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Blockchain In Supply Chain Management

The integration of Blockchain in supply chain management offers previously unattainable real-time visibility, transparency, traceability, and flexibility. Through the use of Blockchain technology, secure peer-to-peer transactions are facilitated, incorporating smart contracts to automate functions such as payments and order tracking.

Author:Camilo Wood
Reviewer:Stefano Mclaughlin
Feb 26, 20242.7K Shares64.5K Views
The business world is talking a lot about blockchain technology, which is changing the way of think about records and interactions. Blockchain is mostly linked with cryptocurrencies like Bitcoin, but it has big effects on many fields, such as supply chain management.
Because blockchain is decentralized, it allows for trust, visibility, and tracking in real-time at every step of the supply chain process. Let's talk about blockchain in supply chain management.

Understanding The Basics Of Blockchain Technology

Illustration of Supply Chains and Transportation
Illustration of Supply Chains and Transportation
Blockchain technology creates a distributed digital ledger that keeps track of events safely and clearly. It was first released in 2008 as the core of Bitcoin, but it has since been used for many other things as well.
The blockchain is made up of blocks that are joined together to make a chain. Every block contains a list of actions that network nodes individuals have verified. It is impossible to change or remove a block that has already been added to the chain.
Decentralization is one of the most important things about blockchain technology. In contrast to traditional databases, which are usually run by a single organization, blockchain lets many people join the network and check transactions. This means that there isn't one place where things can go wrong or make control impossible.
The safety of blockchain technology is another important thing about it. Cryptography makes sure that once data is added to the blockchain, it can't be changed without the agreement of everyone in the network. This makes it very hard for hackers and other bad people to change data on the blockchain.
Also, blockchains come in several different forms, such as public blockchains, private blockchains, and group blockchains. When it comes to public blockchains, anyone who wants to join doesn't need anyone else's permission.
On the other hand, only people who have the network owner's permission can view private blockchains. Consortium blockchains are a kind of secret because you need permission from more than one person to join.

How Does Blockchain Work?

Blockchain is a decentralized ledger technology that lets people make deals that are safe and clear without the need for middlemen. The technology is based on a network of computers, called nodes, that store and verify events that happen in real time.
Every block in the blockchain has a unique code inside it called a hash. This code is used to identify that block. A new block with a unique hash is added to the blockchain every time a transaction takes place.
However, many nodes on the network must first approve the transaction before that can happen. This is done through mining, which is a set of very complicated mathematical formulas. Miners are rewarded with cryptocurrency tokens and other things of value for correctly verifying web transactions.
Once the new block is confirmed, it is added to all copies of the blockchain on all nodes at the same time. This means that because they rely on each other's hashes, no one can change or mess with previous blocks.
Address On Pages
Address On Pages

The Blockchain Use Cases In Supply Chain Management


By mapping and visualizing business supply chains, traceability makes operations more efficient.
A growing number of buyers want to know where the goods they buy come from. Blockchain helps businesses understand their supply chain and connect with customers by providing real, unchangeable data that can be checked.


Transparency builds trust by collecting important data, like claims and certificates, and then making this data available to everyone.
Once something is registered on the Ethereum blockchain, third-party attestators can check that it is real. In real-time, the data can be changed and checked.


Tradeability is a unique blockchain feature that changes the way people usually think about markets. When you use blockchain, you can "tokenize" a product by dividing it into digital shares that represent ownership.
In the same way that a stock market lets people trade a company's shares, this fractional ownership lets tokens show how much a shareholder owns an object. People can trade these tokens, and ownership can be changed without the actual asset changing hands.

Smart Contracts

These are contracts that automatically go into effect. The terms of the deal between the buyer and seller are written straight into lines of code.
Blockchain technology can be used to automate and improve supply chain processes, which will cut costs and make things run more smoothly.

Reducing Paperwork

Using blockchain technology to digitize and automate supply chain processes can cut down on overhead costs and get rid of paperwork, which saves time and resources.


Blockchain can help make sure that rules are followed by creating an open and verifiable record of all the steps in the supply chain. This lowers the chance of not following the rules and the fines that come with it.

Product Authentication

Blockchain can be used to make sure that goods are real and stop fakes by keeping safe, unchangeable records of where a product came from and where it went in the supply chain.
Illustration of food Supply Chains
Illustration of food Supply Chains

Key Challenges For Using Blockchain In The Supply Chain

Blockchain technology could make the supply chain more resilient and viable, but it also comes with some problems that businesses in the supply chain should think about when making decisions.


As blockchain technology develops, its networks will need rules that allow all of them to work together. As a result, these will help make sure that different blockchain platforms, decentralized apps, and legacy technology environments can work together.
These steps will allow people in different parts of the supply chain to talk to each other and make sure that deals go smoothly from beginning to end.


Scalability issues, such as processing power, fast internet access, energy use, and adequate storage space, are the main things that affect public blockchains.
Because public networks are bigger and have more room to grow than private blockchain networks, which are more private, businesses are more likely to use private networks for their needs.

Security And Privacy

Every piece of technology comes with its own set of security and privacy risks. During the solution life cycle, businesses should keep these things in mind as they explore, design, adopt, and apply the solution.
These privacy and security risks for blockchain technology can be broken down into four main groups: smart contracts, consensus mechanisms, confidentiality, and stability.

