Blockchain technology for a more secure and transparent supply chain

Blockchain, the technology behind cryptocurrency, will simplify the paperwork-clogged supply chain. Every transaction will be digitally tracked and cannot be tampered with or altered.

Li & Fung, a Hong Kong-based sourcing company working for several international brands, are among the many firms testing blockchain to track customers' orders to reduce their administrative burden. This solution dramatically improved visibility and reduced the time and effort required.

Blockchain keeps a detailed record distributed between all the participants in a supply chain. When an item trades between two companies that are part of the supply chain it gets recorded in the ledger.

Each transaction creates a unique digital identifier, recorded in encrypted form in a data block. When the next transaction for a particular product happens, for example, shipping the item, the data is registered into another block, this block gets chained to the first one, and so forth, hence the name blockchain.

Distributed ledger technology records detailed supply chain information securely and permanently.

For example, a buyer can access the inventory of a Chinese supplier to see if it has enough purple fabric in stock to fulfill an order for soccer jerseys.

Then the buyer can verify that the order arrived at the tailoring workshop, and finally, that the jerseys are ready and shipped.

Blockchain proponents claim that this technology will change the way individuals and businesses exchange goods and money.

It risks revolutionizing many industries where it is essential to ensure the reliability of various stakeholders, including financial services, trade finance, purchasing systems, manufacturing, billing in public services, government records, and the supply chain.

International Data Corporation, a global intelligence provider, estimates that investments in blockchain software will reach 2.1 billion dollars in 2018, with a compound annual growth rate of 81%, to reach 9 billion US dollars (or 7.79 billion euros) in 2021.

Blockchain enables the automation of workflows across borders, with suppliers and customers, making it transparent and efficient, which is why this technology is the best option for the future and has many more applications and potential than cryptocurrencies.

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