Senior Staff Writer – D/SRUPTION 4TH JAN 2018
Whether you’re starting a new job or buying a new phone, contracts are integral to any official agreement. The sheer volume and complexity of traditional contracts can be overwhelming, involving high administrative costs, dependence on a third party system and often outright confusion. As processes are increasingly digitalised, it’s become necessary to find a way to make reliable, digital business agreements. Enter the smart contract, a computerised protocol which stores and carries out contractual clauses via blockchain. The point is to avoid relying on third party systems, and allow visibility and access for all relevant parties. But what exactly can they be used for?
Supply chain management
Supply chain management involves the flow of goods from raw material to finished product. Smart contracts can record ownership rights as items move through the supply chain, confirming who is responsible for the product at any given time. This has become far easier using Internet of Things sensors, which track goods from producers to warehouses, from warehouses to manufacturers, and from manufacturers to suppliers. The finished product can be verified at each stage of the delivery process until it reaches the customer. If an item is delayed or lost, the smart contract can be consulted to find out exactly where it should be. If any stakeholder fails to meet the terms of the contract, for instance if a supplier did not send a shipment on time, it would be clear for every party to see. Making supply chains more transparent via smart contracts is helping to smooth out the movement of goods and restore trust in trade.