6 Ways Blockchain Can Transform Supply Chain Management

Shweta Goyal
4 min readAug 12, 2019

Supply chains are the crux and core of all businesses. Any business is incomplete without a perfect supply chain network. Most businesses fail due to faulty or slow supply chain management (SCM).

Blockchain technology has a lot to offer to supply chain management. From decentralization benefits to smart contracts and provenance, all the positive traits of blockchain provide this cutting-edge technology a great place in supply chain management.

Let’s consider the example of drug supply chain management. A tablet of medicine or drug is first manufactured in a lab and packed. Then it is supplied to wholesalers who transfer it to retailers from whom you finally buy it. If you get a duplicate drug, is it possible to trace the origin?

With the use of blockchain, yes it is! As soon as a doubtful drug is reported, it’s origin can be fully tracked on the blockchain decentralized ledger. This is possible because the drug will have a unique code that can be traced back to the original source. If it’s a duplicate, the source is identified easily. Thus, it will not be easy for any intermediary of the supply chain to add any duplicate products into the drug supply chain.

Read further to know how you can leverage blockchain technology in supply chain management.

#1. Decentralized Ledger of All Transaction Records

Blockchain is a decentralized ledger. In SCM, at every stage of the supply chain, the product needs to be checked and recorded.

If such records of all transactions, is on a decentralized ledger, all parties involved can have easy access to the records and no party can alter the records as this lies on a public decentralized ledger and not under any single authority.

Thus, it will be easy to quickly track the theft or misappropriation of the product at any stage of the supply chain.

#2. Provenance Verification and Tracking of Products Easier with Blockchain

In a complex and long supply chain system, it is a challenge to find the origin and genuineness of a particular product as the product exchanges so many hands and goes through a very long process before being delivered to the final destination.

A public blockchain is accessible to all and thus it is possible to assign a unique code to every item as soon as it is manufactured. In the next stages, the status of the item can be tracked and updated with the same unique code. Thus, the origin or provenance of the item is easily traceable.

#3. Cost Reduction Due to Reduced Intermediaries

There are a lot of intermediaries involved in the supply chain from manufacturer to wholesaler to retailer; and in between these, the packaging and transport services. At every stage, there are people involved in tracking, recording and checking the supplies too.

With a unique code for all products and easy access to records at all stages, the number of people involved in the whole system can be reduced to a great extent. This will lead to significant cost-saving.

#4. With Security, Comes Trust!

All the elements of the blockchain will validate the transactions and all transactions will be on the record, accessible to all. The records on a blockchain are immutable and cannot be tampered with, by any party involved in the SCM, more so because no party has full or central authority over the decentralized blockchain.

Thus, if there is any kind of fraud or misappropriation at any stage, it becomes very easy to track the same on the decentralized blockchain ledger. Likewise, if any product is defective, the source can be traced with ease and if a product gets damaged in the process, there will be clear records of the stage where it got damaged. Thus, the responsible party can be penalized accordingly.

When every intermediary of the supply chain is aware that the process is so transparent and traceable, the process becomes foolproof. As a result, the consumer or the customer will have better trust in the supply chain system, which in turn ensures better business growth.

#5. Reducing Process Delays with Smart Contracts

Another great advantage of blockchain in the supply chain, is the smart contract functionality. Smart contracts reduce a lot of time and effort at all stages of SCM. For example, on confirmation of payment from the wholesaler, smart contracts can automatically trigger delivery without any human intervention.

In case there is a failure in payment transaction for any reason, smart contracts can automatically halt the further process. Thus, all the elements of the supply chain can smoothly function, without much interaction or intervention.

#6. Digital Currency to Aid International Transactions

Delays in international transactions pose a major hassle in supply chain management, and time is money! The problems associated with fiat currency transfers across borders have always been a critical issue for business.

It generally takes 3 to 5 days to process a single international payment and supply chains can have numerous such transactions.

A blockchain platform offers safe and convenient use of digital currencies. With more success of cryptocurrency or digital currency, supply chain management across borders is expected to become much inexpensive, quick and convenient.

Wrapping Up!

Supply chain management has evolved over the years from manual to computerized, and now a step further on to the blockchain.

Imagine how would your supply chain be, with the just-in-time concept implemented through blockchain; quick and automatic!

Don’t forget to share this post with those who wish to know more about how blockchain can transform the future of supply chain management.

Also, do check out this infographic on benefits of blockchain technology for supply chain management.



Shweta Goyal

A Technical Content Writer with naxshatra.com and a Content Marketer. An Engineer and a tech enthusiast, I also love to craft handmade jewelry.