Smart contract in supply chain management

Explore the transformative potential of smart contracts in supply chain management. Learn how blockchain technology enhances transparency and security

Supply chain management is a 360-degree revolution across various industries like pharma, education, steel plant, construction, and food industry holds A-Z  of industries but doing the right things is effective in supply chain management and thus smart contracts join hands to provide effective results. Let’s see what it can do.

What is a smart contract?

A smart contract is a self-executing predefined condition that automatically verifies fulfillment and enforces and performs the terms of the contract.

What is supply chain management?

Supply chain management is the management of the flow of goods, data, and finances related to a product or service, from the prospective source of raw materials to the delivery of the product at its final destination.

How do smart contracts work in supply chain management?

As we know, a smart contract in supply chain management is a self-executing digital contract that is stored on a blockchain and automatically terminates once it is achieved between parties involved in the supply chain. 

How are smart contracts written?

Smart contracts are typically written using programming languages by technical experts who have the concerns compatible with the application with the blockchain platform on which they will be deployed so to write smart contracts we need a smart contract developer – likely BSEtec  A leading blockchain development who has a pool of blockchain engineers and have developed most common platform for smart contracts is Ethereum you can check with mint trade “which uses a programming language called Solidity. Other platforms like Binance Smart Chain, Cardano, and Polkadot also have many more languages to write smart contracts based on requirement fits and can check their services more.

Steps for writing a smart contract:

Goal Scope: The initial step is to define the work scope, streamlining of the process, and likely goods and service info.

 Selection of blockchain: Once the scope is defined, BSEtec will assist in selecting the appropriate blockchain platform for deploying the smart contract such as Ethereum, Binance Smart Chain, or others by considering its scalability, and security features required for supply chain management.

Set up the env: BSEtec smart contract engineers will install the necessary tools and set up a development environment for the chosen blockchain platform.

Smart contract code:  For example, Solidity is commonly used for Ethereum-based smart contracts in Choose the programming language that supports the chosen blockchain platform to write the code for the smart contract.

Define the contract terms and conditions: Set up the terms and conditions of the supply chain protocol within the smart contract code specifying the conditions that need to be met for the contract to execute, such as delivery of goods, quality checks, quantity, and payment terms.

Compile and deploy the smart contract: Once the code is written, it needs to be compiled into bytecode that can be executed on the blockchain. After compilation, the smart contract can be deployed to the blockchain network in the platform.

Test the smart contract: The quality team tests the smart contract to ensure that it functions as intended. This includes testing its functionality, as well as simulating various scenarios to identify and fix any bugs or vulnerabilities.

Interact with the smart contract: Once deployed, the smart contract can be interacted with by sending transactions to it, triggering its functions, and executing its logic. ensures that the smart contract meets the specific needs of the supply chain and complies with relevant regulations and industry standards for payment processing, order fulfillment, and tracking of goods. Smart contracts can help to reduce the need for intermediaries, minimize the risk of fraud, and increase transparency and efficiency in the supply chain. 

For example, a smart contract could be used to automatically release payment to a supplier once certain conditions, such as the delivery of goods or the completion of quality assurance checks, are met. Here’s a real-time example of a smart contract in supply chain management

Let’s say a company wants to purchase a Steel material from a supplier located in another country. The two parties can use a smart contract to automate the process and ensure that the terms of their conditions are met. This data will be stored in blockchain and includes the conditions that must be met before the contract is executed. Once the conditions are met, the smart contract would automatically release payment to the supplier and initiate the deliverable of raw material, The entire process would be transparent and secure, reduce the intermediaries and delay in payment release such as banks and freight forwarders, and minimize the risk of fraud or disputes between the parties

Overall, smart contracts have the potential to revolutionize supply chain management by providing a secure and automated way to manage and enforce agreements between different parties in the supply chain. Smart contact in the supply chain reduces the paperwork, theft, and data missing as it handles digitally, so if you are running a small business or a larger business you can upgrade your business by streamlining with smart contracts to keep your clients transparent and secure by reaching BSEtec – A leading blockchain development company who can navigate you step by step to achieve your target.