Many things could go wrong if an organization’s supply chain needs to be managed better. In addition, transportation issues, regulatory or other changes, or even a down day at a refinery can cause severe disruptions and losses for oil and gas organizations seeking to deliver services.
A technology that can help to improve these issues is blockchain. Blockchain creates collaborative ways to reduce the need for escrow transactions and payments to move goods globally when oil prices fluctuate often. Oil Companies can use blockchain technology to improve their supply chain processes and manage their assets more transparently in the oil industry. Start your Oil trading journey by using the right trading platform like OIL PROFIT.
The blockchain supply chain concept is already being used by organizations across the globe, like BP, Microsoft, Bank of America, and others. These initiatives have successfully managed inventory at a corporate level and individually. However, the main hurdles are still in how the company manages its information or contracts with other entities worldwide. As a result, it has prevented some companies from adopting these technologies even though they have tremendous value to offer internally and externally.
Challenges that the oil supply chain faces:
Many of the challenges that oil companies face are around transparency, accountability, and costs. People can implement blockchain technology to ensure that each step of the process is followed and contracts are signed in a trusted way. This way, supply chain management will be more secure and fast for any company.
Supply chains are complex, with many different parties involved. Ensuring transparency and trust through blockchain technology will be one way to address these issues. Every party can access all the data related to a product through blockchain by using their private key. It will also help in reducing errors in communication between teams as well as reducing time delays due to lack of information sharing. The supply chain has many steps, such as contract, procurement, process, and distribution. All these facets should follow a standardized set of rules that everyone can access using the blockchain.
Use of Smart Contracts:
The last step to make every part of the supply chain more secure and trustworthy is using smart contracts on the blockchain. Smart contracts can be used by parties to record all information in a way that will not allow them to falsify or miss out on any data. In the oil industry, this will help with everything from paperwork management to payment arrangements which would have otherwise led to delays and loss of payments.
How has blockchain improved the oil industry supply chain?
Blockchain has made the oil supply chain more transparent:
Blockchain is a type of technology that connects many companies and people. It means that any changes or updates in the real-time structure of the supply chain will be public. In addition, every party involved in the supply chain has access to all other information because it is accessible through a virtual network.
Every event can be recorded and secured using the distributed ledger when using blockchain. It reduces errors and shortcomings in systems and makes them practical for the process. The transparency made possible by blockchain will also help to reduce fraud, waste management, and other issues that come from significant errors. As a result, blockchain technology will help to make the oil industry supply chain more transparent and effective.
More accurate and efficient contracts:
It also improves the process of contract making and enforcement through proof of execution by creating a way to track all parties involved. For example, in the oil industry, it is significant for all parties involved to ensure they receive their payments on time or within a specific timeframe. People can do it through smart contracts in the blockchain transaction chain provided by IBM to make contracts more secure between parties. In addition, smart contracts are legally binding across different countries, reducing disputes in payment and delivery of services, among other things.
Blockchain provides a more secure network:
Blockchain security comes from its architecture and use of encryption algorithms to regulate transactions between various parties involved in the system. Using private keys, encryption, and authentication make hacking the blockchain network increasingly challenging. Smart contracts and blockchain technology also provide a more secure way to store information without needing a central network database. It makes it safer for storing and exchanging information, especially in industries prone to hacking, such as the oil industry.
The oil industry is still far from fully realizing blockchain technology’s benefits. However, some examples show how they are using this new way of connecting people and companies to improve their supply chain management processes.
Blockchain and smart contracts are improving the oil industry’s supply chain process and environment. This technology is helping to bring transparency to business transactions which means less risk for both the buyer and the seller. It also guarantees data privacy because no third party will have access to any of your personal information or data. In short, blockchain gives you control over your data. As a result, the oil industry’s market competition has become fierce.