Stakeholder Buy-In And Adoption

Blockchain is still being used in very small ways by global supply chain networks. Supply chain leaders should show the C-suite of their companies how blockchain technology can directly help their businesses.
This will bring in more money and get everyone on board. Leaders must also back more talks about standardizing blockchain across industries and allocating resources to build up important internal blockchain knowledge.

What To Consider Before Choosing Blockchain

There are different needs and supplier chains for each business. But if you want to use a blockchain platform, there are some simple things you should think about.

Public Vs. Private Platforms

You will have to decide first whether you want a public or private blockchain. The most well-known blockchains are open to everyone, like the one that bitcoin uses. It's a shared, encrypted record built on top of a peer-to-peer network that anyone can use and look at.

Evaluating Permissioned Blockchains

If your company decides to use a permissioned blockchain, there are many systems that you should think about. Hyperledger Fabric is one of the most popular permissioned blockchains for large businesses because it lets them build their networks.
The Linux Foundation, which runs the open-source programming language, is in charge of it. Similar to Linux, a group of people collaborate to write the code for Hyperledger, and writers are free to use the technology.

Mitigating Challenges In Blockchain In Supply Chain Management

Even though blockchain has a lot of potential, it is still hard to use in supply chain management. Some of these problems are scaling, working with other systems, and following the rules.
One way to do this is to get everyone in the supply chain network to work together more. It is possible to make the whole supply chain more open and transparent by working together toward shared goals and sharing data in real time using distributed ledger technology (DLT).
As an alternative, creating industry guidelines for blockchain integration that are used in many places and industries is another option. This can help make sure that different systems can talk to each other and also address privacy and security issues.
Companies should also spend money on strong security measures like encryption protocols, basic management practices, and regular vulnerability evaluations. It is very important to do this because one weak link in an autonomous network could make the whole system vulnerable.

Blockchain Platforms For The Supply Chain

Here are some of the most well-known supply chain tools that use blockchain.
  • IBM Food Trust- For managing the food supply line, IBM Food Trust is what you need. It lets food producers, distributors, and sellers keep track of how food moves through the supply chain, making sure that everything is clear and can be tracked.
  • Ambrosus- Another tool for managing the food supply chain is Ambrosus, which is used for pharmaceuticals. Businesses can keep track of how goods move through the supply chain and make sure they are real and of good quality.
  • VeChain- VeChain is a blockchain tool for managing the supply chain and making sure that products are real. It lets companies keep track of their goods through the supply chain and make sure they are real.
  • Provenance- Provenance makes the supply line clear and easy to track. It gives companies a full picture of the supply chain by letting them track goods from where they are made to where they are sold.
  • ChainLink- ChainLink automates the supply chain by connecting smart contracts to external data sources and APIs. This lets businesses make supply chain processes more efficient.
Blockchain Applications Analysis
Blockchain Applications Analysis

Future Outlook - Supply Chain Management

The use of blockchain technology is already changing how supply chains are run, but this is just the start of its effects. Here are some ideas about how blockchain might be used in the future to handle the supply chain. The strategic business value of Blockchain can also help you understand this better.

Greater Adoption

We can expect blockchain technology to be used more across the whole supply chain as more companies see its benefits. This will make the ecosystem more efficient and linked, which is good for everyone.

Increased Integration With Iot

The Internet of Things (IoT) is already being used in many supply chains to keep track of goods and check on their performance. This is an example of an ecosystem that is linked together. When IoT devices are combined with blockchain technology, they can make the supply chain even more open and easy to track.

Improved Sustainability

The rule is meant to give the EU a consistent and binding framework that will stop "greenwashing" and make the social market economy stronger. Companies will have to talk more about how their actions affect people and the environment in the future.
Because of this, blockchain technology will help make the supply chain more sustainable by making it easier to keep track of and confirm sustainable practices like fair trade, pay, and other moral actions.

Emergence Of New Business Models

For the supply chain, as blockchain technology keeps getting better, you might see completely new business models appear that use its special features. One new business concept is making sure food is safe. It lets people who grow, make, distribute, and sell food keep track of and share information about where food comes from, how safe it is, and how well it is made.

Frequently Asked Questions

Is There A Role For Blockchain In Responsible Supply Chains?

Blockchain can enhance transparency and traceability in responsible supply chains.

How Is Blockchain Used In Logistics?

In logistics, blockchain is utilized for tracking shipments and verifying transactions securely.

Which Company Uses Blockchain In Its Supply Chain?

IBM, Walmart, and Maersk are among the companies employing blockchain in their supply chains.

What Is The Role Of Blockchain In Improving Supply Chain Management And Traceability?

Blockchain improves supply chain management by enabling real-time monitoring and immutable record-keeping for enhanced traceability and accountability.


It's impossible to overstate how blockchain technology could change the way to handle global supply chains. Blockchain is here to stay as more businesses adopt this cutting-edge way to improve their processes while keeping all stages of production open and honest, from the creation of the blockchain to the delivery of the final product. I hope that you have understood blockchain in supply chain management.
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Camilo Wood

Camilo Wood

Stefano Mclaughlin

Stefano Mclaughlin

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