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More and more enterprises are turning to smart legal contracts for managing supply chain ecosystems efficiently. Smart legal contracts can provide secure, accessible digital versions to all parties in a single transaction. In addition, they can also manage the workflow of approvals and automatically transfer upon all signatures being collected.
Supply chains involve multiple parties, validation and process execution. This makes them prime contestants for the adoption of blockchain technology. More specifically,
Using smart contracts for managing supply chain ecosystems efficiently
has the potential of streamlining tiered supply relationships, simplifying relationships, and securing data across all verticals
Over time, supply chains evolved into the multi-chain infrastructure we know today due to the complexity of the supply networks. The modern supply chain ecosystem comprises links not only vertically but potentially horizontally to suppliers in the same tier. However, data and information flows are still predominantly vertical in nature with goods and services flowing up and money, risk, and control flowing downwards. Links within the network typically remain static and defined. At the most complex end of the continuum, we have supply chain ecosystems.
The use of smart contracts for managing supply chain ecosystems efficiently has started changing the linear nature of supply chains and networks. Blockchain technology supports the creation of a supply ecosystem with more dynamic links that can change depending on the context of requirements.
Therefore no more centralised processes with step by step procedures. Companies can freely and easily connect in a peer to peer fashion based on opportunities and needs! Furthermore, it expands the capability of establishing quickly and cheaply contractual relationships based on convergent business needs among different parties.
Thanks to increased trust between the parties, enabled by blockchain consensus protocols, the cost of supplies can be fair and optimal for everybody.
Blockchain technology can thus act as a crucial factor of change by making large-scale revenue sharing affordable to pave the way for balanced supply chains and, in general, for balanced business ecosystems.
The next stage in using smart contracts is making them effectively intelligent
by going beyond the simple automation of the contractually enforced chaining of transactions.
Clearly, where the product/service is more complex and requires multiple components to be brought together into sub-assemblies but where limited visibility or transparency is required as the sub-assemblies are well defined and known, a smart contract may be the most appropriate.
As businesses become more and more dependent on supply chain ecosystems for goods and services, smart contracts will play a much more critical role. Currently, supply chains are based on the physical transfer of documents which can take weeks for a single transaction.
Blockchain can help to solve the challenges of efficiency, security, transparency and tracking by using smart contracts for managing supply chain ecosystems efficiently. Smart contracts would help to eliminate or drastically reduce the role of intermediaries.
Do you want to know more about how smart legal contracts can be used for supply chain efficiency and how Trakti can support you?