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How Companies Benefit from Blockchain

The supply chain today comprises a series of decision-making processes that are largely taken in discrete siloes within different departments such as marketing, product development, manufacturing, and distribution, and finally into the hands of the customer. Digitization has the potential to bring down these walls, thus helping the chain to become one completely integrated ecosystem transparent to all the players involved.
Companies have started to realize the core business value of traceability and Supply Chain visibility, which in turn would help them increase efficiency and cost savings targets. However, first they need to overcome the mistrust which are generally associated with product identity and traceability. Blockchain, which is a type of distributed ledger technology, has increasingly gained market traction in supply chains for several isolated used cases such as product provenance and track ad trace of products across the supply chain. When implemented effectively, blockchain can connect and enable increased business efficiency, higher transparency, and enforce accountability among the participating nodes. With better and more reliable data business decisions can be optimized. Across industries, there has been a growing number of pilot projects where use of blockchain technology has successfully helped in streamlining supply chain transactions through the provision of visibility and reliability of transaction information.
It is the transactional transparency, tamper- evidence, along with trust which blockchain provides which can help take the entire supply chain management a step further.
Companies are faced with significant challenges while digitizing their supply chains such as:
  • Coordination of the process with digital transformation across multiple and often disconnected supply chain partners

  • Lack of connectivity

  • Data reconciliation processes is heavy on Cost Incurred

  • Ineffective solutions for handling large amounts of inconsistent data.

While other technological options are there which help manage supply chains, with blockchain, different parties that necessarily do not have a trusted relationships with each other can communicate on the same platform. What blockchain does is that it stores every transaction or exchange of data that occurs in the network, this potentially reduces the need for third parties as all parties in the network now can access and share same data, in a chronological order. Blockchain helps eliminate a costly and complex effort towards data reconciliation which is a prerequisite for most systems today.
Blockchain alone does not solve the human challenges or the need for digital transformation, however when implemented effectively it can act as a powerful tool to encourage new ways of working, increasing accountability and trust. Additionally blockchain has a few more value additions to the existing system, which may include:

1. Substantial gains in efficiency and a reduction in manual processes which are needed for cross- party data reconciliation.

2. Increase in product provenance and consumer confidence for quality, societal, and environmental impacts.
3. Deeper market penetration and easier new product/markets development.
4. Reduced risk of the proliferation of counterfeit products and risk mitigation from lower-quality components.
5. By Leveraging innovation Brands can increase efficiency and eventually work towards change management
When considering the feasibility of blockchain for a specified use case, various costs and trade-offs should be considered. Further, supply chains in different stages might be more suitable and feasible for leveraging blockchain than others.

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