The Future of Blockchain in the Supply Chain – Know the 3 Proven Benefits | NASSCOM
Benefits of Blockchain in the supply chain in the modern world
Blockchain technology recently received some hype with the rise of cryptocurrencies in the world economy. In the age of the digital world, data is a powerful tool. The supply chain data sources may not be sufficient for credibility and traceability reasons. Blockchain in the supply chain has the potential to overcome such modern challenges.
Blockchain’s decentralized nature allows the integration of multiple digital systems resulting in easy digitization of the supply chain and timely achievement of business goals. Supply chain management is a crucial stage of logistics that enables businesses to meet customers’ requirements efficiently.
Currently, Blockchain is an advanced and rapidly growing technology and the industry is estimated to reach a compound annual growth rate (CAGR) of 81.7% by 2026 according to Research and Markets.
But before we learn about the benefits of Blockchain in supply chain managementlet’s understand what Blockchain is.
What is Blockchain?
Blockchain is based on the Distributed Ledger Technology (DLT) database, which records transactions and updates them. The recorded data can be shared across multiple data networks on the blockchain. Hashing is the special algorithm and uneditable cryptographic signature in the blockchain that encrypts recorded data.
Each block is uniquely coded with hash algorithms and because of this it becomes an immutable ledger with high data security. Only participants have access to the registered data in the blockchain.
Benefits of Blockchain in Supply Chain Management
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Transparency and traceability
The decentralized approach does not allow a single entity to act as a controlling factor, making it highly transparent and difficult for hackers to break into the system.
Traceability is an important element of standardized supply chain management; because some problems with product supply as defective products and delays in product delivery can be resolved with improved traceability.
Tracking is the first step in the problem-solving mechanism for supply chain partners who need to update product and transport details in time, making the system highly transparent.
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Data security
Customer data and order history are sensitive and crucial; they should be maintained with high security. Each block is linked to the previous block making it impossible to hack the system.
The data is recorded in the individual block after encryption and third-party devices do not have access to it. By using blockchain technology, companies can ensure the privacy of customer data.
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Decentralized ledger
The decentralized nature of blockchain makes it easier to network and update data instantly, reducing the effort of data duplication. This helps with integration of multiple supply chains and smooth transactions without the need for an intermediary.
Furthermore, the decentralized blockchain ledger enables easier updating of the latest information and allows multiple supply chain partners to work with the same record data simultaneously without data loss.
Final thoughts
The world is heavily dependent on logistics and supply chains from groceries to vaccines, and blockchain development for the supply chain is an intelligent solution to improve the efficiency of the business.
Supply chain management using blockchain resulting in reduced administrative costs and a streamlined flow of operations. The requirement for robust blockchain logistics and supply chain management increases annually in all sectors.
Blockchain development is a complex and tedious process that requires expertise in programming and computer science.
