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Global supply chain upside down?

Blockchain technology is revolutionizing the world in ways never seen before. The finance sector is already feeling the effects of blockchain through cryptocurrencies. However, one area where blockchain is guaranteed to have a major impact is in the global supply chain networks.

The global supply chain is so complex that it has created a set of powerful middlemen who have more power than the manufacturers and other producers at the base of the chain. But why do they exist in the first place? The reason why they exist is that there is no way for consumers and producers to trust each other. That’s why they need someone in the middle of the chain to deal with the issue of trust in a globalized market.

How blockchain effects on global supply chain

This is where blockchain technology comes in as a disruptor to this system since it’s about decentralized trustless networks. Simply put, blockchain creates a system where the middleman is unnecessary. This can be better explained with cryptocurrencies. The reason why cryptocurrencies are so popular is that they have made it possible for individuals to send money all across the world without the need for a bank. Blockchain ensures that such payments are secure thanks to an immutable public ledger.

The same case applies to the global supply chain. With the coming of blockchain technology, a manufacturer does not need to sell their products through distributors. They can sell them directly through block chain’s trustless system. As a result, we are about to witness the end of standardized mass production.

Blockchain technology and largest manufacturers

In coming days, individuals will be in a position to make customized orders for anything they want from a manufacturer. Think of it like Toyota starting to custom produce cars the way luxury brands like Ferrari do it. That’s because the only reason mass production as we know it today exists is due to the complexity of getting to know the needs of every single individual, and cater to their needs. By eliminating the middleman in the supply chain, blockchain creates a scenario whereby any individual in the world can make an order from the largest manufacturers in the world. In essence, the giant global supply chain is about to turn into one giant demand chain where things will be produced when needed and under the specifications of the individual customer.

This will have a number of implications. For starters, consumers will have greater control over what they purchase. That’s because manufacturers and others involved in production will have to deal with the consumer directly and cater to their needs at a personalized level. There is also a good chance that there will be an exponential increase in the profitability of manufacturers all across the world. That’s because, in such an economy, demand will surge. To get a good idea why, imagine Samsung getting orders from individuals around the world rather than from dealers, with each of those customer having their own customized requests. The company’s profitability will be astronomical, right? Well, that’s what about to happen once blockchain turns the global supply chain into a demand chain.

If the banking industry is afraid of cryptocurrencies (a product of block chain technology), then players in the middle of the global supply chain better be afraid too! They are up for a major disruption.