Businesses today are required to be agile, flexible and efficient to survive in competitive industries and secure an advantage against competitors. In a highly dynamic market, one way companies can distinguish themselves and streamline operational costs is through driving logistics and supply chain management processes with continuous innovation.
The supply chain industry is no stranger to artificial intelligence as they take over tasks such as quality control, monitoring manufacturing products and even managing and influencing maintenance. Moreover, according to the Brookings Institution, more than 1.9 million robots have already been used by businesses to increase efficiency and reduce costs in warehouses and manufacturing factories globally.
New technologies are also emerging, with the blockchain industry being at the forefront of this charge for the past half-decade. GlobalData reports that venture capital (VC) has invested at least US$14.8 billion into blockchains in 2021, and many global companies are seen building their businesses around technologies and focusing on Internet Technology (IT) solutions. The reach of the blockchain industry is massive, with entire developments such as blockchain in transportation and blockchain in shipping underway. These are set to transform the way supply chains operate and determine how business processes run in terms of efficiency and speed.
Among other crypto networks, blockchain has emerged to be a potential game changer in not just the financial world, but that of logistics as well. Some areas where high potential lies in this regard include greatly enhancing supply chain management to improve the coordination between parties, enabling faster delivery of products, increasing products’ traceability, and minimising shipping costs altogether.
But what exactly is blockchain’s relevance in supply chain management and how can you use it to your business’ advantage?
What is blockchain technology?
Blockchain is a public ledger that integrates all types of information — that of supply chain management and logistics included — to be distributed and decentralised across multiple digital networks, computer systems and databases. With its encrypted nature, blockchain technology stores a limitless amount of information and documentation within its system while providing a significant level of security to businesses as compared to traditional banking models dominantly used in the past.
With instant transmissions made via the Internet, blockchain also increases efficiency for businesses by providing immediate, shared and transparent information within permissioned parties. Businesses are thus better able to access an overhead view of all details of their processes end-to-end. A blockchain network can also aid businesses in tracking orders, transactions, accounts and more, such that organisations not only streamline logistics, supply chain management and other operational processes, but also make more accurate decisions when determining tasks and allocating costs.
What are the key features of a blockchain?
In order to adeptly apply blockchain technology in supply chain management, businesses should learn to utilise its key features. They are:
- Distributed ledger technology: All parties with the network are granted permission and will have access to the distributed ledger. In contrast to a traditional centralised database, a distributed ledger increases transparency and accountability like never before.
- Immutable records: After a transaction has been recorded into the ledger, that too only once, parties are not allowed to alter or tamper with it. However, in the event of a transaction recorded with an error, a new transaction has to be made to correct this mistake, where both are still visible for easy comparison and identification. In the long run, this helps to eliminate the duplication of tasks that can result in costly confusions, allowing for improved data security and reliability.
- Smart contracts: A smart contract is a set of rules used to speed up transactions within the ledger. They are stored on the blockchain and the tasks are carried out automatically. For instance, a smart contract can be set up to make AI automatically determine the conditions for different types of transfers and transactions in a business’ supply chain.
The importance of implementing blockchain in Indonesia
Businesses in Indonesia have a lot to gain from implementing blockchain technology, with its various applications across payment processing, digital identity management, asset tracking and auditing, smart contracts, supply chain management, and more.
The decentralised nature of blockchain technology makes it more secure than traditional systems, as there is no central point of vulnerability. This means that data stored on the blockchain cannot be altered or corrupted, helping businesses in Indonesia protect vital information from malicious actors and hackers. Additionally, because all transactions are transparently recorded on the ledger, organisations can gain greater visibility into operations, allowing them to make more informed decisions and improve efficiency.
Blockchain technology can also help businesses in Indonesia reduce costs associated with data storage and reconciliation, as the transparent ledger system eliminates the need for manual record-keeping and verification processes. Furthermore, it enables organisations to streamline their payment processing systems, which can result in faster speeds and lower transaction costs.
Overall, the implementation of blockchain technology can provide businesses in Indonesia with massive benefits, including improved security, transparency, cost-effectiveness, efficiency, and scalability, especially when applied to business logistics. By leveraging blockchain to its fullest potential in supply chain management, Indonesian businesses have the opportunity to gain a significant competitive edge in a rapidly evolving digital economy.
