Let’s face it. In an industry where many companies are still trying to get a handle on their internal data—and some still even process much of their information manually—it’s hard to imagine a reality where buyers, suppliers, carriers and other supply chain partners all share data across one secure platform.
But realistic applications for blockchain will soon be realized, with many experts predicting widespread adoption within five years. Smart contracts are one blockchain application gaining traction, with the potential to offer immediate rewards.
Blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.
In this format, traditional contracts are converted into computer code to form a digital agreement that is stored, replicated and supervised by the network of computers that run on the blockchain. The self-executing, digital contracts allow the chain to essentially hold funds in escrow until both parties meet their obligations.
“This helps make sure that all parties fully meet the conditions set in the contract,” explains Ray Young, co-founder and chief technology officer of Omnichain Solutions.
For instance, in a delivery scenario, Young says “a smart contract would ensure the trucking company only receives payment once the retailer confirms receipt of the shipment.”
Smart contracts can also help “prevent breaches and reinforce trust and accountability among everyone in the supply chain,” Young adds.
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