Warehouses, producers, and consumers may be able to better comprehend and fine-tune the product journey due to the integration of NFTs into supply chains as a whole.
Non-fungible tokens (NFTs) are useful for digitizing, tracking, and tracing items. Supply chains need a technological reset. NFTs are fundamentally verifiably distinct digital tokens. NFTs can be used for ownership rights transfers, authentication, and storing data that can be verified on blockchains. An NFT can be coupled with a product and used to record, verify, and report each touchpoint because the average product experiences many on its way to a consumer.
It is now more important than ever to give consumers a clearer understanding of where the things they buy come from and how each step in a product’s journey impacts the environment or helps create a livelihood for workers worldwide. Supply chain disruptions and growing consumer interest in sustainable and ethically sourced products have combined to make this a priority.
Being “digital twins” of products, NFTs can be used to track and verify products as they progress from raw ingredients to an item in a customer’s hands. Its solution not only provides a buyer with a verifiable certificate of ownership but can also inform customers about supply chain sustainability practices.
Are NFTs the solution to supply chains?
Instead of the extensive, protracted, and complicated paper trails that go along with transactional ownership and activity of various items, NFTs create digital footprints or a “token ID” linked to the item throughout its lifetime.
Information flow irregularities can be lessened or even eliminated with the aid of NFTs. The immutability and transparency of the blockchain ensure the reliability and accuracy of the supply chain data.
The uniqueness of each NFT is established by the data present in its metadata, which results in the updation of digital assets on the blockchain in real time.
NFTs in the supply chain: Application
NFTs in supply chains are relatively new, and few people know the advantages of supply chain optimization. The industry is aware of the potential of blockchain as a problem-solver, but NFTs are irreplaceable tokens with profound uses.
Product traceability
Globalization means products reach customers via an intricate and neat but very long process. The voyage of a product begins six to twelve months before it is purchased at the retail or market shop. Every service is outsourced to the point where retailers or other organizations are unaware of the source of a particular product component. The 2013 tragedy at the Rana Plaza might make a wonderful illustration. Versace, Gucci, and H&M were unaware that the Rana Plaza plant supplied them.
Although the technical paradigm of non-fungible tokens (NFTs) was not strictly intended to disrupt supply chains, it has the potential to drastically alter the problems in this area. NFTs can serve as “digital twins” of physical commodities and aid in supply chain traceability.
Data sharing
Due to the businesses’ reluctance to provide customers with useful information, this application is more advantageous to the customers. Consider a smartphone as an illustration. We choose a smartphone based on its features and the manufacturer; we have no idea how long the battery will last or when it was made. NFTs have the potential to establish a trustworthy platform between businesses and customers.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/03/08/are-nfts-a-solution-to-supply-chains/