Blockchain Solutions for Supply Chain: Top 3 Use Cases

By Anush Jafer
9 Min Read

Blockchain, the technology that powers bitcoin and other cryptocurrency networks, has emerged as a game changer in the financial world. While the crypto sector highly publicizes the application of this technology, the technology brings a paradigm shift to how individuals and businesses across the globe transact, record and store data or assets. It provides a solution for all types of global industries. Applications of the technology in the supply chain sector are gaining traction among businesses.

Blockchain technology’s innate distributed and immutable features bring security, transparency, credibility, and automation to supply chain management. Blockchain provides the efficiency, speed, and trust essential for managing supply chain processes effectively.

The Challenges Faced by Supply Chain Management 

Businesses use the extensive and complex global supply chain industry to produce and deliver their goods to customers worldwide. Therefore, companies must create a trust-based ecosystem with end-to-end, open, and transparent communication to have a successful supply chain. However, traditional supply chain management restricts this.

Supply chains are characterized by a complex network of delivering goods from a source to their intended destination. It involves multiple parties, including manufacturers, suppliers, distributors, and retailers, often geographically dispersed. Therefore, several intermediaries are heavily relied upon to deliver accurate information at different stages in the supply chain process. 

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Moreover, today’s logistics sector rely on many intermediaries to maintain manual entries or audits. These complexities create obstacles like fraud, cause delays, losses, and damages. Furthermore, the intricacy involved can make it difficult for companies to track the origin and authenticity of products, thereby effectively hindering trust in the supply chain process. 

The need for trustworthy and authentic information becomes even more crucial when it comes to the supply of food and pharmaceuticals. Tracing the products’ lifecycle from the manufacturer to the consumer is pivotal because these products have stringent shipping and storage requirements. However, due to the sector’s bottlenecks, timely access to reliable information is frequently limited. For instance, the food industry is crippled by the problem of food wastage and contaminated food due to insufficient data and traceability mechanisms in traditional supply chain processes. A World Health Organization report claims that contaminated food is to blame for nearly 420,000 fatalities annually. 

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The proliferation of the counterfeit market is another issue that has grown due to the inadequate infrastructure for supply chain tracking and transparency. Forbes estimates that the annual value of the illegal trade in counterfeit goods ranges from $1.7 trillion to $4.5 trillion.

Advantages of Using Blockchain in Supply Chain Operations

As transparency and traceability are central components in the effective running of a supply chain, blockchain is a ground-breaking technology to alleviate the challenges faced by businesses and the logistics sector. As a result, businesses are beginning to integrate the power of blockchain technology to replace conventional supply chain processes. Major Fortune 500 companies like FedEx, UPS, Walmart, Ford, and Tesla, as well as logistics behemoths like Maersk, are already utilizing blockchain technology to streamline processes, demonstrating its undeniable potential. IndustryARC estimates that the blockchain market in the supply chain will reach $524 million by 2024. 

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Transparency and Security 

Blockchain technology uses a distributed or decentralized network of computers or nodes to store and validate transactions, as opposed to traditional ledgers, which are centralized and administered by a single authority. As a result of all the information being accessible and stored on multiple machines, the technology is effectively hack-resistant.

supply chain

The distributed ledger records various transactions or information in a series of blocks. These blocks are connected to create a chronological history of all transactions visible to all parties. Additionally, a blockchain’s consensus mechanism, a system for maintaining a single version of the complete history of transactions agreed upon by all parties, enables greater transparency.

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Therefore in the supply chain process, the features of this technology foster trust between all parties, from the source to the end consumer or customer. Furthermore, by linking all stakeholders to a transparent ledger of information, blockchain improves predictability and transparency by enabling users to track a shipment’s status and condition at any given time in unison. 

Tracking and Information Credibility

The transparency offered by blockchain technology extends beyond documentation and administrative processes. Information stored on the blockchain includes the provenance or origin of a given product or material. 

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Customers can confidently authenticate where products came from, how they were manufactured, and how and where they were shipped throughout the supply chain, thanks to the trackability and immutability of blockchain technology. This is especially helpful in avoiding fears about food safety and counterfeiting. 

Inventory management is a crucial component in the success of a business. Poor inventory management can lead to wasted resources with products expiring, leading to higher overheads. Moreover, the failure to keep sufficient inventory levels can lead to a loss of sales and decreased revenue for a business. Blockchain eliminates inconsistencies in inventory management as goods move along the supply chain. It accomplishes this by eliminating traditional linear data entry techniques that might result in incorrect data entries. 

Automating Payments 

Automating and settling payments through smart contracts is another innovative application of blockchain in supply chain management. Smart contracts are created using programming languages and are used to automatically carry out the terms of an agreement between two or more parties without the need for a central authority to supervise the process.

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Payment delays are common in conventional supply chain processes due to the number of intermediaries and third-party services, each with its own set of payment protocols and procedures. Further delays are brought on by the reliance on manual processes like payment reconciliation and invoicing, which are prone to errors.

A smart contract on a blockchain can automatically execute the terms and conditions of a transaction when specific predetermined conditions are fulfilled. This can include the receipt of goods or successful quality assurance tests. Since all parties in the supply chain have access to the same transaction terms, settlement disputes are avoided, effectively saving time and resources.


Blockchain technology enables better communication and collaboration, which are vital for the smooth execution of supply chain processes. Better transparency not only empowers customers by letting them know where their products come from, but it also helps businesses cut costs.

The blockchain is reinventing the supply chain as the sector transitions to an autonomous self-driven ecosystem.