Author: Joseph Chukwube
Translation: First.VIP Saline
Source: first class warehouse
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Editor's Note: The original title is "Technology behind the blockchain-based supply chain: What is it essentially?" 》
In 1991, after an in-depth study of the field, Stuart Haber and W. Scott Stronetta first described encryption as a security chain consisting of blocks, and they wanted to create a time-stamped document system that could not be tampered with.
The first blockchain concept was proposed by Nakamoto in 2008. He improved the system using a method similar to Hashcash, and launched the first cryptocurrency, Bitcoin, the following year.
Due to the mystery of the information of this mysterious character, the uncertainty of Nakamoto's identity led to the emergence of bitcoin conspiracy theories. For example, four well-known Asian technology giants such as Samsung, Toshiba, Zhongdao and Motorola jointly created Bitcoin. Some even say that it may be a project of the US intelligence agency and so on.
Today, the blockchain technology behind Bitcoin has been widely accepted in many industries, and it has become a platform that can strengthen existing operating models in all aspects of the company.
Next-generation blockchain technology is used in artificial intelligence, e-government, predictive analytics, security, and the Internet of Things. In many industries, the supply chain is one of the areas where blockchain technology is easily deployed and accepted.
Nearly all of the world's leading companies use supply chain management and enterprise resource planning software. Despite the large investment in this area, most companies know very little about the specific logistics location of their products at a particular point in time.
In most cases, the simulation gap in the supply chain ecosystem is the culprit. When manufacturing goods, their production status can be recorded, but once the product is out of the warehouse, the visibility and tracking of the goods can only rely on digital tools, such as RFID and PDF documents used to track goods.
The current system was significant 30 years ago, but it is a bit eclipsed today. Before the advent of Bitcoin and blockchain technology, only a middleman could create a real set of real data that was recognized by a large number of entities.
Blockchain technology enables many partner companies in the ecosystem to share critical information without the need for intermediaries and to reach agreement among all.
All data and transactions on the network can be synchronized through the blockchain, without the need for intermediaries to intervene, and all participants can verify the calculations of others.
Blockchain logic can be applied to the supply chain. Blockchain security and redundancy, applied to inventory and the use of bank nodes instead of supply chain partners, will lay the foundation for a new approach to supply chain management using blockchains.
Fundamentally, blockchain technology means that at a certain point in time, there will be no two locations for an inventory product. Once the product is shipped out, the transaction status of the product will be “in transit” for everyone in the ecosystem. Updated information that everyone can trace back to.
Although this is a new technology, many large companies have piloted a blockchain-based supply chain management system.
Starbucks will use the distributed ledger technology system supported by the Azure Blockchain Service to obtain "digital time traceability" about its supply chain.
Food and beverage giant PepsiCo recently launched a trial called Proton Program to test how a blockchain-based supply chain management system can improve efficiency. As a result, the system improves supply chain efficiency. 28%.
Blockchain-based supply chain
Using blockchains, companies can obtain real-time digital books of digital transactions and cargo logistics that record all nodes from all ecosystem participants. This is the full transformative advantage of the blockchain, which allows companies to save more time, money and effort in all aspects.
1. Visibility is higher, procurement is more economical
Some companies need to negotiate purchase discounts based on the overall purchase volume they need. In a business driven by various vendors, subsidiaries, and internal functions, it is not easy to track the total purchases of a company.
The blockchain makes this process simple by constantly refreshing the digital ledger that consists of data from all ecosystem partners, so that no matter who in the ecosystem makes a purchase, the total purchases can be viewed.
If there is no blockchain, the company will need to hire multiple auditors to manually record the purchase volume.
2. More complete data and analysis
A supply chain is a continuous process that includes multiple data generation nodes. In order to understand how many products or materials are in different locations, and how much demand is generated in a certain period of time, the enterprise must be completed by deploying personnel and technology.
In the technology industry, taking into account the cost of capital and the rapid depreciation of technology products, the annual inventory cost of $1 is now estimated to have fallen to between 20 and 40 cents.
The blockchain allows the system to track and manage resources at the ecosystem level, providing more comprehensive forecasts and maintaining the same level of service with less inventory.
3. Digital contract and payment
According to various studies, it takes an average of 60 days for a Fortune 100 company to get paid after completing a product delivery task.
Although these payments are subject to contractual constraints, most contracts clearly state that the final payment must be settled within 30 days of the delivery of the service, but in practice the final payment will take more than two times.
The gap between contract and reality is mainly due to the “simulation gap”. That is to say, after a job is completed, an invoice is generated, email is sent to the customer, and payment is made on the client (including verification of service delivery), it takes a lot of unnecessary time. The use of blockchain-driven ecosystems can greatly reduce this time.
4. Block criminals
The blockchain creates an ecosystem in which all participants have identical identical books to create real-world data without the need for third-party intervention.
Each ledger contains all transaction and inventory logistics information throughout the ecosystem. If any malicious participant attempts to fool the system by changing the ledger entry, they can only change their own ledger entries. This will make their books unsynchronized with others, thus creating a powerful deterrent to malicious participants.
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