It has already been more than two decades since organizations have started to shift from conventional paper-based systems to digital storage mechanisms such as databases. Progressively, the threat factors comprising information exchange protocols and critical exposure of such databases to the internet made them search for more secured platforms. The role of technology is colossal, and it was blockchain technology that came to the rescue. Being the foundation for the crypto world, it has revolutionised the industry completely. One such booming concept in cryptocurrency is Non-Fungible Tokens (NFTs). It is the hottest concept in today’s crypto globe as it has already made its entry in several other industries, including gaming, artwork, media and entertainment, real estate, and much more. Similarly, NFTs are all set to step into the next promising industry – NFT Supply Chain Management. This blog exclusively discusses how the NFTs are utilised in supply chain management.
What Is A Non-Fungible Token?
NFTs are unique tokens that record ownership on a blockchain similar to the network that underpins other digital currencies. It is one-of-a-kind digital assets that cannot be mutually exchanged and duplicated. It means that a Bitcoin could be exchanged for other Bitcoins. But in NFTs, the concept is different. An NFT is not equal to another NFT as both tokens’ values would differ. Therefore it is called non-fungible tokens. Scarcity is an added advantage that would make the price surge sky-high. This is because when it is a rare piece, the users would be in a race to attain it, which would eventually make the price go high. Also, NFTs are indivisible, meaning that a user cannot send a part of the token’s value. Thus NFTs may represent a digital asset or a tokenized form of real-time asset that makes it act as a proof-of-authenticity in the virtual world. The representation comprises artworks, music, in-game items, collectibles, videos, pictures, virtual land, tokenized real-world assets (cars, properties, racehorses etc.).
A Sneak Peek Into The Supply Chain Industry
Whenever we talk about the supply chain, it always includes supplier, manufacturer, assembly operation, the dealer (comprising transportation), information and communication technology. It is then followed by in-office communication as well as outside the company with stakeholders. The user’s commercial feasibility greatly depends upon the capability and competency to navigate and manage a challenging business network. So it is evident that supply chain management is not only a simple relation between a manufacturer and user but also an interconnected system in which the paramount factors, including quality, cost, and risk of goods, are a function of the execution of the whole network.
NFT In Supply Chain Management
When a decentralized software is brought into the industry, say, blockchain-based NFT platforms will categorise these supply chains into four prime stages – Procurement, Production, Transportation, and Warehousing. Tokenizing assets with non-fungible tokens would make the industry more secure, provable, recognisable, and efficient. One of the proven examples of using NFTs in supply chain management is Louis Vuitton. The top-of-the-line fashion brand has confirmed the use of NFTs to authenticate the ownership of opulent products or goods.
To be more specific, we come up with a blockchain-based supply management system utterly based on smart contracts. The prime ideology behind the concept is to represent the solid products in the form of virtual tokens and recipes that facilitate their transformation. Other functionalities such as accrediting the products, transferring, dividing, and amalgamating supplychain promotes cross-business traceability.
Tokenization of the products:
For each kind of product handled in the supply chain, a smart contract should be set up. With the help of smart contracts, tokens could be conceived, which denotes real-time products. Each token would represent one batch of products that be gauged in weight, volume, items, and size. This way, physical goods will be converted into virtual tokens by the contract owners using the smart contract.
Recipes for transformation:
So as to represent a manufacturing process digitally, various tokens could be transformed into a brand-new token. When conceiving a novel smart contract, the good’s composition is well-defined. Comparing it to a recipe, the creator suggests the number of input goods and subsequent quantities that are essential for the creation of a novel product. This way, a batch of goods could be created. The batches of input tokens need to be specified, which will be automatically consumed by the smart contracts. However, the token owners could be split, merge, transfer and consume batches.
Accreditation of the products:
It is very imperative to certify a product, which in turns enhances the value, originality, and trust in the product. Therefore, the products could be accredited with the certificate contracts. During the creation of the batch, the input tokens could be confirmed on whether they come under the specified certificate.
As we discussed, the entire manufacturing process will be reflected on the blockchain. Each step in the manufacturing process is taken into consideration. Therefore, traceability is for the entire product, including its ingredients. Also, the implementation of blockchain provides timestamps, the time and the date of manufacture.
Perks Of Utilising NFTs In The Supply Chain
The supreme perks you glean through implementing NFTs in the supply chain include,
- Elimination of counterfeit products
- Enhanced traceability
- Ensure uniqueness
- Maintains provenance
- Validate authenticity (proprietorship)
Final Thoughts Of NFT Supply Chain Management
Thus the development of NFTs is sky-rocketing every day as it has huge potential in making an individual a billionaire. The exploration of unexplored industries is now taking place to implement NFTs in the novel industries to make the best use of it. NFTs in supply chain management is also a great initiative as it overcomes the previous challenges in the industry effortlessly. Assuredly, it will revolutionise the industry in the near future.
Cryptocurrency Exchange Script is one such expert in blockchain technology and crypto services. We lend our fullest support in facilitating the blockchain-based NFT concepts in your supply chain business, thereby making you stay unique and updated in the crypto market. For any further queries, schedule a meet with our experts and implement the upcoming trend in your business instantly.