With 2020 projected as a significant year for businesses transitioning to blockchain technology, many organizations remain unclear about the fundamental distinctions between blockchains and supply chains. Understanding these concepts is essential for making informed technology decisions.
What Is A Blockchain?
A blockchain operates as information linked through sequential blocks, each containing three key elements:
- Data — The actual information being stored
- Hash — A unique digital fingerprint for the block
- Previous Hash — The hash of the preceding block
This structure makes alteration extremely difficult once data is recorded. Bitcoin blockchains illustrate this perfectly by storing transaction sender, receiver, and currency amounts.
Rather than being controlled by a single entity, blockchains are managed by peer-to-peer networks. Any modifications require unanimous network approval. Tampering attempts would require attacking every block and accessing over half the network—a practically impossible feat.
What Is A Supply Chain?
Supply chains optimize production and distribution from suppliers to consumers, managing the flow from raw materials through finished goods delivery. Key components include:
- Customers
- Raw materials and ingredients
- Finished goods
- Natural resources
- Retail and e-commerce services
- Returns and recycling
- Logistics and transportation
It's important to distinguish logistics (transportation alone) from comprehensive supply chain management. Properly managed supply chains enhance customer service efficiency and boost sales profitability.
Can A Blockchain Track A Supply Chain?
Yes. Traditional supply chains face significant complexity issues, and blockchains provide improved tracking capabilities.
Four primary supply chain costs exist:
- Inventory — covering stock, surplus, damage, theft, and loans
- Quality — professional verification expenses
- Transportation — supplier-to-consumer delivery
- Procurement — materials and raw goods acquisition
Blockchain transparency reduces human errors, time delays, and unnecessary expenses while ensuring supplier information accuracy.
The Bottom Line
Blockchains and supply chains serve different but complementary purposes. As blockchain technology matures, we're seeing increased adoption across modern enterprises looking to enhance their supply chain operations with greater transparency and security.
Interested in exploring blockchain solutions for your business? Let's talk.