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What is Blockchain in Supply Chain Management?

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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:

  • streamlines supply chain operations for multi-party involved
  • increases visibility in the workflow and communication
  • enables end-to-end tracing of logistics in real-time
  • minimizes human staffing and automates the processes, and
  • deploys Electronic Data Interchange (EDI) systems to secure sensitive data.
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: 
  • Wholesome logistics management
  • Regulatory and compliance
  • Finance and risk handling
  • Supply chain control and inventory management
  • Claim Resolution
  • Holistic food safety
  • Cold chain tracking
  • Direct consumer to supplier (or producer, manufacturers) payments  

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 (type of), When, How, and Between Whom” the information needs to be exchanged. The reason being is Blockchain records data flow publicly in timestamped blocks with clear detailings of the participants.
  • Licensed partners, services, software, and products; because Blockchain permits communication and data transmission only between trusted parties.
  • All the multi-party involved must adopt the Blockchain network to streamline and synchronize workflow throughout all linked channels.
  • Integration of Blockchain technology with existing IT infrastructure. Like third-party applications such as ERP, CRM, and others.
  • Defined Standard Operating Procedures (SOPs) for all associated partners, for example, enforcement of EDI.
  • Financial projection on the computational cost incurred during the Blockchain transactions, corresponding to the budget and expected profit.

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

10 core features that expedite the productivity of supply chain operations are: 
  • End-to-end automatic recording of supply chain activities in the distributed ledger
  • Concurrent tracing and tracking of commodities with live updates
  • Permitting supply chain transactions via smart contracts
  • Facilitating holistic license and identity management of associated partners
  • Onboarding of logistics documents adhering to GS1 standards
  • Recordkeeping complete audit trail of supply chain documents
  • Validating supply chain transactions by only trusted/licensed partners
  • Shielding sensitive data via hashing and consistent timestamping
  • Authorizing ownership of supply chain transactions via e-sign
  • Implementing security through multi-factor authentication (MFA), identity fraud detection, permission-based access control systems, and many more.

What are the benefits of blockchain in supply chain management?

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

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

From planning to production, trading, and handling logistics systems, blockchain accelerates and improves processing speed at every stage.
  • Advanced automation with quality assurance

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

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.
  • Delivers absolute accuracy

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.
  • Establishes reliability and integrity

Blockchain network primarily focuses on protection against counterfeiting, real-time monitoring, and error elimination. This, in turn, makes supply chain activities more standard, ethical, transparent, traceable, and tradeable.
  • Amplifies and nurtures customer relations

Blockchain seamlessly keeps pace with customer demands and improves serviceability to build deeper loyalty toward them.
  • Exponential growth in ROI

With the overall boost in efficiency, tradeability, security, and point-to-point automation, blockchain enables firms to devise profitable business formulations. It helps them to expand additional operational capabilities and double down ROI. 

The bottom line

Blockchain facilitates entrusted and tamper-evident dataflow of logistics, inventory, finance, production line, and delivery in supply chain management. 

It also empowers firms to streamline supply chain activities, trace shipments, automate payments, and detect error vulnerabilities. 

Above all, the supply chain information is entirely secure under the principle of least privilege (POLP). So, leverage the immense opportunities of blockchain and level up your supply chain business.


What is Blockchain in Supply Chain Management? key takeaways:
  1. What is blockchain in supply chain management?
  2. Applications of blockchain in supply chain management 
  3. How does blockchain work in supply chain management?
  4. What are the critical requirements in supply chain management for blockchain success?
  5. What are the core features of blockchain in supply chain management?
  6. What are the benefits of blockchain in supply chain management?
  7. Affordable Technology 
  8. Efficient at par excellence
  9. Advanced automation with quality assurance
  10. Prevents unnecessary consumption of time  
  11. Delivers absolute accuracy
  12. Establishes reliability and integrity
  13. Amplifies and nurtures customer relations
  14. Exponential growth in ROI
  15. The bottom line

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Merehead review. Vleppo is a startup, digital asset exchange platform based on the Komodo blockchain protocol.