Introduction
Advancements in technology have played a central role in the development of new modes of electronic payment as part of promoting efficiency in different aspects of business performance. That led to the development of cryptocurrencies and the blockchain technology, which have become a game changer especially in supply chain management (Biggs, Hinish, Natale, & Patronick, 2015). Cryptocurrencies refer to a modern type of currencies that are unregulated or ungoverned when compared to the traditional forms of payment. On the other hand, blockchain technology refers a protocol for digital ledge as part of promoting proof of ownership for cryptocurrencies. The blockchain technology was first developed as part of the Bitcoin currency, which remains as one of the most controversial modes of payment around the world. In that view, this report will embark on an in-depth analysis to help understand how cryptocurrency and blockchain technologies have impacted supply chain management in business performance.
Background of Crypto Currency and Blockchain Technology
In 2011, the world experienced the development of the first cryptocurrency, Bitcoin, by an individual or group of individuals using the pseudo-Satoshi Nakamoto focused on eliminating the intermediaries such as banks and governments, which control currencies. Bitcoin was the first cryptocurrencies that sought to build facilitate transactions and payments while reducing the idea of a centralized monetary environment. Cryptocurrencies tend to create a B2B system of operation, as they provide individuals with full control of their currencies without any intermediary such as a bank. That means that a transaction occurring using cryptocurrencies is from one person to the other securely and transparently, which is one of the critical aspects that helps in building business performance.
Delegate your assignment to our experts and they will do the rest.
Any transaction occurring on any cryptocurrency is recorded in a specific protocol or public ledger, which also indicates the shift in ownership of the currency from one individual to another. The ledger is referred to the blockchain technology, as it seeks to create a public record of all transactions occurring on the cryptocurrency. In a centralized environment, for example, a bank, an individual is only able to access specific transactions recorded on an individual bank statement. However, in the blockchain technology, the individual would be in a position to access all transactions that may have occurred on the cryptocurrency to the point of access. In other words, the blockchain technology would be considered as a record-keeping mechanism focused on creating a more comfortable and safer environment within which businesses would engage over the internet.
Impacts of Crypto Currency and Blockchain Technology on Supply Chain Management
Although cryptocurrency and blockchain technology was created as part of promoting B2B transactions within a decentralized environment, businesses are benefiting from the technology. In other cases, businesses find themselves promoting creativity in the utilization of this technology as part of their approach towards improving their overall performance outcomes, as well as, expanding on the possibilities associated with this technology in the business environment. From a business perspective, the idea of cryptocurrencies and blockchain technology would have a wide array of benefits in ensuring that businesses achieve some of their intended goals and objectives. One of the critical areas that the technology has impacted significantly is supply chain management, which is considered as one of the critical areas that define business performance. Some of the notable impacts include:
Maintaining Records of Transactions
One of the notable advantages associated with the cryptocurrency and blockchain technology is the ability to maintain records of all transactions, which is a critical benefit in supply chain management. The technology may help in recording the quantity and transfer of assets within a public record securely and transparently, which helps towards ensuring that the supply chain departments are held accountable for their transactions. As the assets move between the supply chain nodes, they are recorded in the blockchain technology, with each movement accounting for a single block in the blockchain (Biggs, Hinish, Natale, & Patronick, 2015). Thus, this means that the management within a company would be in a position to access the blockchain as part of their approach towards viewing the records of the movement of assets from one node to the other.
From another perspective, the cryptocurrency and blockchain technology would be of value in logistics, as it seeks to make records of any logistical movement of assets, thus, ensuring that each of the assets is accounted for within the business environment. One of the critical challenges that supply chain departments experience in their approach to management of the supply chain process is creating accurate records of logistical movements. However, the cryptocurrency and blockchain technology provide the departments with that capability by ensuring that the records are accurate and secure (Biggs, Hinish, Natale, & Patronick, 2015). That means that any record input on the blockchain cannot be altered or reversed, thus, suggesting that individuals would be held accountable for such movements on the supply chain nodes. Ultimately, this would be of value in building better value for companies investing in supply chain management as part of their business model.
Traceability of Transactions
The effectiveness of the supply chain management process depends wholly on the capacity of the supply chain departments to track and trace any notable movements of goods from one destination to another. However, this is somewhat challenging when using manual inputs considering that most of these inputs may be altered as part of eliminating any form of traceability. When dealing with the cryptocurrency and blockchain technology, the movements are recorded automatically within a secure and transparent protocol that any individual around the world would be able to view (Greengard, 2017). The technology incorporates the ability to trace the movement of goods from their origin to their destination while focusing on other aspects such as quantity and quality. In other words, technology seeks to create an avenue from which individuals would be in a position to take note of any movements of goods within the supply chain nodes accurately.
The technology introduces a front from which the supply chain department can track purchase and change orders, shipment notifications, or other related transactions, which, in turn, helps in building that overall platform for enhanced performance in supply chain management. The ability to improve traceability through the cryptocurrency and blockchain technology brings to floor a new level of transparency in what would be described as a B2B ecosystem (Biggs, Hinish, Natale, & Patronick, 2015). The ability to trace the movement of goods would help improve transparency, as it becomes much easier for the management within business environments to establish the exact location of specific assets at specific times. That means that the supply chain management process would be automated as part of its approach towards improving transparency.
