What is Blockchain 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. This is how the blockchain supply chain can contribute to the improvement of supply chain management. The benefits of blockchain in supply chain are endless, but some of the most obvious are increased transparency in supply chains and increased trust between parties. By providing a decentralized database that is shared among all parties, blockchain technology can cut costs and improve efficiency.

How Does the Blockchain Work in Supply Chain Management?

With the blockchain in supply chain, the potential of supply chains grows exponentially. To make it easier for you to understand how the blockchain in supply chain works, 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 technology in SCM is a part of the Diploma in Supply Chain Management and Global Logistics online program and Part-Time Online MBA concentration in Supply Chain Management. These programs are offered through a flexible learning system, and they lead to the PhD in Logistics and Supply Chain Management – a research-based doctorate degree.

blockchain technology in supply chain

Blockchain in Supply Chain Example:

Blockchain in supply chain provides valuable security benefits. For Example:

  • An inaccurate shipping address could lead to products being lost or stolen. With blockchain, shipping information is tracked and recorded on a public ledger, making it much more difficult for this type of fraud to occur.
  • Blockchain can also be used to verify the authenticity of products, from food to luxury items. By using a smart contract or token system, consumers can be assured that what they’re buying is what it says it is.

Types of Blockchain in Supply Chain:

If you’re looking for ways to implement blockchain in your supply chain, keep in mind that there are different types of blockchain technology. Some work better for certain applications than others. For example:

  • Private blockchains are suitable for businesses that want to keep their data private, whereas,
  • Public blockchains are best suited for applications that require transparency and security.

Key Benefits of Blockchain in Supply Chain:

Blockchain technology in supply chain offers several significant benefits:


Blockchain provides a transparent ledger that records all transactions across the supply chain. This transparency allows all participants to have a single version of the truth, reducing disputes and increasing trust among partners.


With blockchain in supply chain, each product can be traced back to its origin. This feature is particularly valuable in industries such as food and pharmaceuticals, where knowing the source of each ingredient is critical for safety and quality control.


By automating and streamlining processes through smart contracts, blockchain supply chain can reduce the amount of manual paperwork and administrative overhead. This leads to faster transaction processing and reduced costs.


The decentralized and immutable nature of blockchain makes it highly secure against tampering and fraud. Each transaction is encrypted and linked to the previous one, making it nearly impossible to alter or forge.


Blockchain in supply chain can help ensure compliance with regulatory requirements by providing a transparent and immutable audit trail. This capability is essential for industries that must adhere to strict regulatory standards.


By improving efficiency and reducing the need for intermediaries, blockchain can lower the overall costs of the supply chain. Streamlined processes and reduced fraud-related losses contribute to significant cost savings.

How to Implement Blockchain in Supply Chain?

Implementing blockchain technology in supply chain involves a series of key steps to ensure a seamless and effective integration. Below is a list of crucial steps to follow:

Step-1: Identify Use Cases:

  • Determine specific areas within the supply chain that can benefit from blockchain.
  • Common use cases include traceability of products, reducing fraud, and improving transparency.

Step-2: Select the Right Blockchain Platform:

  • Choose a blockchain platform that aligns with your business needs (e.g., Ethereum, Hyperledger, or Corda).
  • Consider factors like scalability, security, and public vs. private blockchain options.

Step-3: Set Up the Blockchain Network:

  • Establish the necessary infrastructure, including nodes and consensus mechanisms.
  • Define the governance model and roles for participants in the network.

Step-4: Integrate with Existing Systems:

  • Ensure that the blockchain solution can seamlessly integrate with current supply chain management systems.
  • Use APIs and middleware to facilitate data exchange between different technologies.

Step-5: Develop Smart Contracts:

  • Create and deploy smart contracts to automate processes and enforce agreed-upon terms.
  • Ensure that the contracts are secure and tested thoroughly to prevent vulnerabilities.

Step-6: Onboard Stakeholders:

  • Educate and onboard supply chain partners, ensuring they understand the technology and their roles.
  • Provide necessary training and support for smooth adoption.

Step-7: Data Input and Verification:

  • Implement mechanisms for accurate data entry and verification at each stage of the supply chain.
  • Use IoT devices and other technologies to capture real-time data.

Step-8: Monitor and Audit:

  • Continuously monitor the blockchain network for performance and compliance.
  • Conduct regular audits to ensure data integrity and address any issues promptly.

Step-9: Scale and Improve:

  • As the initial implementation proves successful, explore opportunities for scaling up.
  • Gather feedback and make necessary improvements to enhance the system’s efficiency and effectiveness.
blockchain in supply chain

How a Blockchain Can Improve the Supply Chain?

  • In a supply chain, blockchain technology can be used to record and track product shipment data.
  • With blockchain, all relevant information can be tracked, making the implementation of supply chain mapping and the supply chain process more transparent.
  • With this technology, companies can avoid counterfeit products and reduce fraud.
  • They can also improve the safety of products in the case of the local supply chain, as well as the international supply chain.
  • All parties in the supply chain — from manufacturers to retailers — can use the information provided by blockchain to make informed decisions. For example, they can use real-time data to ensure that products meet production standards. This will reduce errors and lead to better quality control.
  • By using it, companies can reduce costs and increase efficiency.
  • They can also improve customer trust in their business. When customers know that the products they buy are safe, they will be more likely to purchase them again.

How the Blockchain Will Transform the Logistics and SCM Industries?

Many things 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 numerous copies of 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 blockchain technology in supply chain management, as one block is only connected to the one that follows it and the following to the next, and so forth. Thus, it is extremely difficult to compromise the security of a blockchain.

Application of Blockchain Technology in Supply Chain:

Take a look at businesses in the food industry, for example. Because these businesses, like restaurants, work with fresh produce, the business must follow the product from their source to the end client, as they are highly perishable. Since 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 effective so that the end consumer enjoys a greater level of quality.

blockchain supply chain

Disadvantages of Blockchain in Supply Chain Management:

  • Complexity: Implementing blockchain technology in supply chain requires significant technical expertise and understanding, which can be a barrier for companies without adequate resources.
  • Cost: The initial setup and ongoing maintenance of blockchain systems can be expensive, potentially outweighing the benefits for smaller businesses.
  • Scalability: As more transactions are added, blockchain networks can become slower and less efficient, which may not be suitable for high-volume supply chains.
  • Data Privacy: Since blockchain is a transparent and immutable ledger, confidential business information could be exposed, leading to concerns over privacy and competitive advantage.
  • Regulatory Challenges: Varying regulations across different countries can complicate the implementation of a unified blockchain system in global supply chains.
  • Energy Consumption: Blockchain networks, especially those using proof-of-work consensus mechanisms, can consume large amounts of energy, raising environmental and sustainability concerns.

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.

With respect to end-to-end traceability, speed of product delivery, coordination, and financing, there is still a lot of room for improvement in supply chains. Based on our study, companies have used blockchain to address those issues. Now is the time for supply chain executives who are sitting on the sidelines to take note of its potential. To make progress, they should join forces to establish new regulations, test various blockchain technologies, conduct proofs-of-concept with different blockchain platforms, and build an ecosystem with other firms. The effort will certainly require some resources, but the investment may well pay off big time.