Half of Supply Chain Industry Will Invest in Blockchain in 2017
Large numbers of major corporations are exploring the usage of blockchain technology and some are implementing the technology, according to a recent report from eft.
Blockchain’s inroads have been seen primarily in the banking and finance industry, but, notes the report, “blockchain’s application to supply chain seems like a natural second step.”
Blockchain, which got its start facilitating virtual currencies like Bitcoin, creates a single version of the truth among data shared by diverse computers and networks. That’s why the application of the technology to banking is clear cut. But those same characteristics can be applied to supply-chain applications.
“It seems that the technology is truly in its most basic state right now when it comes to supply chain,” said the report. “There are a number of start-ups and incumbents looking to leverage the technology to solve critical challenges in the industry from improving payment systems to transferring and verifying shipping documentation.”
Possible applications of blockchain to supply-chain operations including automating key processes with smart contracts. “Smart contracts are contracts that can executed automatically based on the fulfillment of certain conditions,” noted the eft report. “Given the amount of complex paperwork in the supply chain, there is the potential for creating smart contracts in many areas for speed, trust and security to name a few.”
Blockchain technology also has the potential for adding trust and security to the transfer of assets in the supply chain, such as documents, physical assets, and currency. This can be helpful for small and midsized companies with speeding up payment processes, including credit checks, payment terms, and shortening the order to cash cycle.
Blockchain could also change how data is exchanged in supply chain. It could, for example, replace the documentation between parties during shipments. Smart contracts could eliminate major steps in shipping or moving goods such as issuing bills of lading and customs papers and could also eliminate a number of third parties involved in many transactions.
Quality control and maintenance reporting are other areas blockchain could be used effectively in the supply chain, the report concluded, leveraging the trust, security, and automation aspects of the technology.