Assigning or Verification Certificates
The cryptocurrency and blockchain technology record all the relevant details of a given transaction, as it works towards creating an accurate ledger that reflects on all aspects of the transactions. In the supply chain management process, this would be considered as very advantageous, as it helps in assigning or giving verification certificates within different transactions as part of tracking specific products (Greengard, 2017). For example, when tracking organic products delivered within a given business enterprise, the assigned verification certificate of the movement would help in determining the type of product to avoid a situation where organic products would be mixed with non-organic products. Ultimately, this means that the use of this technology seeks to eliminate any underlying confusions that are common in supply chain management.
According to Haughwout (2017), the cryptocurrency and blockchain technology help in building the concept of provenance referring to the idea of tracking the place of origin, as well as, evaluating the properties associated with currency. In supply chain management, the technology will also help in building provenance, as it seeks to evaluate the place of origin for products moving through the supply chain node. Thus, this helps in ensuring that the ultimate consumer of the product can trace its place of origin as part of determining its quality. Implementation of this technology in supply chain management would be of value in promoting confidence in the process, as it builds on a capacity to deliver products matching consumer demands (Greengard, 2017). For the consumers, they will have the ability to assess the quality of their products from an individual perspective based on their access to the blockchain.
Security
Security remains as one of the critical factors affecting supply chain management, as it becomes hard for supply chain departments to link specific products to specific serial numbers and barcodes. In the supply chain management process, it becomes harder to control the security of the products considering that the products tend to go through different avenues of logistics (Haughwout, 2017). In some cases, loss of products occurs with the challenge focusing more on determining the specific location of the damage. However, the utilization of the cryptocurrency and blockchain technology would help in eliminating any security concerns, as it introduces the idea of using a shared and indelible ledge using specific codified rules. That means that all products would be linked to their serial numbers and barcodes, thus, avoiding any situations that may lead to the loss of specific products.
The codified rules developed as part of the cryptocurrency and blockchain technology helps in eliminating the need for audit within the internal systems and processes during the supply chain management process attributed to the security of the technology. These rules will govern the movement of products within the supply chain nodes thereby eliminating any notable instances where the process would experience any significant flaws (Greengard, 2017). That means that the adoption of this technology would help in promoting faster movement of products from place of origin to its destination, as well as, creating a guarantee of security. Consequently, this means that the adoption of this technology may act as one of the security protocols that companies and organizations may engage as part of promoting efficiency in their supply chain management.
Ability to Share Information
The cryptocurrency and blockchain technology acts as a public ledger that any individual around the world may be able to access at any given time if he or she would need to as part of promoting transparency in the technology. In supply chain management, this is one of the lacking elements considering that consumers do not have access to information relating to the manufacturing process, assembly, and delivery of products (Haughwout, 2017). In such cases, it becomes harder for the consumers to determine the quality of the products that they consume due to lack of access to such information. The adoption of the cryptocurrency and blockchain technology will help in dealing with such issues in the supply chain management process as part of building confidence among consumers.
Through this technology, consumers will be in a better position to access information on the manufacturing process of the products, assembly, and delivery as part of establishing the possibility that the products would match its intended objectives. The central aspect to note is that the technology would not require any form of permission from vendors or suppliers considering that the ledger is held on a public protocol that any individual can access at any time. The main idea of adopting this technology is to create a decentralized architecture in supply chain management with the intention of ensuring that the processes are transparent from all perspectives. On their part, consumers will find themselves in a better position to judge products depending on the processes involved before they are delivered within stores in their locations thereby avoiding low-quality products.
Analysis of the Impacts
From the discussion presented about on the impacts of cryptocurrency and blockchain technology on supply chain management, it is important to point out that the technology is more viable as part of its approach towards projecting better capacity in different processes. The technology creates an avenue from which information on the movements of products within the supply chain nodes is held on an interlinked network of computers. That means that such information would be accessible at any given time by any individual connected to the network as part of promoting accountability and transparency in the supply chain management process. The discussion also suggests that the adoption of the technology would also help towards improving efficiency in supply chain management attributed to the notable advantages that it projects. In overall, the technology would be of value in building a better platform for support in supply chain management by ensuring that the processes are secure.
Conclusion
In summary, advancements in technology have helped in the development of new modes of payment, referred to as cryptocurrencies, which are becoming common in the world today. Cryptocurrencies operate on a network referred to as a blockchain, which acts as a record-keeping mechanism that helps in storage of information revolving around all transactions associated with given cryptocurrency. In supply chain management, the crypto currency and blockchain technology would have notable impacts in promoting efficiency in the processes, as well as, improving security and transparency. The technique seeks to create a front from which consumers would be in a better position to trace the place of origin for the products delivered, which is essential in determining the quality expected.
References
Biggs, J., Hinish, S. R., Natale, M. A., & Patronick, M. (2015). Blockchain: Revolutionizing the Global Supply Chain by Building Trust and Transparency. Journal of Business Management, 31 (11), 40-42.
Greengard, S. (2017). Blockchain prototype could secure US drug supply chains. Healthcare Purchasing News, 41 (11), 58-68.
Haughwout, J. (2017). Blockchain: A Single, Immutable, Serialized Source of Truth: Blockchain technology could help introduce higher levels of security to and confidence in supply chain transactions. Material Handling & Logistics, 72 (8), 27-29.
