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The Impact of Blockchain on Supply Chain Management




Blockchain's Impact on Supply Chain Management

Blockchain technology, which is commonly linked with cryptocurrencies such as Bitcoin, is gaining recognition for its enormous potential in revolutionizing supply chain management. Its decentralized and open character improves operational efficiencies and confidence throughout the supply chain.


Improving efficiency and lowering costs

Blockchain also improves productivity and lowers costs by automating and optimizing supply chain activities. Smart contracts, which are self-executing agreements with the terms explicitly put into code, can automate payments and other transactions once certain criteria are satisfied, eliminating the need for manual intervention. This automation shortens the time spent on paperwork and administrative tasks, lowering expenses and reducing errors (Saberi et al., 2019).

Improving Security and Reduced Fraud

Blockchain's security qualities are especially relevant in global supply chains, where fraud and theft are prevalent. Blockchain's decentralized design eliminates a single point of failure, making it highly resistant to fraud and cyberattacks. This security component is critical for industries that handle sensitive data and high-value commodities (Casey and Wong, 2017).

Smart Contracts Provide Efficiency Gains

Another big benefit of blockchain is the usage of smart contracts. These are self-executing contracts in which the terms of the agreement are written as lines of code. When specified conditions are met, such as shipping updates or quality checks, smart contracts can execute transactions and events across the supply chain automatically. This automation improves efficiency by minimizing the need for manual intervention and associated paperwork, resulting in faster operations and lower operational expenses (Saberi et al., 2019).

Challenges in Implementation:

Despite these benefits, the use of blockchain in supply chain management confronts some hurdles. These include the high costs of technology installation, the complexity of integrating blockchain with existing IT systems, and the requirement for a cultural shift to accept this new technology (Min, 2019).

Conclusion

In conclusion, blockchain technology has the ability to alter supply chain management by increasing transparency, efficiency, and security. However, its adoption necessitates overcoming considerable technological, financial, and organizational barriers. As the technology evolves and additional use cases emerge, blockchain is likely to become a standard in supply chain strategies across a variety of industries.


References

Casey, M.J., and Wong, P. (2017) 'Global supply chains are about to get better, thanks to blockchain', Harvard Business Review.

Kshetri, N. (2018) '1 Blockchain’s roles in meeting key supply chain management objectives', International Journal of Information Management, 39, pp. 80-89.

Min, H. (2019) 'Blockchain technology for enhancing supply chain resilience', Business Horizons, 62(1), pp. 35-45.

Saberi, S., Kouhizadeh, M., Sarkis, J., and Shen, L. (2019) 'Blockchain technology and its relationships to sustainable supply chain management', International Journal of Production Research, 57(7), pp. 2117-2135.


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