As we know use of technology improves the efficiency of processes. Application of Block Chain in Supply chain Management will ensure transparency and efficiency in the whole process starting from inventory management to record keeping to vendor management to product distribution to the end user.
In supply chain management, Block chain can be applied to many tasks such as self-executing smart contracts among suppliers and vendors, unified payment system, keeping track of all inventories of components and products, transparent exchange process etc.
The traditional supply chain management involves a long process from procuring raw material to the distribution of finished goods to the end user. It passes through many entities, different locations, several individuals and extended over the months. These al factors make supply chain a complex process which lacks in transparency.
With the current supply chain management, it is difficult to fix accountability in case of any illegal or unethical practices. It is also difficult for end user to know the actual value of the finished product as each individual or entity add value at different stage of supply chain.
Application of Block Chain for Efficient Supply Chain Management
Traditional supply chain management involves intermediary or trustee for payment among two parties to exchange their value in domestic as well as international trade. Block chain eliminate the intermediary as it records the data in distributed ledger and based on cryptocurrency where payment is secured. So, block chain allows transfer of money anywhere without the involvement of banks.
- Track record of inventory
Big giant Walmart uses block chain technology to keep track of its inventory at each stage of product creation and delivery. This ensures transparency and fix accountability in case of mishandling. Through its public and distributed ledger, block chain reduces the possible chance of conflicts and ensure better coordination among different participants involved in the process of making products available to the end user.
Supply chain management in itself involves lots of step by step process. Utilizing block chain at different points of chain, it can speed up the process. For example, the records of products and materials at each point with its source to destination. The records will help to detect the issues at different points regarding inventory or logistics. This will improve the vendor management, logistic management and inventory management and chances of possible delays.
- Improved customer service
With the block chain technology, a manufacturer can reduce the waiting time for the customer regarding product delivery. With accurate feedback from customer (Block chain eliminates intermediary using smart contract), company can make further improvement in its offering to meet the customers' expectations. With the increasing consumer capability in buying process, they expect more authenticity and transparency in exchange process which block facilitates. This enhance the customer confidence in the company and result in sustainable customer relationship.
With proper records, authentic and real time feedback, block chain improves the planning process related to procurement of inventory, medium of distribution of goods, route of transportation, relationship with the vendor and customer. Block chain provides a proactive approach to deal with the problems occurred at different stage o supply chain management.
So, Block Chain can reduce the cause of delay in process and chances of disputes among different participants in supply chain management process as well. It also improves the relationship with the consumer and improve the efficiency of overall processes.