Impact of Blockchain in Supply chain Management

Impact of Blockchain in Supply chain Management

Most leading companies across the world today makes use of computerized supply chain management or enterprise resource planning (ERP) software for product management. With these digital infrastructure, products can be traced right from its origin to the recycle bin.

However, managing supply chain is quite a complex task, given all the links from the creation of a product to its distribution, which can involve over a hundred stages of communication, multiple geographical locations, multitudes of payments, invoices and the management of numerous entities involved at the different phases of business.

Despite the high investment and complexity involved, companies have limited visibility about where their products are at a given point of time. This is mainly because of the analog gaps that exists between the enterprises or the enterprise boundaries.

Let’s make itmore clear, when a product is manufactured, it is recorded digitally in the supply chain software. Now, after formalities like packaging and a dozen other procedures related to it, the product will be send for shipping. As soon as it is marked for shipping, a PDF document is made which is a software copy of what exactly resembles a printout.

The box will have details such as shipping ID, its current location and details of the person who signed for it but do not contain the details of the product it contains, such as where it was sourced from, how it was stored and so on. In effect, it contains a sea of data but very little information that can be deemed useful to assess the product quality.

The lack of transparency and the increase in complexity to assure quality have forced companies to look out for an alternative system. And that’s where Blockchain based supply chain management system has gained importance. In this blog we will take a look at the issues of the present day supply chain management systems, how blockchain can help and how they are already bringing about a convincing change in the current system.

The Need for a Blockchain based System

Supply chain management is an age old practise dating back to centuries. However, with time, the face and complexity of this system has changed beyond recognition. The globalization in manufacturing industry has made the system heavy with convolution.

It is not possible for the buyers or customers to know the actual value of a product, owing to the lack of transparency in the system. Similarly, investigation of unethical or illegal activities in the current supply chain management system is extremely difficult. Another greatest shortcoming of present day system that warrants the need of Blockchain is the failure to identify and inform the requirement and coordinate the supply of the products, on a larger level.

Blockchain in Supply chain management

The blockchain technology is one of the most popular technologies today and has the potential to facilitate different projects including tracking, contracts or agreements, exchange, payment and so on.

Being a distributed and digital ledger, blockchain can record transaction in blocks and these transactions can be shared across the nodes. This makes the technology, highly transparent. The blocks are linked with each other (the one before it and after it), ensuring security. It is also extremely scalable and efficient without the control of a central authority.

Blockchain technology provides consensus, ensuring there are no disputes on the transactions in the chain as all entities on the chain possess the same version of the ledger. The ownership of assets is visible to the entities on the blockchain, adding the much-needed authenticityto the system. Also, data on a blockchain cannot be erased, making it trustworthy.

The Power of Blockchain-enabled Supply Chain Management System

Blockchain technology enables the incorporation of a real-time, digital ledger that helps keep live track of transactions and movement of procurements in supply chain management companies. The technology helps save time, effort and money on several fronts, increasing the efficiency of the system.

  • More savings and visibility in Procurement

Procurement discounts are usually negotiated by the companies, based on the quantity of purchases they drive. Large companies have numerous subsidiaries across different regions and hence it becomes difficult to keep track of the volume that is driven across. Blockchain technology will help bring this under control and provide indispensable accountability to the system. 

With the ability to manage as well as track products at the ecosystem level, we can ensure better accuracy and forecasts, the system demands very less inventory to provide the same level of service.

  • Ending costly procure-pay gaps with Smart Contracts

Blockchain puts an end to slow processing and frauds by integrating the transactions in a digital contract which connects the enterprise with banks and logistics with enterprises.

  • Digital Payments and Contracts

Blockchain technology can help make the system transparent and reliable with the implementation of contracts and digital payments.

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Blockchain Integration is not that complex


Blockchain integration brings aboutreliable and accurate data for analytics, more visibility for procurement and improved trust among the people in a blockchain infrastructure. The integrative technology is not necessarily prerequisite. However, the underlying processes and logic make the data synchronised. It offers a solution to the current fragmented platform.

Working Models of Blockchain in Supply chain Management

Blockchain technology allows fund transfer across the world without the limitation or restriction from having to contact any central authority or bank, thus simplifying global supply chain management.

Blockchain technology in supply chain management already has a few successful examples in Tomar, the Australian vehicle manufacturer who make payment to its suppliers withBitcoin through the technology.

Walmart (food industry) is another use case of Blockchain technology based supply chain. The disturbingly increasing food recalls in 2018, due to E.coli and Salmonella outbreak has forced Walmart to adopt Blockchain in their food sourcing process.

The Walmart Blockchain initiative in association with IBM’S Food Trust, creates a massive digital ledger to track food from the farm where it is logged onto the blockchain with a handheld device, to processing facilities and distributors, until it reaches the store shelves.  This helps in tracking the food and tracing the outbreaks quickly back to its source.

According to Frank Yiannis, who is the Vice President of Food Safety at Walmart “With the traceability of blockchain, we can scan product and trace it back to source with precision in seconds instead of days or weeks”.

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The technology is also made use in Dole, Tyson, Nestle and Unilever. BHB Billiton which is also the largest mining firm in the world is on the path of incorporating Blockchain technology to keep track of its activities and record data. This will help with increasing their efficiency as well as in improving communication with partners.

Would you like to know more about our blockchain services?

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