Blockchain and how does it affects the Supply Chain industry

Blockchain and how does it affects the Supply Chain industry

Since the emergence of Bitcoin in 2008 by Satoshi Nakamoto, it laid the foundation of a new financial system which does not rely on any central authority. People called it the ‘decentralized and peer-to-peer system’ for payments. However, the underlying technology that made it happen, which most of the people aren’t familiar with is ‘Blockchain’ which is a distributed databased that holds all the transaction records that can’t be modified or deleted. Beyond currency, this blockchain technology can be applied to a variety of different industries to make them more transparent and automated with a lower reliance on any central entity or governing body.



In this article, we will discuss two different applications of Blockchain and how it applies to the supply chain industry.



Blockchain and supply chain



Supply chain is the heart of the global commerce. The bottle of water that you see on your table has travelled through many different places before you purchased it from the shop. Supply chain involves many different players like supplier, manufacturer, wholesaler and retailer etc. One of the problems with traditional supply chain technologies is that it is very difficult to keep track of all the goods across all the different players of the supply chain.



This is where blockchain comes in. Blockchain provides an immutable database, which can be used by all the players in the supply chain to upload the data and track the origin of the goods. Any player in the supply chain, e.g. a retailer can track through blockchain about whether or not the goods that he just purchased from the wholesaler are authentic and genuine. Blockchain brings more transparency into the supply chain, and this can help reduce counterfeiting and fake products specially in the luxury industry.



Beyond transparency, one other application of blockchain and supply chain is interoperability. Traditionally, all the players in the supply chain use different kind of enterprise grade software (ERP systems). These variation in the software reduces the interoperability, which means that a supplier can’t use anything that the manufacturer has, and the manufacturer can’t use anything which the wholesalers has etc. This adds up to a lot of overhead costs for the companies. Since blockchain is the public ledger, anyone can use it to upload or download data without the use of expensive software systems.



One of the notable cryptocurrencies which aims to disrupt the supply chain industry is VeChain, which will facilitate the famous belt and road project of Chinese government. The government will utlilize the VeChain Blockchain in order to efficiently track goods across many different regions, ensuring that they are authentic and not tempered with.

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