Application of Blockchain Technology in Supply Chain Management

At its core, blockchain tech offers a secure means of tracking transactions through a distributed digital ledger. Although multiple people can access some or all of the data, they cannot possibly delete the record of any changes or modifications to the information, making it a single source of truth.

The Storage & Sharing Of Data

A blockchain database is a peer-to-peer network. The network of users, called nodes, is connected through the Internet. They make use of the network to transfer information directly between them, without any third-party intermediaries in their way.

Decentralization Is The Crux Of The Technology

Decentralization describes how all of the computers or nodes within a blockchain aren’t all under one roof. Instead, every one of them is operated by an individual or a group of individuals. Each node has a complete record of all blockchain data, so no individual can alter information or delete transactions. This eliminates any dependency on third-party intermediaries.

How Has Blockchain Transformed Supply Chain Management

Today, companies aren’t just concerned with ensuring their suppliers operate in line with their Sustainable Development Goals, they also want them to demonstrate compliance with an increasing array of regulatory and customer requirements, including ethical sourcing and anti-slavery rules.

They are not just asking, ‘what is my exposure at a country or industry level, but what is my exposure with the specific supplier I work with and the specific site manufacturing the goods that I source?’ That’s where a technology like blockchain has made a world of difference.

Blockchain tech has offered unprecedented visibility into end-to-end supply chains, from the movement of goods to facilitating payments, and it also captures data on sustainability metrics. As a result, companies are now beginning to think beyond their own operations – to even their relationships with their suppliers and their suppliers’ suppliers, and assessing the wider impact they have. Blockchain technology is helping assist in addressing some of the weaknesses in global supply chains that were exposed by COVID-19, allowing businesses to identify issues more quickly and avoid disruptions by switching providers seamlessly.

The visibility provided by blockchain has made it easier for manufacturers, retailers, and logistics providers to identify pain points and act more quickly to resolve issues as they arise, such as bottlenecks or product shortages. Such benefits are expected to drive the growing adoption of blockchain technologies in a wide variety of applications aside from supply chain management – from governments making use of blockchain tech to verify COVID-19 vaccine certifications to the US Air Force’s BASECAMP (Blockchain Approach for Supply Chain Additive Manufacturing Parts) strategy, which it employs with the printing of 3D parts on the battlefield.

Despite the fact that it was originally driven by the financial services sector, more companies are looking to tap into the many potential efficiencies that blockchain tech can help bring into their supply chain and logistics processes because the technology is so much more accessible and efficient. This is exactly why the industry is witnessing the deployment of massive amounts of funding for the next stages of development in this sector.

Technology Trends

Highlighted below are some of the most noticeable blockchain trends in supply chain management.

Supply Chain Financing

The high efficiency of blockchain technology in invoice processing, along with more transparent and secure transactions, is making it increasingly popular in supply chain finance. Blockchain technology enables the use of smart contracts that trigger immediate payments as and when products are delivered.

Supply Chain Logistics

Hassled with many intermediaries and tedious back and forth between partners, logistics experiences significant operational friction. With the blockchain, transactions can be verified, recorded, and coordinated autonomously without third parties. This completely eliminates an entire layer of complexity.

Supplier Payments

Blockchain technology facilitates fast, secure, and inexpensive international payment processing (and other transactions) through the use of encrypted distributed ledgers that offer the possibility of reliable real-time verification of transactions without the need for intermediaries such as correspondent banks or clearing houses. An instance of the use of blockchain technology for supplier payment can be found in the coffee industry. One company uses blockchain technology to better track all elements of the global coffee trade, from producer to consumer, thereby increasing supply chain productivity. Using cryptocurrencies, this blockchain application in the supply chain guarantees payment directly to farmers immediately after their produce gets sold.

Cold Chain Traceability

Critical supplies such as food and pharmaceuticals benefit from blockchain technology as it facilitates the safe recording of IoT sensor data such as temperature, humidity, vibration, and other environmental measures. Smart contracts allow for the immediate repair of any abnormal readings. Walmart is using this technology to track the provenance and condition of its pork products from China and is extending the technology to its other product imports as well.

Food Safety

Cross-contamination in highly convoluted supply chains is challenging to keep track of and isolate. Delays can cause significant damage to reputation as well as the cost of callbacks. Nestlé, Walmart and Unilever, and others are using blockchain to immediately identify the source of foodborne illnesses within the supply chain.


When it comes to the benefits that blockchain technology and smart contracts bring to supply chain management, the benefits are substantial.

Eliminating The Need For Unnecessary Middlemen

Typically you have a number of players in a supply chain, from the producer all the way to the consumer. What blockchain can help accomplish is take some of those middlemen out of that supply chain and automate with technology. Companies have already done this with cloud and web technologies, but there’s another level of efficiency with blockchain technology, especially with the deployment of smart contracts. What companies can do now is automate the role of a trustee, or even automate the role of a validator, or the role of someone who serves as a merchant in the middle of two transactions.

Smart contracts don’t just remove the need to copy and transfer records from one party to another, but they can also be programmed to trigger transactions automatically, without the necessity for any human intervention whatsoever.

Efficiency Gains

Smart contracts can automatically track goods from production to delivery, creating an audit trail that streamlines administration, eliminates errors and reduces processing times.

Cost Savings

By replacing manual processes, smart contracts reduce the time and cost of document processing and data validation.


Smart contracts can provide full traceability, allowing companies to guarantee the provenance of the goods they use and sell. Not only is this essential for ethical and sustainable sourcing, but it also enables companies to quickly find and resolve sourcing issues, from faulty components to food contamination. Walmart reduced the time it takes to trace the food source from seven days to just 2.2 seconds with the help of IBM’s Food Trust solution, which has been deployed on the Hyperledger Fabric blockchain.

Built-In Compliance

From food regulations to anti-slavery legislation, smart contracts can be designed with built-in regulatory requirements, automatically proving compliance at the same time.

Integration With Central Systems

Blockchain and smart contracts can be integrated with other technologies such as smart sensors and radio frequency identification tags throughout the value chain, supporting essential activities such as inventory management and dynamic pricing.