BlockChain Technology: What is it & How does it work?

BlockChain is more than just a buzzword and, as we’ve learned, it can provide increased inventory accountability among supply chains in various industries.  In order to understand how BlockChain works, let’s take a brief look into how current systems handle inventory in supply chain management.

barcode-scanner-500x500Retail worker scanning a barcode. (Photo Source)

Did you know that the first bar code was created in 1944 by a company called GS1?  It’s purpose was to provide businesses with a better way of tracking inventory.  Yet, anyone who has worked in the world of retail knows how time-consuming this process can be.  Bar codes can sometimes be challenging to scan and are proprietary, which can lead to high costs. 

BlockChain technology can vastly improve these processes by utilizing IoT sensors to retrieve data about particular items, ranging from food to high priced merchandise.  IoT sensors can indicate the location of a cargo ship,  internal temperatures (for perishable products), and real-time GPS location.

Why is this important? Having good visibility in supply chains can significantly drive down costs.  Companies who aim for granular level visibility can gain greater inventory accountability through each individual unit versus a Bill of Lading level.

An EDI, or Electronic Data Interchange, was meant to solve these issues by providing synchronous protocols to allow for communication between factories, trucks, ports, ships, and retail stores.  However, it also meant that only companies with fully owned supply chains can implement EDI.  Most companies do not own their supply chains and as a result, EDI was not successful due to the complex protocols along with the difficulty of the number of parties involved.

This is where BlockChain can be a huge advantage. 

How does it work?  Each step in the supply chain cycle reports directly to a CMB, or Common Messaging Bus, moving from a synchronous protocol to an asynchronous protocol.  This granular level data allows team members from all parties to see exactly what’s inside each container, it’s current location, temperature, and other useful information.

While technology can get us down to tracking on an individual level, there are still difficulties that remain, which is why most businesses have yet to implement this into current systems.

What are your thoughts on BlockChain Technology? Have you experience it first hand in your business? Please share your thoughts in the comments!

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A passion for writing, photography, & all things digital; Diana obtained her Master's degree in Integrated Marketing in 2019 from NYU's School of Professional Studies, with a focus on Digital Marketing.  She is currently working on a project to be launched in 2020. Thank you for following along this journey. Stay tuned for updates!

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