As time passes, the complexity of supply chain management also increases. It even takes several days to make a payment between a manufacturer and a supplier, or a customer and a vendor. Additionally, with companies relying on a large number of suppliers, products and parts are often hard to trace back to suppliers, making defects difficult to eliminate. So, how do you wiggle your way out of these supply chain challenges? Blockchain technology might be the solution that you have been looking for. This technology has been the new talk of the town for a while now, and it drives bitcoins and other cryptocurrencies. The use of such a technology in the supply chain might sound confusing. But what needs to be understood is that the application of blockchain technology goes way beyond just financial transactions. Here are some of the critical applications of blockchain technology in supply chain management:
Automating supplier payments
Using blockchain technology, funds can be transferred anywhere around the world. Also, the transfer is done directly between the payer and the payee without involving a third-party. Tomcar, an Australian vehicle manufacturer, uses bitcoins to pay its suppliers. One of the critical advantages of blockchain is that it is highly secure and less costly when compared to traditional methods of paying the suppliers. It also provides rapidly automated clearing house payments between the payer and the payee.
Blockchain technology can be used to record the product status at each stage of production. These records are inalterable and permanent. Also, they allow the tracing of each product to its source. An example is that of Walmart using blockchain technology to track the sales of pork meat in China. The system makes the process of supply chain management more efficient by showing where each piece of meat comes from, its processing and storage, and sell-by date. Furthermore, in the event of any product recalls, the company can correctly track the defective batches and who bought them.
RFID-driven contract bids
RFID tags simplify supply chain management by storing information about products. The RFID tag can be easily read and processed by IT systems automatically. Therefore, this technology can be applied to smart contracts for logistics. RFID tags attached to cartons or pallets store information on the delivery date and location. Logistics partners run applications to identify these tags and bid for the delivery contract. The party that offers the optimal price and service gets the contract. A smart contract then tracks the status and the final delivery performance.
Cold chain monitoring
The need for special storage is often seen in food and pharmaceutical industries. Also, companies gain more value in sharing warehouses and distribution centers, rather than each one paying for its own. Sensors planted on these sensitive products can record temperature, humidity, vibration, and other items of interest. The readings and data can then be stored using blockchain technology, which is permanent and tamperproof. If a storage condition deviates from what was previously agreed, each member of the blockchain will be notified. Also, a smart contract can trigger an action to correct the situation.