s about solving them. That’s why professionals have outlined the issues and the costs associated with them. Some of these might be a question for a later day but a few are already solvable. So, to put things in perspective, we’re going to list a few and try to find the answers using blockchain.
Besieged On All Sides
What Problems Does the Supply Chain Face?
It’s a pretty broad term but the customer service quality is one of the most pressing issues for supply chain management right now. The advent of online shopping has changed the way people respond to less-than-stellar service or poor quality products. Nowadays, almost all customers read reviews and feedback, putting a lot of weight on these when it comes to choosing their next purchase. But a manufacturer or a distributor cant’ be held solely responsible for the end-quality of the product and, certainly, not for the way it will be presented to the customer.
You could make a luxury sports car and ship it off with a trusted supplier but then who knows what happens? The sales place could be dirty, the salesmen might be rude to the customer, there are myriad variables here. And every single one of those, like it or not, influences your end-results. You can’t possibly expect to stir the poor feedback someone else’s way every time but, thanks to technologies like IoT and blockchain, you can enforce accountability.
There’s also the question of the market you’re in changing. In the modern fast-paced world, it’s pretty much impossible to predict every single turn successfully. Most of the time, companies turn to analytics in order to work out which changes they have to make but that leaves gaps in their knowledge and is far from a perfect answer. Focusing on data does allow to keep up with the market, rolling out new products or features and responding to customer trends promptly. And yet, supply chain management dictates that there must be a better way and we’re all looking for it even now.
And, of course, there’s the everlasting general issue of cost reduction. All companies are on the lookout to keep the shipping expenses down, especially since they make up a hefty chunk of the product cost. This is yet another issue that doesn’t come with a definite answer but new methods are being invented all the time. And it’s also one that’s exacerbated further by the lack of trust between manufacturers and logistics companies.
The Miracle Cure
Which Can Blockchain Solve And How?
The only issue we’ve listed that doesn’t have a ready-made solution via blockchain is customer feedback. However, you can tackle the rest pretty well and, most importantly, without any complicated adoption and integration required. Blockchain doesn’t need a major overhaul of your systems to start bringing you benefits.
For example, the issue of market data collection. Blockchain scales well and lets you store this kind of information reliably, making it easier to spot a shift in market trends and get ready for it. With reliable data on the market, a company will be able to speed up the product development or get outdated goods off the market in time. Moreover, a well-made system can scrape the data from sources automatically so that you don’t miss anything by doing it manually.
It’s also important to remember that the key issue is trust, be it between manufacturer and distributor or the producer and the logistics companies shipping the goods. With blockchain, you’ll be able to spot any inconsistencies or attempts at fraud, thus eliminating any untrustworthy companies from your supply chain. That’s the big benefit of blockchain’s immutability – the elimination of embezzlement and fraud, which are frequent causes of financial loss for companies. No longer will you have to worry that your transportation company is skimming a bit off of your profits.
Similarly, blockchain can make transportation itself less costly. Using a blockchain-based system, you can calculate how much product is already out there (whether from your or competitors) by tracking the packages or each unit separately. That way it’ll be apparent when you need to do another shipment and the chances of your goods deteriorating in storage will be slim-to-none.
There’s also nothing to stop you from installing blockchain-based security measures such as temperature readers that make sure that frozen foods are being delivered in the right conditions. Alternatively, instead of trusting the driver to take the most efficient route, you can keep the GPS data locked in the ledger to make sure that no detours are harming your delivery times and rates.
Also, with blockchain, you don’t really need the middlemen that you’d usually pay as a means of doing business without entrusting your money to new partners. The technology allows you to transfer money and, if you don’t get the services or products in return, clearly show that the transaction wasn’t fulfilled. It’s a huge step toward trust and accountability.
Plus, don’t forget that blockchain automates. Instead of having your financial department waste their time on calculating total purchases or discounts etc, just relegate this duty upon a blockchain-based system. It will do the job of a whole department in less than half the time. Quite a lucrative offer, wouldn’t you say?
Last but not least, the usage of blockchain smart contracts lets contractors and other service-based companies get their payments immediately upon finishing the job. A particularly pressing issue in today’s world when late pay is a problem for many contractors and not even regular contracts are protecting them.
See Through the Smoke
With all these practical examples, it’s clear that blockchain for supply chain is a great solution and one that might revolutionize the way the system is managed. While there are some kinks to work out, it’s already a huge boon for the industry and we’ll happily work on custom solutions using it. From supply chain to healthcare to fintech, we’re over the moon for blockchain so don’t hesitate to contact us for blockchain development services.