This year alone has seen a significant expansion of the blockchain revolution. In fact, 2020 is projected to be one of the biggest years for businesses around the globe to switch from traditional data storage to blockchains. Yet, despite this growth, many are still unaware of some of the most prominent differences between a blockchain and a supply chain. Let’s take a closer look.
What Is A Blockchain?
At its purest, a blockchain is a system of information chained together by a series of blocks. Specific information is stored within each individual block, which is composed of three primary factors: the data, the hash, and the hash of the previous block. A block’s hash is essentially its identification (think of it as a virtual fingerprint). No two blocks have the same hash; they are unique and can never be replicated. Once a block’s data has been altered in any way, the hash changes as well.
Each type of blockchain stores different data among each of its blocks. For instance, a block within the Bitcoin blockchain stores specific transaction details, including the sender, the receiver, and the amount of currency. Blockchains are utilized mainly for their effectiveness and reliability in terms of storing crucial information. As soon as any data is recorded within a blockchain, it becomes incredibly challenging for any changes to be made.
Rather than operating under an individual, a Blockchain is run by a Peer-to-Peer (P2P) network consisting of authorized personnel. If there are to be any modifications whatsoever, everyone within the P2P network must vote unanimously for the authorization. If an attacker were to tamper with a block, they would first need to attempt the same attack on every block within the chain and gain access to over half of the P2P network. However, during this process, an authorized member would likely notice the attack taking place. This makes any foreign interference all but impossible.
What Is A Supply Chain?
Simply put, a supply chain is a system used primarily for the optimized production and distribution of a company’s products and/or services to their final buyers. It contains information regarding the start-to-finish process in which these products and services get from supplier to consumer. In other words, it tracks and organizes raw materials and finished goods from point A to point B. A supply chain is made up of several components, including:
- Finished Goods
- Natural Resources
- Retail, Services, and E-commerce
- Ingredients and Parts
- Returns, Recycling, and Reuse
- Logistics (transportation of goods)
It’s also important that you don’t confuse logistics with a supply chain. Logistics revolves specifically around the transportation of goods and is thus only one part of the supply chain. The entire supply chain involves logistics, when and how products are manufactured, and everything else mentioned within the list above.
Nowadays, most companies have a high-functioning supply chain in full effect. In fact, it’s rather difficult to optimize their business without one. Supply chains help companies improve their customer service by enhancing the efficiency of their product delivery. If managed properly, they generally lead to an increase in sales as well, thus turning a much higher profit.
Can A Blockchain Track A Supply Chain?
Yes. Supply chains are fundamental for the optimized production and distribution of a company’s products and services. However, with the exhausting complexity surrounding the current system, traditional supply chains are slowly becoming outdated. As a result, more and more companies are beginning to use blockchains to track their supply chains.
Supply chains typically consist of four primary costs, including:
- Inventory - Cost of inventory, surplus, damaged or stolen goods, and loans.
- Quality - Cost of quality checks performed by a team of trained professionals.
- Transportation - Cost of delivery from supplier to consumer.
- Procurement - Cost of the goods and raw materials listed within the supply chain. (Additional expense if you decide to hire procurement officers).
The data of these costs can all be easily managed with a blockchain. The financial information can be recorded transparently within a specific block with its own unique hashing algorithm. This allows every member of the authorized personnel within your business to oversee any final decisions regarding the accuracy and modification of vital information.
Most companies that use blockchain to track supply chains do so to reduce the number of human errors, time delays, and unnecessary expenses. In addition, it provides a reliable method of ensuring that all of the information received from the suppliers is 100% accurate.
A blockchain is a system of information chained together by a series of blocks. Specific information is stored within each individual block, which is composed of three primary factors: the data, the hash, and the hash of the previous block. Blockchains are utilized mainly for their effectiveness and reliability in terms of storing crucial information. As soon as any data is recorded within a blockchain, it becomes extremely challenging for any changes to be made.
A supply chain is a system used primarily for the optimized production and distribution of a company’s products and/or services to their final buyers. Supply chains help companies improve their customer service and save money by enhancing the efficiency of their product delivery.
Despite these differences, blockchains and supply chains can intermingle to a degree. In fact, more and more companies are beginning to use blockchains to track their supply chains. This helps to reduce a company’s human errors, time delays, and any unnecessary expenses.
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