Blockchain, which acts as the foundation for digital currencies like Bitcoin and other cybersecurity systems is receiving growing media attention. Depending on a distributed record system, where every transaction is logged for all related and authorized stakeholders to see, it is perceived as a conceivable way of strengthening trust and security and fast-tracking business processes, serving to remove the human component. Many administrations, tech moguls and industries are beginning to try out blockchain technology.
Smart contracts are self-executing contracts in which the conditions of the agreement between buyer and seller are clearly written into lines of code. The code and the agreements enclosed within are stored across a distributed, decentralized blockchain network.
Businesses are looking at ways to automate transactions to make them smoother, more efficient, and more secure for all parties, and it looks like blockchain and smart contracts are viable solutions.
Smart contracts development enable trusted transactions and agreements to be implemented among different, anonymous parties without the necessity of any central authority, legal structure, or external enforcement system. They make sure transactions visible, clear, and unalterable.
Smart Contract Benefits
As a substitute for conventional contracts with a central business model, below are the benefits that smart contracts offer businesses:
Direct transactions with customers:
Smart contracts eliminate the need for middle-men and enable clear, explicit relationships with customers.
Opposition to failure:
With smart contracts, businesses do not need to depend on a third party. Therefore, no sole person or entity is in control of data or money. Decentralization ensures that even if any individual exits the blockchain network, the network will continue to function with no loss of data or integrity.
Business agreements are automatically executed and enforced. In addition, these agreements are immutable and therefore unbreakable.
Smart contracts are stored in a distributed blockchain network. Therefore, their outcome is authenticated by everyone in that network. Therefore, no individual can force control to release other people’s funds or data, as all other blockchain participants would spot this and mark such an attempt as invalid.
Eliminating intermediaries removes additional fees, allowing businesses and their customers not only to interact and transact directly but also to do so with low to no fees for transactions.
All contract transactions are stored in sequential order in the blockchain and can be accessed along with the complete audit trail.
Recently, talks about blockchain’s prospective advantage for the consumer goods sector in supply networks have been recurring. There are opinions that it could help wrestle food fraud, enhance trust in business transactions and fast-track operational processes.
Conventional supply chain methods which still rely to a large extent on paper contracts, electronic mail, and text files, are a problem to fast moving consumer goods and FMCG businesses in general; they are more susceptible to error, can delay organizational, and transactional processes, and create problems that can be difficult to trace.
However, if FMCG contracts are placed on a shared ledger system, where every transaction is visible to all approved shareholders and cannot be altered on second-thoughts, smart contracts powered by the blockchain technology may extend trust to transactions between businesses, making them more accessible and easier to monitor.
Generally, the immutability feature that comes with distributed ledger implies that inter-enterprise procedures become more trustworthy in cases of disagreement, enabling FMCG businesses to improve management of suppliers and guaranteeing compliance to operational and regulatory standards.
The interoperable data bank and shared messaging system that smart contracts provide could also make available a solution to product fraud, which can lead to consumers being misled about product quality.
Supply chains are enormously complex, and it might be tough for companies to find the exact stages where fraudulent practices have ensued and eliminated them completely. Because imitating remains a huge problem. The enhanced immutability of the data and trust a distributed ledger provides means corporate principals may be able to identify inconsistencies in supply networks identifying fakes better.
Apart from ensuring high product quality, smart contracts also foster building trust with consumers.
In Walmart, the use of blockchain technology was developed out of a bad batch of vegetable which resulted in the illness of a large number of its customers. Having carried out a two-year trial, the supermarket chain announced in September the rollout of the technology enabling them to track every lettuce.
This year, the supermarket chain will compel most of its farmers to offer exhaustive information about their products to a database. Subsequently, in the event any future sickness outbreaks, the company would be able to recognize and dispose of just the affected batches, as opposed to cleaning out the entire shelves of fresh produce.
Based on reports from The New York Times, the IBM developed system has also been adopted by Dole, Wegmans, and Unilever to track produce as it moves through the supply chain.
It is imperative to remember, though, that blockchain does not offer a comprehensive solution to the challenges facing the FMCG sector. For example, although much is made of the ability to store data in an unbreakable chain, the technology itself doesn’t protect against fraudulent data being used in the first place. These systems only secure data against retroactive manipulation.
What should also be measured is that this way of collecting and allocating data seldom offers itself as an “all-in-one” bargain package: establishments need to evaluate the ROI compared to existing systems in place and even newer technologies. As an alternative, it’s most likely to deliver value when used in a targeted way for a specific service or product categories. A possible scenario would be to incorporate blockchain systems as part of a value network, with other technologies being deployed elsewhere.
Fast Moving Consumer goods businesses need to certify that they understand the ways to make the most from immutable and shared databases and implement them in the right way. FMCG spearheads should make sure that they are in touch with the latest developments in digital consensus marking technology like blockchain smart contracts and establish an enthusiastic, open attitude towards industry collaboration.