Understanding Blockchain in Supply Chain:

If you ever heard the term “blockchain”, you’re probably thinking about bitcoin or any other type of cryptocurrency. While it is true that this is how the blockchain appeared, it is a rather versatile solution for a wide range of problems. For example, it could solve issues in supply chain management and make the involved processes run smoother. So, let us understand how blockchain supply chain can contribute to the improvement of the supply chain management.

What is Blockchain in Supply Chain Management?

With the blockchain supply chain, the potential of supply chains grows exponentially. It is enough just to think about what blockchain means and it will be easy to understand how great current supply chains can grow and improve. To make it easier for you to understand what blockchain is and importance of supply chain management, you should think about it as a very large database. But, in comparison with traditional databases, the blockchain is not controlled by anyone or any entity. However, changes or updates can take place in the blockchain, but only if the majority of its participants agree with the change. Thus, besides being capable of managing large amounts of data, the blockchain can make processes easier while giving everybody an equal share of rights.

blockchain in supply chain management

How blockchain will transform the Supply Chain Industry?

There are many things that can be significantly improved in the supply chain industry with the help of the blockchain. For example, every transaction is recorded on one of the blocks belonging to the blockchain and on the numerous copies on the entire ledger. These recordings are then distributed over a higher number of computers, which makes the information highly available and, therefore, very transparent. Increased security is another advantage of using the blockchain in supply chain, as one block is only connected to the one that follows it and the following to the next, and so on and so forth. Thus, it is extremely difficult to compromise the security of a blockchain.

blockchain in supply chain

Application of Blockchain in Supply Chain Management:

Let us take a look at businesses in the food industry, for example. Because these businesses, like restaurants, work with fresh produce, it is crucial for the business to follow the produce from their source to the end client, as they are highly perishable. Due to the fact that it is more transparent, it is easier to track pork sourced from China, for example, with the blockchain,  tracking down every piece of meat, how it is processed, where it is delivered, and when it is sold. Thus, the entire process is made more effectively so that the end consumer enjoys a greater level of quality.

blockchain supply chain

Advantages & Disadvantages of blockchain in supply chain management:


  • Improved collaboration between the parts involved in the supply chain;
  • Transparency in every stage;
  • Improved security and encryption;
  • Decentralization of data and the possibility to reach consensus;


  • It may be challenging to make a blockchain scalable;
  • A lack of controls concerning data access;
  • It may not be completely compliant with the legislation of some countries;

How blockchain will revolutionize supply chain management:

With the help of blockchain technology, it is extremely easy to transform a regular supply chain into a global supply chain. This is due to the fact that there is no need for a bank to make payments, as funds can be transferred from anywhere, with ease and in complete safety. Besides transparency, supply chains that use blockchain technology will also become more effective, saving time, effort, and resources. It is discussed in more details in the diploma in logistics and supply chain management and logistics courses – offered by AIMS’ institute of supply management.

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