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02 November 2022

What is Blockchain in Supply Chain Management?

Blockchain is revolutionizing supply chain management at its core. Its transparent, persistent, and decentralized architecture is helping the logistics firms in downsizing three key challenges:

  1. lack of clarity in both internal and external communications,

  2. poor tracking system followed by counterfeit issues, and

  3. inadequate flow of quality resources and consistent information.

With the increasing popularity of its robust solutions across all industries, the Blockchain supply chain market is growing exponentially.

Here’s what the numbers say:

So the future of blockchain in the supply chain is quite evident. Let’s deep-dive into the basics and understand how it simplifies the underlying complexities.

What is blockchain in supply chain management?

Built on distributed ledger technology (DLT), blockchain’s core function is to record information in a decentralized, distributed, and public system. It aims to leave no scope for alternation, hacking, and data breach.

In the context of supply chain management, blockchain:

Blockchain utilizes a shared IT infrastructure—wherein manufacturers, suppliers, distributors, retailers, auditors, and other associated partners smoothly share and synchronize crucial information alongside supply chain activities. This, in turn, improves the customer success ratio significantly.

Applications of blockchain in supply chain management 

Here are some prominent use cases of blockchain in the supply chain industry: 

How does blockchain work in supply chain management?

Supply chain management deals with multi-party, multi-industry, and multi-geography, which adds more complexities to the logistics operations. But blockchain simplifies it by enforcing smart contracts and validating supply chains through permissioned blockchains. 

Within the blockchain network, the firms can hassle-free trace the goods and services from the source to the current destination. 

It records every “in-transit” movement in the permanent digital ledger, visible to the multi-party involved and the end customers. This level of transparency establishes credibility across all associated channels and mitigates security risks.

Eventually, blockchain makes supply chain operations super efficient and diminishes the possibilities of human error, unwanted delays, and additional costs. Moreover, it eliminates the role of intermediaries, which minimizes the risk of fraudulence. 

In data breach and counterfeit cases, blockchain detects the exact vulnerable point. As a result, it allows firms to operate logistics functions in ‘zero trust’ environments.

What are the critical requirements in supply chain management for blockchain success?

The requirements are subject to change following the business (and industry) specific needs. But the below-mentioned six parameters are critical in every aspect.  

What are the core features of blockchain in supply chain management?

10 core features that expedite the productivity of supply chain operations are: 

What are the benefits of blockchain in supply chain management?

The top 8 profitable benefits of blockchain transforming the supply chain are:

The high-level blockchain tech stack is available at a pretty economical range, substantially reducing development, administrative, and maintenance costs.

From planning to production, trading, and handling logistics systems, blockchain accelerates and improves processing speed at every stage.

Blockchain flawlessly automates complicated and nested supply chain tasks with optimal management of resources, analytics, as well as quality control.

Blockchain replaces conventional supply chain documentation with live tracking of goods and public history trails. As a result, it minimizes stock loss, prolonged transit and shipping time, miscommunication, and overall turnaround time.

Supply chain management often deals with inaccuracies that directly impact and delay the subsequent interlinked channels. But blockchain’s integration with IoT has successfully overcome this biggest challenge.
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