How difficult can it be to enter into a contract with someone or invest a huge amount for the first time?
Whether you are trading or running a supply chain business, you require a written agreement to carry out further operations.
In trade settlement, you are required to have a legal contract to buy or sell a commodity. It works as a security and a kind of reassurance between the two parties. This is a document that comprises all accurate and mutual terms and conditions set between the two parties.
The most widespread issue in trading is drafting a written document which consumes a lot of time. Many industries are switching their documentation work through smart contracts. It is a factual reality that many of the trading activities and transactions are conducted online; hence, the traditional paper-based deals would not work anymore. Also, most of the arrangements occur between anonymous parties, which make it more complicated and also give rise to trust issues.
During a supply chain process, it is a mandatory task to check each of the cargo documents and verify the conditions before taking any step further. Moreover, it is a lot more time consuming to validate each contract with the bulks of cargo entering and exiting the premises regularly; as one mistake could cost a fortune to both the seller and buyer.
Thus, a smart contract encrypted with blockchain is safer and smarter than the old-fashioned paperwork, reducing the extra burden and time.
What is a Smart Contract?
A smart contract is a self-executing agreement piece managed by a P2P (Peer-to-peer) network of computers. It also:
- Provides coordination and enforcement framework for agreements
- Eliminates the need for traditional legal contracts
- Formalizes simple agreements between the parties
Unlike papered contracts, digital documents can be accessed easily from anywhere via internet. The advent of the Internet of Things has further automated the functioning of these contracts with smoother, more efficient, and secured access for all the involved parties.
Thus, the business leaders and industrialists are now looking at blockchain and IoT-empowered smart contracts as a viable solution for enhanced supply chain processing.
An IoT-powered Smart Contract Solution Provides
No matter if you are dealing with a stranger residing in another country or city; smart contracts help you build an unbiased relationship with your partners. Now you don't have to think twice before making a profitable deal as your documentation is in safe hands. Implementing a smart contract solution with your business eliminates the physicality of contracts and thus, enables trustworthy deals between the two parties all on a digitally safe platform.
Currently, businesses are significantly adopting blockchain-secured smart contracts for the entire supply chain process. It thus helps avoid the need for third-party advisors or any other intermediary assistance during the trade. Before the advent of smart contracts, there was an exorbitant amount of fees associated with the whole documentation process. But now, smart contracts are the key to saving money and increase profitability with improved industrial functioning.
IoT-powered smart contracts include rules that define how the data is entered or changed in the database. These contracts ensure foolproof confidentiality and are trusted because of their encoded version. They are typically created and housed on a blockchain code which is highly-secured and can only be decrypted by developers, when needed.
A smart contract solution works like a hardware driver that enables software applications to interact with hardware devices in a system. Therefore, smart contracts significantly describe asset capabilities, its services, and how they can be accessed for better industrial production.
Combining a smart contract with IoT sensors potentially helps record the entire supply chain process transparently. It further helps to automate the payment for the supplies entering a manufacturing facility without causing any delay.
A smart contract solution holds the potential to produce equipment usage records and quality control checks in real-time. It entrusts all the involved parties by generating accurate data as per the decided norms. Like blockchain, a smart contract allows input from the database and can trigger an event whenever required.
For instance, when a payment is received, a smart contract triggers the payment delivery and if the action is against the specified conditions, it triggers penalty or any other action. This notifies all the parties networked within a smart contract about the payment processing, keeping everything transparent among the involved people.
Utilizing Smart Contract Solution in Industries
Todayâ€™s supply chain operations are much complicated and fragmented, which can work smoothly with essential technological assistance. A supply chain operation becomes simpler and more transparent with the use of smart contracts. These digitally formed documents lay a considerable impact on a productâ€™s supply chain by providing complete visibility of the entire process. It enables the information about what companies were involved in product making and how the product has moved from one supply chain segment to the other. Thus, strengthening the partnerships between the companies and allowing complete transparency to know the real-time status of the product until it reaches the end-user.
Smart contracts have significantly switched places with third party transactions. Now, there's no need to depend on any intermediary to perform transactions. Apart from this, the healthcare sector is increasingly taking advantage of utilizing IoT-based smart contracts to ensure safety and privacy of their patient's information. The smart contract can be implemented to analyze, aggregate, and share important clinical data. It also allows easy movement of the patients from one facility to another without bothering about filling forms. With the help of a smart contract, the concerned physician can analyze the health records on a blockchain network. It further streamlines the treatment activities, which also avoids the hassle of updating any procedures.
Trade clearing or settlement is the process involving labor-intensive activities like taking approvals, complex reconciliations within the industrial facility. Maintaining substantial IT networks and independent processing on each network by each party causes discrepancies that lead to a huge amount of costs and settlement delays. Blockchain coded smart contracts enable workflow automation by significantly reducing lags, costs, and settlement time. Implementing a smart contract solution effectively applies to reduce manual workflows, multiparty agreements, building trust between the parties, and interdependent transactions. This ideates innovative efforts to transform trading operations and represents a brand-new model of utilizing IoT concepts for productivity.
Blockchain can simplify industrial operability and supply chains. IoT and blockchain work parallel to help revolutionize trading activities. Using a smart contract solution one can eliminate the overall cost, delivery delays, and unnecessary waste due to paperwork. Also, they comprise high-level encryption, which secures the information and assure confidentiality and safety.
Multiple industries (healthcare, supply chains) have started adopting innovative methods for improved productivity, and using a smart contract a solution is one of them.