There is a new technology that is the driving force behind the booming cryptocurrency market, and it is called Blockchain. Blockchain technology was created specifically for Bitcoin, the cryptocurrency that has recently made the Winklevoss twins digital billionaires. Blockchain technology has many other possible applications as well, quite specifically in Supply Chain.
But what is this Blockchain technology and how does it work? Simply put, Blockchain is a distributed, decentralized, digital ledger that that keeps track of information or transactions in blocks across a peer-to-peer network. Whenever a new transaction occurs, that information is added to the new block with reference to the previous block. The idea behind this technology is to create a way for information to be readily available and protected from tampering or fraud.
Supply Chain has many nuanced areas that can make it complicated and therefore slow. It takes time to make a payment to a supplier or get information on where a shipment is currently. There are a few ways that Blockchain is being used for Bitcoin that can also be used to help Supply Chain.
Anyone working in logistics is familiar with how technology has changed the industry and how these advancements have helped to streamline things. Digital Supply Chains have helped businesses to better communicate with customers and third-party resources. There is a better exchange of information and data for all parties involved in the shipping process. Through the use of Blockchain, business will be able to have trustworthy, up-to-date information available to them all the time. By having information in blockchain all parties involved in the shipping process will have the same information at the same time. But how exactly?
For example, let’s say that a shipment is being sent to a warehouse to be sorted and then shipped to its final destination. For each part of that process, blockchain can be used. When the first shipment goes out, the ledger is updated in the block. When the shipment arrives at the warehouse, the ledger is updated again with a reference to the previous block. This is again repeated when the shipment leaves the warehouse and when the process is completed by the shipment reaching its final destination. By using this method with blocks referencing prior blocks of information, and the ledger being stored at multiple locations at the same time, all parties involved will receive the same information and be able to access it. The ledger is secure because it is being stored in multiple locations. The only way to change or falsify the ledger would be to access all copies of the ledger at the same time.
The same way that cloud-based transportation management systems connect businesses in a network, the use of blockchain can let these businesses share and update information as well as see how they can reduce wasted time, money, and effort. The idea of the cloud-based system is to have information available to all. Combining this idea with blockchain creates a more secure, more accurate account of all information. By having the ledger in multiple locations, and having it updated automatically with reference to the previous block of information, the idea of the cloud is enhanced. Plus each party connected to the network has a physical account of the information.
Another way that blockchain could help change the supply chain industry in the future is through automatic payments. There are some companies that are currently taking and using Bitcoin and other cryptocurrencies as payment. Blockchain allows for a transfer of funds to anywhere in the world, which could circumvent traditional banking methods. Also through the use of automation and blockchain, immediate transfer of funds could happen. Imagine having a network of information what immediately updates the latest movement of a shipment and upon delivery makes payment. The automation of certain parts of the supply chain would save time and energy, and they would be safer than ever.
Although blockchain is currently best known for its use in cryptocurrencies such as Bitcoin, the potential uses of this new technology are immense. By incorporating blockchain into the supply chain world, the industry can rocket itself into new heights. Information will be more secure and tamper-proof than ever. The sharing of information across parties will be instant and secure, helping to keep everyone updated. The use of automation can streamline processes, saving time and money. All the applications of blockchain are yet to be discovered, but we can look forward to a future with blockchain in it.