The application of blockchain technology in the supply chain industry can lead to multiple improvements, including increased transparency, enhanced security, streamlined processes, and reduced costs. Below are a few major application scenarios and specific implementations:
1. Product traceability
- Application Scenario: Consumers and regulatory agencies demand to know the origin and history of products to ensure product quality and safety.
- Implementation: By recording the information of each production link on the blockchain, each step, from raw material procurement to finished product manufacturing to logistics and distribution, can be traced and cannot be tampered with. For example, in the food supply chain, information on the origin, processing date, and transportation conditions of each batch of ingredients can be recorded, so that in the event of a food safety incident, the source of the problem can be quickly located.
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Detailed step-by-step instructions
- Raw Material Purchase: Suppliers upload raw material information, including supplier name, raw material type, and purchase date.
- Production and Processing: Manufacturers record key information about the production process, such as production date, production line number, and quality test results.
- Quality testing: A third-party testing organization conducts quality testing and uploads the test report.
- Packaging and warehousing: After the products are finished packing, the warehousing information is uploaded, including warehouse location, warehousing time, and so on.
- Logistics and Transportation: Logistics companies record information about the transportation process, such as transportation routes, transportation time, and environmental conditions.
- Retail Sales: Retailers record sales information, including the date of sale, location of sale, and purchaser information.
- Consumer Inquiry: Consumers can scan the QR code on the product to inquire about the complete traceability information of the product.
- Regulator Audit: Regulators can view and audit product traceability information at any time to ensure compliance.
- Problem traceability: Once a problem is found, it can be quickly traced back to a specific link through the blockchain and appropriate measures can be taken.
2. Supply chain finance
- Application Scenario: SMEs often face financing difficulties in the supply chain, while traditional financial institutions find it difficult to assess credit risk due to information asymmetry.
- Implementation: Utilizing blockchain technology to establish a shared trust platform that enables all participants to view and verify transaction records in real time, thereby reducing credit risk. Automated payments and settlements are realized through smart contracts, accelerating capital flows and reducing financing costs.
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Detailed step-by-step instructions
- Generate Debt Voucher: The supplier signs a contract with the core enterprise and generates an accounts receivable voucher containing information such as the supplier name, core enterprise name, amount, due date, and so on.
- On-chain storage of credentials: The credentials data will be stored on the chain through smart contracts to ensure that the data cannot be tampered with.
- Verification of debt certificates: financial institutions query and verify the authenticity of debt certificates through blockchain.
- Financing applications: Suppliers submit financing applications to financial institutions, attaching proof of claims that have been uploaded.
- Financing Approval: The financial institution carries out financing approval based on the validation results and internal risk control system.
- Disbursement of funds: The financial institution disburses the financing amount to the supplier and the disbursement information is recorded on the blockchain.
- Accounts receivable collection: the core business pays the accounts receivable to the financial institution or supplier on an agreed date.
- Debt voucher cancellation: after receiving the payment, the financial institution or supplier cancels the debt voucher through a smart contract.
- Funds settlement: The financial institution performs the final funds settlement with the supplier and ensures that all payments are cleared.
3. Contract management
- Application Scenario: Contract management and execution in the supply chain involves multi-party coordination and is prone to misunderstandings and disputes.
- Implementation method: The contract terms are automatically executed using smart contracts, which automatically trigger payment instructions when preset conditions are reached, such as the arrival of goods at the destination. This approach reduces the possibility of human intervention and improves the efficiency and reliability of contract execution.
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Detailed step-by-step instructions
- Signing of the contract: Both parties sign a contract specifying the terms and conditions.
- Contract on-chain storage: The contract content is stored on the chain through smart contracts to ensure that the contract cannot be tampered with.
- Monitoring of execution conditions: Smart contracts continuously monitor the conditions of contract execution, such as delivery dates, payment terms, etc.
- Conditions reached: When the preset conditions are reached, the smart contract automatically triggers the corresponding execution actions, such as payment, delivery and so on.
- Automatic enforcement of terms: Smart contracts automatically enforce the terms of the contract, reducing human intervention.
- Recording of execution results: Execution results are recorded on the blockchain, ensuring transparency and traceability.
- Confirmation by both parties: Both parties confirm the results of the execution of the contract and can negotiate if there is any disagreement.
- Ending the contract: The smart contract automatically ends the contract after its execution.
- Archived records: all records of contract execution are archived for subsequent reference and audit.
4. Logistics tracking
- Application Scenario: In complex cross-border logistics, tracking the location and status of goods is critical to optimizing inventory management and customer service.
- Implementation: Combining Internet of Things (IoT) devices with the blockchain, real-time information on the location, temperature and humidity of goods is collected and uploaded to the blockchain. This information is open to all authorized participants, increasing the transparency of the supply chain while helping to prevent lost or damaged goods.
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Detailed step-by-step instructions
- Shipments into the warehouse: goods into the warehouse, record storage information, including warehouse location, storage time, etc..
- Loading of goods: goods are loaded onto the means of transportation and loading information is recorded, such as loading time and means of transportation number.
- Commencement of transportation: The means of transportation begins transportation, recording information such as departure time and departure location.
- Path tracking: Real-time tracking of cargo location and status, such as temperature, humidity, vibration, etc. through IoT devices.
- Arrival at the transfer station: the goods arrive at the transfer station, record the information of the transfer station, such as the arrival time, the location of the transfer station.
- Continuing transportation: Continuing transportation from a staging area, recording the relevant information.
- Arrival destination: the goods arrive at the final destination, record the arrival time, destination location and other information.
- Sign for the goods: the consignee signs for the goods and records the signing information, such as the signing time and the signer.
- Completion of delivery: Delivery of goods is completed and delivery information is recorded to ensure the transparency and safety of the logistics process.
5. Quality assurance
- Application scenario: Ensure that products meet specific quality standards, especially in high-risk industries such as medical devices and automotive parts.
- Implementation: Blockchain is utilized to record quality inspection reports and ensure the authenticity and immutability of these reports. When there is a problem with a product, it can be quickly traced back to a specific batch through the blockchain and appropriate measures can be taken.
flow chart
Detailed step-by-step instructions
- Raw material testing: quality testing of raw materials and recording of test results.
- Production process testing: conduct multiple quality tests during the production process and record the results of each test.
- Finished Product Inspection: Conduct final quality inspection of finished products and record inspection results.
- Test report on-chaining: All test reports are stored on-chain through smart contracts to ensure the authenticity and immutability of the reports.
- Inspection report inquiry: relevant parties can inquire the inspection report at any time to ensure the quality of the product.
- Problem traceability: Once a problem is found, it can be quickly traced back to a specific batch through the blockchain and appropriate measures can be taken.
Implementation challenges
Although blockchain technology has a wide range of application prospects in the supply chain, it also faces a number of challenges, such as technology maturity, standardization, privacy protection, adaptation of laws and regulations, and other issues. Therefore, it is necessary to consider these factors comprehensively when actually deploying it and gradually promote the application of the technology.
summarize
By providing a decentralized, transparent and secure data exchange platform, blockchain technology can effectively solve the problems of information silos and lack of trust in the supply chain, and promote the development of the supply chain in a more efficient and reliable direction. With the continuous progress and improvement of technology, it is expected that blockchain will be applied in more fields in the future.