Nearly every company in this world relies on ERP and supply chain management to run their business. From connected manufacturing equipment to digital invoices, RFID scanning, products are actively tracked from their origins until their way to recycling bin. Despite all this digitization, companies have negligible visibility and insight in the movement of their goods and their details in transit. The reason is an analog gap that exists between these digital systems within enterprises and outside the enterprise.
Blockchain application development can transform supply chains at the ecosystem level where companies can get an integrated global view of the entire supply chain. Here are some advantages of a blockchain based supply chain.
More Visibility and Savings
Companies are known to negotiate procurement discounts on the number of purchases theymake. In some cases, companies can ask their procurement partners to purchase on their behalf for their subsidiaries. However, in such cases, it is difficult to track the volume of purchases made by business partners, subsidiaries and everyone in your supply chain network. The digital ledger can be designed to incorporate all data from your partners and subsidiaries and you will be able to see the total volume of purchases made by your company irrespective of who directed and completed the purchase activity.
One good thing about digital ledger is this data is always present in front of your eyes and your business partners don’t have to share the operational data. Without
digital ledger, companies will be required to hire several people to capture and audit these volume purchases.
Businesses would be required to hire dozens of people working day and night to add up all volumes and determine the discount the company is entitled to receive. Blockchain application development does all of this without any staff or additional time in the pre-verification process thereby bringing more visibility in volume purchases across all supply chain network and helping your company get the right volume discounts.
Better Data and Reliable Outcomes
Data is of critical importance in making supply chains more efficient. With blockchain technology, the data and transactions are transparent and legitimate and you can track and manage resources at the ecosystem level. The result is the data stored in digital ledger offers better accuracy that leads to better forecasts. One of the advantages of this factor is that companies can maintain lower inventory level without affecting the same service level.
Digital Contract and Payments
The realization of payment is quite long and an average US Fortune 100 company has a salesoutstanding period of 60 days. It means the company has to wait for a minimum 60 days to receive payment after a successful sale has been made. Nearly all companies interacting with each other specify payment upon receipt or credit period of 30 days. Generally, when a purchase is made, the invoice is generated and sent to the customer who then decides when and how to pay them.
Though payments are made digitally, the analog gap in which suppliers gently nudge the customer to release payment runs at a snail pace which delays payments to the companies. Blockchain technology can put an end to this by integrating delivery and payments into smart contracts that flow across the enterprise and integrate with banks and logistics partner.
In smart contracts, the payment on receipt clause and proof of delivery from logistics will automatically trigger automaticdigital invoicing and paymentwith banking system leaving no room for an analoggap that leads to delayed payments.
Putting a Stop to Rogues
Blockchain technology puts an end to all malpractices in
supply chain management. A digital ledger based on blockchain technology is a central intermediary based on shared one truth. Each transaction is part of the digital ledger and every participant of the supply chain has access and visibility of the digital ledger and recorded transactions. If any participant tries to manipulate or perpetrate fraud, they immediately go out of sync of the digital ledger and rest of the ecosystem that is a deterrent to any malpractice or bad behavior.
These are ways in which blockchain helps supply chain management.