Non-fungible tokens (NFTs) have demonstrated their potential in every known industry. The tokens are not interchangeable, and they are stored on a digital ledger termed “blockchain”, also we can find some valuable NFTs in the best NFT marketplace. This means that NFTs benefit from the features of blockchain: they are publicly available, any modifications are preserved, and they are impervious to outside modifications. Supply chain management (SCM), which comprises all procedures that convert raw materials into finished commodities, is the central administration of the movement of goods and services. By managing the supply chain, companies can cut excess costs and deliver products to consumers faster and more efficiently. The supply chain industry has learned over the past two years about the fragility of the system and how operating failure in one country can negatively disrupt the entire chain. As a result, non-fungible tokens have received a lot of attention as a solution to this global disruption in the coming years.
NFTs in Supply Chains: An Overview
NFTs produce digital footprints or a token ID that is connected to the product throughout its lifetime. and complex paper trails that accompany the transactional ownership and activity of a range of goods. The information contained in NFTs is unique and leads to digital assets being updated in real time on the blockchain. NFTs can help to lessen or even completely eliminate information flow discrepancies by enabling all parties in the supply chain to access the same immutable record on the ledger. The supply chain data’s validity and dependability are ensured by the immutability and transparency of the blockchain. NFTs can increase productivity and reduce costs when sourcing and acquiring the products and services that a company needs. In an end-to-end view, NFTs also produce information about a part’s position, amount, and other important details.
Applications of NFTs in SCM
NFTs in the supply chain are a relatively new idea, and few people are aware of the advantages of supply chain management. The industry is aware of the potential of blockchain as a problem solver, but NFTs are immutable tokens with more substantial uses.
1. Traceability of the product
Globalization has a significant influence on the system. Six to twelve months before the retail or market shop actually makes the sale, a product begins its journey. To the point when businesses or retailers are unaware of the origin of a certain product component, every service has been outsourced. The tokenization system’s ability to trace the product’s movement in real time enables a firm to easily identify the owner of the asset by executing quick scans and producing reports. Businesses must be aware of the distribution nodes for estimating shelf life and the selling window for perishables. NFTs create information for each product in the system, and managers are always aware of where each product is at any given time. The tokenization technique will help enhance the management of supply chain inventory. Real-time replenishment data, fewer unnecessary stock checks, and fewer stockouts are all advantages for businesses.
2. Better supply chain collaboration
The cycle of fostering more supply chain collaboration can be begun with a single fact from the seller’s seller to the buyer’s buyer. Trust is necessary to build supply chain collaboration (SCC) and allow organizations to exchange resources and data in order to capitalize on the collaboration.
3. Streamlining procurement operations
Both the buyer and seller sides must be completely transparent if procurement processes are to be streamlined. Procurement involves more than merely purchasing different commodities from vendors. Planning, supplier identification, assessment of a large number of potential suppliers, supplier selection, adjustment of suppliers’ performance goals, contract management, and payment evaluations are also required.
Also, it has some other applications, like production, in which NFTs produce a digital identity. And transportation is improved, so employing NFTs will produce defects faster than before. The trucking sector is feeding every tiny detail into one digital ledger. NFT Warehouse (NFTW) is an application of NFTs in warehouse management systems that allows multiple parties to execute the order at the same time.
How are NFTs and blockchain related to SCM?
Blockchain may reduce communication or data transfer errors by giving all participants in a given supply chain access to the same information. More time can be spent on delivering goods and services, either by increasing quality or decreasing cost, or by doing both, rather than spending more time validating data.
NFTs can be used as digital twins of the products to track and verify products as they progress from raw ingredients to an item in a customer’s hands. This solution not only provides a buyer with a verifiable certificate of ownership, but it can also inform customers about supply chain sustainability practices.
Companies may demonstrate their transparency to customers anywhere in the world with NFTs. Implementing NFT has a slight advantage over rivals in the areas of blockchain, IoT, and digitization. Digitally representing unique assets is moving toward more involved, paper-trail-requiring procedures. NFTs will serve as the source of uniform information for all the stakeholders along the chain, from manufacturing facilities to retailers, and from the port of exporter to the port of importer.