This article is the second of a three part series from Rocket Industrial's own John Troemel which will explain what blockchain is and its effect on supply chain and distribution.
How Will Blockchain Impact Supply Chains and Distribution?
With a blockchain’s decentralized network, all transactions are present in one chain. Everyone in the process can view all transactional data and ensure compliance at every level, making it easier to track specific orders and reduce operational inefficiencies. Blockchain will also produce detailed information about a product’s lifecycle such as supplier information and manufacturing details in near real time. It will improve supply chain security.
The cryptography-based nature of blockchains makes it impossible for a single entity to control the data involved, which means it’s nearly impossible to compromise the data without leaving a signature. For example, if an individual goes into the system to change a transaction (for fraudulent purposes or to cover up an error they made) it will alter the coding of the event. The altered coding will appear very different and it will be easy to notice. Because an altered code is easy to recognize, it is also easy to recognize fraud or inconsistencies almost immediately, further driving down costs from poor employee practices or even potential fraud attempts by customers. While it is true that blockchains are highly transparent to users, it is also possible to create Permission Blockchain, after that a digital ID would be required to access the blockchain at any time.
It will be easier to manage data errors.
It is common for a large-scale database to have inaccuracies and errors. However, identifying and rectifying errors takes a large amount of time. With blockchain, this could be a thing of the past. Since errors will be carried over from a single block to all other blocks in the chain, it is possible to identify the issue more efficiently with a finite paper trail involved.
It will optimize the supply chain and increase customer satisfaction.
Once blockchain technology is extended to frontend applications, customers can be part of the blockchain. Customers will be able to view their orders in near real-time from production to supply and track the performance of the supply chain. Transparency would not only improve the entire process but also bolsters customer-client relationships and instill a sense of trust within the consumers. Feedback from clients and customers would also be in real time, which could be fed back into the supply chain engines through blockchains to improve the market forecast. The scalability of supply chain operations would improve scalability and be in sync with market trends, which would help a business grow in parallel.
Imagine a customer opens a new bottle of pain relievers and notices the seal isn’t completely adhered to the bottle. In the future, it may be possible for the customer to enter this information directly into a blockchain, immediately notifying everyone involved in the production and distribution of the pain reliever that this lot may not be sealed correctly.