How is Blockchain Disrupting the Supply Chain Industry?

Published by Turing Labs on

Process of Supply Chain Management

A supply chain starts with the delivery of raw materials from the supplier to the manufacturer and eventually ends with the delivery of the final product to the consumer. Proper management of the supply chain gives many benefits such as an increase in sales and revenues, a decrease in frauds and overhead costs, quality improvisation etc.

Supply chain management involves the integrated planning and execution of different processes of the supply chain. But let me remind you that practically doing all this is a very tedious task even for small businesses. Therefore, in order to make tasks simpler and resolve inefficiencies while saving the company’s money, different technologies like AI and Machine learning are being applied to SCM. And amongst these, blockchain has proved to be the game changer.

What is Blockchain?

The blockchain is a way of maintaining records of transactions across several interlinked networks of computers. It is a decentralized shared public digital ledger. If you want to make any change in any recorded transaction, you’ll need to alter all the subsequent blocks. The technology has been applied to many industries and supply chain management is one of them.

Supply Chain and Blockchain

Blockchain can store records of each and every product very effectively. Records are added every time a product changes hands, data is maintained such as who purchased the product and for how much, when the product was packed, shipped, displayed and sold. A permanent history of all the transactions that a product went through is maintained which you can revisit whenever you want.

The blockchain technology has greatly reduced the paperwork involved in various transactions of the supply chain. The sharing of data throughout the company and with the manufacturers, suppliers, and vendors has become very easy.

Let’s take a look at the ways in which blockchain has proved to be the game-changer in the supply chain industry.

Provenance Tracking

The supply chain of big companies and organizations involve a lot of elements. That’s why it becomes very difficult for them to keep track of each and every record. And this lack of transparency leads to issues with customers and cost starts soaring high which ultimately affects the brand name.

With the use of blockchain, maintaining records and provenance tracking have become easy since the product information can be accessed with the help of embedded sensors and RFID tags. You can trace the entire history of the product with the blockchain. It is also very helpful in detecting frauds at any level of the supply chain. Transparency reduces delays and disputes and prevents goods from getting stuck in the supply chain.

One great example for transparency is Coffee supply chain. There are so many issues involved in Coffee plantation business like rough climatic changes affecting the coffee farm, mostly grown on remote hilly areas, high price volatility etc. Blockchain can’t solve all these issues but it can add transparency to the Coffee supply chain, thereby increasing the efficiency involved.

Bitcoin Magazine reported Bext360, the company which provides supply chain enhancements using emerging technologies came up with a blockchain powered solution to track all the elements of the coffee trade, right from the farmer to the consumer, thereby bringing transparency in the Coffee supply chain. The Ireland based Coffee business Moyee tied up with the Bext360 for this blockchain product and now the farmers are able to directly deal with the coffee consumers.

Reducing Cost

The real-time tracking of the product has proved to be the most beneficial for cost reduction. The overall cost of moving items in a supply chain is greatly reduced with the use of blockchain. The extra costs have been reduced with the guarantee of the security of the transactions.

A survey of supply chain workers was conducted by APQC and the Digital Supply Chain Institute (DSCI). The result showed that more than one-third of people told that reduction of costs is the topmost benefit of application of Blockchain technology in supply chain management. The middlemen and intermediaries have been completely eliminated from the supply chain. This has minimized or better to say eliminated the risk of frauds, product duplicacy and saved money too. The customers and suppliers process their payments through cryptocurrencies rather than relying on Electronic Data Interchange(EDI).

Cloud Logistics, the international company which provides transportation system for the supply chain companies recently changed their payment system from traditional ways to blockchain powered in order to reduce the overall transfer fees involved in payment transfers.

Building Trust

Without building trust among partners you can’t work smoothly. For example, a manufacturer should be able to depend on the supplier for following the factory safety standards when he receives the products. When it comes to following various norms like regulatory compliances, trust plays a very important role. Blockchain prevents tampering with the product thus establishing trust.


The blockchain technology has connected different ledgers and data points while maintaining the data integrity among different participants of the supply chain. The database can be customized according to the data feed. Blockchain has improved inventory management and minimized courier costs.

The technology has offered scalability. It has made it possible to assess a large database from multiple locations around the world. It has provided higher standards of security. Blockchains are created in a private manner which allows the data to be accessed explicitly between the parties who have the permission to do so.

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