Blockchain In Supply Chain

For the past few years, blockchain has been a hot topic. The potential of blockchain technology is massive, and it has the potential to raise the logistics business to new heights by making supply chains more sustainable and transparent.

Blockchain was the main topic of discussion among tech enthusiasts a few years ago, but today this technology is entering the economy. The World Economic Forum views blockchain as a means to strengthen the global economy and restore the integrity of supply chains damaged by the impact of COVID-19. Market trends are also indicating the path.

According to a recent study, the market for blockchain-based supply chain solutions will increase to $3.3 billion by 2026 from its current size. For the entire supply chain industry, this represents a revolution.

Understanding Blockchain Technology

Blockchain is an internet-based technology coveted for its capacity to disseminate transactions in immutable, encrypted ledgers and publicly validate, record, and distribute transactions. 

The system was developed to allow bitcoin transactions, a digital currency that runs without the help of a central bank. Fundamentally, blockchain technology offers a platform for building and disseminating the ledger, or record, of each bitcoin transaction to thousands, if not millions, of computers connected to networks throughout the globe.

The word “blockchain” refers to the chronologically linked “blocks” of verified, immutable transactions that make up a chain (exhibit). Blockchain technology offers greater security than the banking paradigm since transactions and ledgers are encrypted, and instantaneous internet transmission eliminates banks’ two- to three-day clearing process and related fees for money transfers between accounts. Thus, “blockchain” was coined.

What Is Blockchain In Supply Chain?

A blockchain supply chain offers a flexible answer to a variety of issues. Its incorporation into financial transactions can improve the efficiency of supply chain management procedures.

Manufacturing, financing, procurement, and other operations are expected in a supply chain, and there may be one or more transactions between these processes.

A blockchain supply chain duplicates these transactions several times over the whole ledger and records them in the blocks. Then, these records are dispersed throughout the blockchain’s computer network, making the data incredibly accessible and transparent.

Every transaction along the supply chain is recorded and reflected on the blockchain, essentially involving everyone in real-time transactions.

Let’s use the food business as an example to explain the value of blockchain in supply chain management. Restaurants and other food-related enterprises use fresh produce. Therefore they need to track the goods from the producer to the consumer, considering how quickly they spoil.

The restaurant will be able to track various food items through a fictitious supply chain – from the time they are sourced in another country until they are delivered to the restaurant, and finally, to the moment they are sold to the customer; if they adopt a blockchain supply chain management system that is more transparent.

Thus, the entire process is made more efficient so that each participant enjoys significant levels of standardization – the end consumer a greater level of quality, the restaurant a more cost-effective operation, and the raw pork handlers a lower risk of conflict.

Benefits Of Using Blockchain In Supply Chain

The top 4 advantages that blockchain brings to supply chain management are as follows:

Transparency and Traceability

The most well-known advantage of blockchain in supply chain management is this one. Its transparency and traceability cannot be overstated, making it the main talking point of this technology.

Smart contracts facilitate supply chain transactions on the blockchain. Smart contracts are self-executing, programmed contracts that operate following the terms and conditions the buyer and seller set.

This enables transactions between anonymous participants without needing a central authority, a legal system, or an outside enforcement agency. These decentralized blockchain supply chain network’s smart contracts govern how the supply chain’s transactions are implemented.

Every transaction is transparent and traceable thanks to the blockchain’s widespread availability and permanent preservation of these smart contracts. The parties involved sign off on the transaction and certify its validity when it is successful. The transaction’s relevant information and specifics are then permanently entered onto the blockchain.

As a result, holding parties responsible for contradictions will be considerably more straightforward. Additionally, it will increase productivity because participants are more aware of the consequences of not upholding their end of the deal.

Better Security

Because the blockchain is a read-only digital ledger, it is incredibly challenging to forge, hack, alter, or cheat. This strict protection reduces the likelihood of fraud or forgery.

The security enhances companies’ credibility and reputation that blockchain provides for their supply chain management. Additionally, it lowers operating expenses, which prevents enterprises from deteriorating.

Fraud reportedly costs businesses $400 billion annually and is to blame for 50% of company failures. There will be considerably less chance of fraud because it is harder to falsify data on the blockchain.

Improved Cohesion

Lack of trust is the main issue with the current supply chain management model. When there is a lack of confidence between the parties in the supply chain, it is difficult for them to forge a seamless chain of operations that carries the product from the place of manufacture to the end user. The cohesion that blockchain technology offers improves the supply chain’s stability.

The supply chain’s inadequate security policies allow participants to manipulate data in any way they see fit. Each participant is aware of this potential. As a result of the supply chain’s participants’ distrust, it becomes fragile and susceptible to break.

Increased Automation And Forecasting

The blockchain-based supply chain model necessitates greater automation. Because most of the data in a regular supply chain are analog, this analog data can be transformed into digital signals with the aid of an ADC (analog-digital converter). After which, they are added to the blockchain.

The likelihood of human error is significantly reduced by the automation of production processes across the supply chain. As a result, errors that cause misunderstandings and confrontations are eliminated—improving the effectiveness of the supply chain.

Businesses can estimate and predict more accurately because of the real-time data gathered on items in a blockchain supply chain. Hence strengthening their business practices and giving their clients a better experience.


Blockchain technology has so far emerged as the supply chain’s savior. Although it is inherently immutable, blockchain technology has some limitations preventing it from being widely used in supply chain networks worldwide.