Blockchain for Supply Chain Transactions

Supply chains involve hundreds of businesses and thousands of transactions. As products move along supply chains, enterprises often run into many errors. Besides actual product manufacturing, a basic supply chain involves several transactions: retailer placing an order, supplier getting financed from bank, supplier shipping merchandise to retailer, retailer paying supplier, supplier paying bank, retailer returning damaged merchandise, supplier paying for that, and on and on it goes. 

In short, supply chains can get quite long and convoluted, and there is quite a bit of room for error along the way. 

Blockchain brings together two big factors with potential benefits:

• Security: The ledger is a secure way to record transactions because cheating with fraudulent entries is very difficult, if not impossible.
• Distributed records: No single entity has complete control over the records. This actually increases the trust factor as well as the ability to verify transactions quickly.

When applied to Supply Chains, this brings several potential advantages:

• Traceability: Errors are inevitable in the supply chain, and they may be impossible to catch, especially at the time that the error is occurring. Each “link” in blockchain follows a chronological sequence of all transactions. This means that nothing that happens during the supply chain gets lost in the process, and all links in the blockchain are individually copied, encrypted, and pinpointed for each party in the supply chain. This practically eliminates current traceability issues. 
• Secure and Verifiable: Security comes from making it difficult or impossible to commit fraud or forgery. Blockchain is one of the most secure technologies out there. When it’s applied to the supply chain, all transactions along the way are secure and can be easily verified at a later point, if needed.
• Automation. Let’s face it: supply chains as they stand can be slow. Especially when it comes to complex data sets and orders, it takes a long time to get through every process in the supply chain, especially when that chain involves thousands of components. It can be completely unpredictable. Blockchain automates important pieces of the supply chain, greatly reducing the cost of time. 
• Ethical and Sustainable. When we can trace back every link in the supply chain, it makes it simple to know where materials are coming from, where they went, and who had access to them. This can improve sourcing efforts in terms of ethics and sustainability. (think: no more conflict diamonds)
• Reduced Costs. With blockchain technology, once implemented, enterprises gain efficiency and reduce waste because, while the blockchain has redundancy built-in, this streamlines other (flawed) methods of duplication that are prone to data entry errors, single points of failure, and inaccessibility.