As you know the current EDI (Electronic Data Interchange) system plays a vital role in the electronic transfer of business information. But here comes the next big thing Blockchain, referred as the most important invention after internet itself will be the Game changer will enable greater supply chain efficiency than ever before.
What is Blockchain?
The blockchain is a distributed database that holds records of digital data or events in a way that makes them tamper-resistant. The transactions are stored in an organized way known as blocks, while the following transactions are stored in a new block every time. The arrangement of several blocks in a logical sequence of transaction piles up to make a chain where every transaction has its own timestamp which is secured by a cryptologic process. To sum it up blockchain is a record-keeping mechanism
Effect of Blockchain on Logistics Industry:-
Blockchain will enable you to track all transactions more securely and transparently through the whole supply chain, reducing the errors, delays and additional costs associated with the process creating a more efficient workflow.
Following image shows how blockchain will drive value in the supply chain.
Image source:- https://www2.deloitte.com/us/en/pages/operations/articles/blockchain-supply-chain-innovation.html
- Automation of Key Processes: – Creating smart transactions and contract documents that can be automatically executed based on certain triggers will speed up the existing tedious paperwork required in supply chain creating trust and security more than ever.
- Trust and Security: – Adding cryptologic algorithms to the transfer of assets and other docs will result in increased trust between partners. The smooth conducting financial transactions will speed up payment process will definitely prove to be beneficial to everyone.
- Improve Data exchange methods:- The involvement of various parties in different point during shipments leads to the generation of large data that needs to be transferred but blockchain will eliminate these majors steps in moving or shipping of goods like- custom papers, bill of lading etc.
- Traceability and Transparency: – Documenting a product’s journey across the supply chain reveals its true origin and touch points, which increases trust and helps eliminate the bias found in today’s opaque supply chains.
Hurdles in Blockchain Implementation:-
- Consent of Everyone: – Taking consent of everyone who are involved in the process and convincing them about the advantages of blockchain and transferring knowledge regarding the technical aspect that’s going to change will be the biggest challenge in this process to replace the existing system.
- Technology Barrier:- The continuous updating of documents will lead to a big data base requirement if failed to do so the blockchain system will become inefficient, so the monster question that comes in front is can the technology cope with such requirements.
- Building Trust: – Blockchain doesn’t guarantee any proof of actual movement of goods from one place to another, nor does it assure any authenticity of goods is some parties conspire on it. Neither can it prevent conspires or anything that happens outside ledger, things like IoT will help in such cases but are in nascent stage.
The best take away is Blockchain will drastically transform supply chain collaboration, reduce costs associated with various steps and increase visibility in the process to be reckoned as the disrupter in Logistic and Supply chain industry.
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