Blockchain in the supply chain management

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Improving supply chains is a pressing challenge for businesses today. The implementation of blockchain will increase their transparency and efficiency, as well as optimize budgets.

How can we use blockchain in the supply chain?

The production and sale of goods and the provision of services require coordinated work from all process participants. This is especially true for multinational companies with offices in many countries and different time zones.

What is the supply chain, and how can blockchain help businesses? You’ll find the answers to these questions below.

What is the supply chain?

The supply chain includes people and organizations involved in creating and delivering goods and services to the end consumer. It usually involves raw materials suppliers, manufacturers, logistics companies, wholesalers, and retailers.

The management of the supply chain should be seen as coordinating the activities of each participant to maintain the quality of products and their prompt delivery to the customer. But in a dynamic marketplace, it isn’t easy to comply with numerous regulations and standards. How can blockchain help entrepreneurs?

How to use blockchain in the supply chain?

The supply chain works efficiently when there is a transparent flow of information, materials, finished goods, and money between all parties involved. If there is a problem at any stage, it negatively affects the retail value of goods and services and, as a result, the profits of all companies engaged.

Blockchain is an innovative technology that enables supply chain transparency, cost optimization, and risk mitigation. This result is possible due to the improvement in the methods of fixing and transmitting data. 

Blockchain capabilities

Blockchain is a chain of data blocks interconnected by cryptographic methods. The information stored in such a system cannot be falsified or hidden: any change must be confirmed by the entire network.

Blockchain technology maximizes the transparency and efficiency of data transfer while reducing paperwork and operating costs.

The main benefits of implementing blockchain in the supply chain are:

1. Absolute transparency. All participants in the supply chain have full access to information about the location of raw materials, finished goods, and production status. The information recorded in the system cannot be changed, which means that the person responsible for each stage of the process is clearly identified.

2. Data compatibility. In modern supply chains, it isn’t easy to promptly integrate information from multiple participants. Blockchain technology implies separate nodes for all of the organizations involved. After adding data to one of the blocks, each supply chain member can review it and assess its relevance and validity.

3. Operating cost optimization. This category includes maintaining unnecessary documentation, disposal of perishable goods, commissions for financial transfers, etc.

4. Refusal of Electronic Data Interchange. Systems of this type are widespread. Their main disadvantage is the transfer of data in separate batches, not in online mode. If a business requires a fast transfer of information for decision-making, blockchain will be a worthy alternative to EDI.

Results of using blockchain in the supply chain

By implementing blockchain in the supply chain, entrepreneurs:

  •  provide data transparency, which is essential to everyone in the supply chain;
  • increase the reputation of companies among customers and additionally promote products and services;
  •   attract new business partners who appreciate transparency, efficiency, and security. 

What are the possible challenges of introducing blockchain into the supply chain?

1. Consent of supply chain participants. Although every company wants more profits, today, only a few entrepreneurs agree to use blockchain for several reasons. Some aren’t ready for innovations. Others can’t fully assess the possibilities or don’t want complete transparency.

2. The need for creating new infrastructure. Not all specialized supply chain systems can work with blockchain technology. Thus, switching to a new management model will take time and resources.

3. Staff training. After implementing blockchain, all employees must learn how to work in the new environment and learn about the solution's benefits and its impact on job responsibilities.  


Blockchain in the supply chain is the present for a few major market players and the future for many companies seeking to become leaders in their fields. We can assume that a massive transition from classic management systems, which have many weaknesses, to an effective innovation is on the horizon.