Ever since Bitcoin – a cryptocurrency and online payment system using virtual currency – made inroads in 2013, Blockchain (the technology behind the Bitcoin platform), has grabbed attention of all. This is because Blockchain technology is extendable across industries, and is not restricted to Finance. In fact, it will be prudent to say that Blockchain technology can be extended to any transaction that has value – money, property, and goods.
I think that Blockchain technology is going to create a remarkable impact on the way we do business in the future.
What exactly is Blockchain technology?
A Blockchain is a distributed ledger of records that is tamper-proof. It is a decentralized database, which can be viewed by everyone who has access to the Blockchain network. How does this work? All stakeholders connected with a transaction or “block” can see it. Once all concerned stakeholders arrive at a consensus and approve the transaction, the block is updated cryptographically, after which it cannot be deleted or modified in any way. The next block simply sits on top of the previous block, thus creating a chain of records that is shared with all stakeholders.
Every transaction requires only the concerned parties, and does not need any intermediary, resulting in saving precious time and cost. For example, smart contracts using Blockchain technology can automate contract execution for terms of agreement between two or more parties. Besides financial transactions, identity management, electronic voting, supply chains, royalty payments are just some of the areas that Blockchain technology can facilitate and disrupt.
Blockchain technology with distributed networks represent a true peer-to-peer exchange of everything. This explains why it has generated so much of interest and investment.
Blockchain in Supply Chain
Supply chain networks will derive tremendous benefits from Blockchain technology, and I believe that it’s just a matter of time that we see huge strides in this space. IT and Retail majors are already looking at applying Blockchain technology to Supply Chains very closely. According to a Wall Street Journal Report, Wal-Mart is running a Blockchain technology pilot in the first quarter of 2017 to track and trace pork in China and produce in US – two of the high-volume product categories in the largest markets. Closer home, our parent company – The Mahindra Group – has piloted Blockchain technology to improve its supply chain finance business. We expect that use of Blockchain will significantly reduce time taken for invoice discounting.
Typically Supply Chains speed and agility is impacted due to lack of transparency, trust and gaps in technology. Blockchain technology has the potential to disrupt supply chains by providing this open, yet secure ledger leading to a transparent chain with reduced risk and increased trust.
Add Transparency to your Supply Chain
Blockchain technology can be used to add transparency at every stage in the Supply Chain. Product movement can be tracked across every node in the Supply Chain, till it reaches its final destination, providing real-time visibility into the supply network. At every stage, only the concerned parties are signing-off on the transaction. You could also track high-value items, verify product authenticity and automatic certifications. The possibilities are endless.
Become Agile and Efficient with Smart Contracts
Smart Contracting will let two partners sign a contract by approving each other’s terms. A seller can publish the pricing, terms and conditions, discounting and any other relevant information, and any buyer on the Blockchain can find a suitable contract, and sign off on it. The network becomes more efficient, and there are no process overheads since there are no intermediaries. I think Smart Contracts will completely disrupt Supply Chain networks in the near future, and change the way people do business.
Build Trust and Opportunity
Supply Chain networks that use Blockchain technology will build trust amongst all parties involved. Since the chain is transparent, all parties can see previous transactions. This means that sellers will know which buyers will pay on time. Consequently, new business deals become easier, the chain improves in efficiency, and reputations are built based on transaction history.
Improve Quality and Get Proactive with Smart Products
As Supply Chains become more dynamic and alive with IoT integration, adding Blockchain technology to your network will more than double the benefits. Imagine IoT-enabled products sending information directly to the blockchain, which in turn lets manufacturers see real-time product performance. The information is authentic, in real-time, and will let manufacturers see faults as they occur. Not just that, they can also be proactive, improve service levels and product quality.
Blockchain technology can help build agile, trustworthy and cost-effective Supply Chains.
Are we witnessing a technological revolution in progress?
In my opinion, we’ve just touched the tip of the iceberg – much has been happening, and will happen with Blockchain technology. A gamechanger that may unfold slowly, albeit surely over the next decade or so, Blockchain technology is likely to have far reaching implications on every digital transaction we make in the future.
That being said, the Blockchain concept is really new – so both the technology and model will need a lot of work. Tech majors or edgy startups – everybody believes that Blockchain technology has real potential – and if it goes the right way, it will cause more than a minor upheaval in business in the years to come. Blockchain technology is likely to change both business-to-business and business-to-consumer interactions.
The Supply Chain industry definitely stands to benefit from Blockchain technology. As I see it, we must adopt, adapt and deliver the best possible value to our customers.