Role of Blockchain In Supply Chain Management

ART03x - edited feature imageSupply chain management is basically about the movement of the work-in-progress inventory— raw materials from the place of origin to the manufacturing point— and in the end, to the consumer and create a loyal customer to their brands possibly at the lowest cost. This process should be adequate and follow the schedule to make the product reach the consumers when needed.

On the other hand, the theory of Blockchain is a digital ledger that can be distributed and it is in cryptocurrency – which can be used for tracking, exchange of agreements, smart contracts, and payment. The transactions are recorded into the blocks that lead into the blockchain.

Blockchain in
Supply Chain Management

Blockchain can be the backbone of the digitized supply chain. It actually helps the customers and businesses track their product from the time of pickup to the time it reaches the end consumer. Blockchain has a permanently saved digital ledger, which is very safe to share with parties and make transactions. This also reduces fraud, errors, and tracking fees.

Blockchain was first introduced into financial services for efficient and secure payments, trade agreements, etc. Recently, other industries like consumer goods and retail are examining how to enter into blockchain applications.

Applications of Blockchain in Supply Chain

Payments in Automotive Suppliers

Blockchain can be a very easy approach to businesses if they have a globalized supply chain. Tomcar, an Australian vehicle manufacturer, pays its suppliers through bitcoin. Other three partners in Israel and Taiwan have also accepted this mode for their automotives.

Tracing the Food/Meat

In terms of the food industry, Walmart uses blockchain to track its product to the end consumer. Walmart tracks its product pork meat from China where blockchain keeps a record of the piece of meat from the order placed to the date it is sold to the consumer.  Through this tracking function, the investigators can also find and remove the sources that provide food-borne diseases and list out those factories.

Nestle, Unilever, and Tyson also use the blockchain for the similar purposes.

Monitoring Cold Chain

Food and pharmaceutical products need to put their products in cold/special storage. In this area, blockchain helps in recording the humidity, temperature, vibration, and other parameters and store those values on blockchain which are tamper proof and permanent.

If the storage condition changes from what has been agreed, then all the blockchain members will see it. Here, a smart contract comes into the frame to correct the situation.

Solar Power Microgrids

In the solar industry, smart contracts are used for the redistribution of the excess power. Blockchain consists of a Transactive Grid application to monitor and redistribute the energy. Ethereum is the platform used in running this program as it helps in building all kinds of smart contracts. This also automates in the purchase and sales of green energy by saving cost and pollution.

Health Industry

The medical records of patients can be accessed from any part of the world by the patient. By giving the key access like patient fingerprints, the entire medical record can be seen and can alert the paramedic, who can help them identify the problem prescribe medication without the risk of any allergy reactions.

Importance of Blockchain in Supply Chain

Oracle, SAP, and IBM all build their related blockchain platforms in Hyperledger and not in Bitcoin.

The benefits we receive through blockchain can help us save money, time and several efforts.  The blockchain is impenetrable in any kind of cyber-attack and hacking. There are many potential benefits that businesses acquire from the blockchain technology. Some of them include:

  • Increasing the public trust through the share data and increasing credibility.
  • Engaging the stakeholders
  • An absence of malpractice and thus reducing public relations risk

Blockchain helps get more accurate feedback from the consumers and predict their needs that would help retailers, manufacturers, and providers to satisfy their customers and increase their business. The future of blockchain can be way more profitable adding the traceability, security, and transparency to the supply chain by promoting honesty and trust among the businesses and the end consumer.

Legal Considerations in Using Blockchain

Every organization should consider the legal issues that might arise in using blockchain for logistics/ supply chain management. Some of the laws that organizations should follow are:

  • Enforceability of awards against foreign entities
  • Blockchain-based agreements
  • Dispute resolution mechanisms
  • Privacy protection laws
  • Transportation regulatory requirements
  • Cybersecurity risks

Obstructions to Using Blockchain

  • Budget
  • Lack of Standards
  • Lack of Industry support
  • Regulatory Issues
  • Not seeing the value
  • Lack of awareness.


Supply chains have to face challenges in terms of quality, cost, and speed. These parameters can be achieved easily with blockchain in supply chain management. The advantages of blockchain are that they will avoid fraud, miscommunication, and unnecessary agreements. The entire supply chain ecosystem moves forward with the help of blockchain and it will be more transparent to the businesses and customers.

This brings in a lot of benefits from the source of manufacture to the destination of the consumer. The speed of the supply chain increases reducing the costs. Blockchain can be used by any number of people. Samsung and Oracle reported that they are considering to use blockchain for their global supply chain management.

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Maneesha Kakulapati

Maneesha Kakulapati

K.Maneesha is an SEO Developer At She holds a masters degree in Marketing from Alliance University, Bangalore. Maneesha is a dog-lover and enjoys traveling with friends on trips. You can reach her at Her LinkedIn profile Maneesha Kakulapati.

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