Key Challenges for Using Blockchain in Supply Chain
- Scalability: Currently, one of the greatest shortcomings of such networks concerns scalability, particularly the number of transactions the blockchain network can handle or how fast it can process these transactions. The growing number of transactions can slow down the process of their processing in blockchain networks at a given time and increase their congestion, which leads to delays and higher costs of transactions.
- Interoperability: There exist many different types of blockchain platforms and protocols and each of them defines standards and specifications. The main issue arises from the effort to ensure that interworking between such complex systems is effective and synchronized within the blockchain networks.
- Regulatory Compliance: Blockchain has some form of regulation, but the present legislation is sometimes not adaptable enough to fully characterize blockchain and its consequences. However, there are limitations to blockchain in continuously evolving regulatory laws, especially regarding data privacy or protection, consumer rights, and especially for handling of financial information.
- Costs and Infrastructure: It is also very expensive to implement blockchain technology due to the need for many resources in terms of hardware software and the network. Besides, constant harmonization and utilization expenses play another important role, and it is significantly high for a private blockchain network.
- Security Risks: Despite its transparent, decentralized structure plus the heavy reliance on cryptographic algorithms, blockchain is not invulnerable to security threats. Holes in smart contract code, consensus algorithms, or network communication layers can be used by malicious agents to interfere with or even destabilize the supply chain.
- Adoption and Standardization: Exploring the potential for blockchain technology in the supply chain also involves manufacturers, suppliers, distributors, and regulators for the system to work. In particular, it has been identified that blockchain is still an emerging technology in many sectors and industries, and this results in the absence of well-defined guidelines for blockchain innovations and solutions.
- User Experience and Education: These users can experience significant difficulties in terms of usability and education because blockchain technology might be hard and new for several supply chain professionals. It is therefore important to ensure users of these blockchain applications have adequate knowledge to utilize them in their everyday lives and work efficiently.
Blockchain for Supply Chains
Blockchain has become identified as one of the major disruptive technologies that hold great potential in the supply chain area. Historically, supply chain management has always faced several challenges such as; opacity, and weak supply chain controls to mention but a few. Blockchain, which is a distributed digital record system that is secured through cryptography, is well-equipped to handle many of these issues. Given that blockchain preserves information and transactions in an easily accessible and immutable form, this technology can strengthen trust with various parties, facilitate processing, and improve the supply chain.
Table of Content
- Current Supply Chain Scenario
- How can Blockchain Help in Improving the Current Scenario?
- Potential Benefits of Using Blockchain in Supply Chain
- Key Challenges for Using Blockchain in Supply Chain
- Case Studies Related to Blockchain in Supply Chain
- Conclusion
- FAQs