Distributed ledger technology and blockchain are poised to revolutionize many industries. Everyone is waiting for that “first killer app” in the blockchain space — an area where the strength of a distributed immutable ledger will fill an immediate need. A natural fit would seem to be the supply chain.
The supply chain is the process in which goods are manufactured and moved both overseas and domestically from maker to buyer. Currently, each manufacturer, wholesaler, and retailer works within their own systems, with their data squarely locked in their internal database.
Any time something goes amiss — such as a late shipment, canceled order, or chargeback — the individual party has to sift through their system data and try to correlate this with any acknowledgments or paper trails they can find from their trading partners — an inefficient and inaccurate process.
What Can Blockchain Offer?
Blockchain brings about the potential to develop and implement a standardized industry-wide supply chain management system. With an immutable record of every transaction taking place, each party will be privy to the status of products moving through the chain — from manufacturing all the way to the retail customer.
Wholesalers and manufacturers want to ensure the secure delivery of merchandise, be that to a specific retail store or distribution centers. Equally, retailers have a need to ensure merchandise authenticity arriving from verified and authorized manufacturers. This is especially important in relation to medical products.
With the entire process recorded on the blockchain and all the actors having access to the same ledger, immutability and automation provide all parties with the information that will guarantee that merchandise moves at optimal speed through the chain.
Smart contracts will be able to automatically trigger actions such as payments of invoices — for example, automating both accounts payable and receivable will eliminate hundreds of man hours spent reconciling documents.
Companies are looking at different hybrid methods today whereby blockchain will augment their current practices. Despite this, their financials still revolve around traditional methods such as letters of credit, getting factors to approve invoices for early payments, and manual paper checks.
The last step needed for blockchain to fully automate and revolutionize the supply chain space is for payment to be tied in.
As cryptocurrency becomes more accepted, many large players in the supply chain are viewing it as an alternative to traditional currencies. The benefits are enticing due to the ease and security of instantaneous and cross-border payments — coupled with the removal of fluctuating values experienced through currency exchange. However, since the start of 2018 key players in the industry are still hesitant to accept crypto payments.
With cryptocurrency prices fluctuating so wildly, it becomes almost impossible to forecast or plan a business model around receivables that could be valued at ten times the receiving price — or half of it — within a few weeks.
This is where stablecoins like Stably and the StableUSD stablecoin come into play — allowing companies to immediately stabilize their dollar values and escape the fluctuation that’s rampant in the crypto space.
Providing companies with further ability to hedge or invest their receivables in the marketplace give companies the ability to earn more on their services and increase profitability and cash flow.
Stably provides the last missing piece of the supply chain/blockchain solution and looks forward to the transformative role StableUSD can play in the near future.