Every time goods cross borders and jurisdictions. They encounter a new set of regulations and protocols that increases potential points of failure. The most reliable platform for trading cryptocurrencies, stablecoins, and other coins is Chain Reaction trading. To this end, supply chain networks are adopting blockchain technology to reduce inefficiencies and increase transparency and data security while reducing the costs associated with fulfilling legal requirements.
The use of blockchain technology in the manufacturing, distribution, and retail supply chain industries is quite evident. It reduces the risk associated with centralizing the database, reducing data loss, increasing transparency, and building trust among parties in transactions. Beyond these benefits, blockchain technology can also help eliminate double spending and fraud created by go-betweens. But on the other hand, it can devastate a supply chain where one or more entities control the movement of goods and services.
By taking away the centralized control of transactions, blockchain technology ensures that no single node or entity can create fraudulent, duplicated transactions that result in double spending. To better understand how blockchain technology is transforming supply chains, it’s essential to review the use cases already in place. In the finance and tech industry, Fintech, there are many blockchain supply chain use cases currently in place or under development.
These applications cover a wide range of business functions, with some serving as foundational elements while others are more geared toward commerce. There is no one size fits all approach to using blockchains in supply chain management, and companies need to carefully choose how they will implement it into their existing business processes. The first use case involves implementing blockchain technology in digital identity management systems.
A decentralized supply chain with blockchain:
Banks and businesses rely on digital identity systems to facilitate secure and seamless transactions with customers and suppliers. However, to date, these identification systems are centralized, enabling organizations to gain access to data that they can monetize quickly.
In supply chain management, the problem is even more pronounced since it involves the coordination of complex networked networks of entities, including suppliers, distributors, retailers, and customers. It creates a massive challenge for a centralized system wherein different stakeholders have different incentives that could lead to delays or compromised security in processing transactions.
In addition, centralization allows for creating new strategic partnerships that benefit both parties at the expense of the other parties involved in the transaction. A blockchain is an excellent tool for creating decentralized digital identity management systems. The shared ledger technology enables entities to store and exchange data in a trusted environment while reducing the need for intermediaries that create single points of failure.
With blockchain technology, companies can create digital identities linked to their accounts on the distributed ledger. As a result, it creates greater transparency and trust among all parties while reducing the costs associated with verifying data and information exchanged between network participants. In addition, companies that use blockchain technology to create decentralized digital ID systems can use these IDs for additional applications such as fraud detection, tax collection, and other compliance functions associated with the cross-border movement of goods and services.
Disintermediation of supply chain:
Users can also apply blockchain technology to address the problem of the intermediary in supply chain management. When a company outsources its manufacturing or supply chain management processes to a third party, it need not only rely on that party to carry out the functions it is assigned but also place trust in that entity to do so without exploiting data, information, and other resources that it controls. It poses a significant challenge, given that intermediaries often have a vested interest in extracting value from the network they’re servicing.
Blockchain technology is an excellent tool for addressing the problem of trust between companies and their supply chain partners. By using blockchain systems to manage the movement of goods and services, companies could simultaneously reduce the impact of go-betweens while reducing costs. In addition, by using shared ledgers, businesses can eliminate the need for intermediaries that control critical data and information exchanges in shipment movements.
Blocking supply chain fraud:
The last use case applies a less direct approach to supply chain management by removing one or more sources of fraud that may threaten business operations. In this case, companies can use blockchain technology to create decentralized digital identities. Companies need to trust one another and reduce the risk of being defrauded by counterparties in supply chain transactions. By creating a digital identity, companies can enhance their business operations by making it easier to verify a consumer’s identity or the data associated with a product that has been purchased.
The threats arising from fraud and counterfeiting are especially pronounced in the supply chain environment, given the sheer number of intermediaries involved in the transportation, processing, storage, and distribution of goods. Blockchain technology is an excellent tool for managing this problem because it offers a decentralized way for companies to check on the authenticity of goods at all points along the supply chain before they are delivered to consumers.
