How the Supply Chain May Benefit From Blockchain Technology

Just as it has in the healthcare, transportation, and financial service sectors, blockchain technology is positioned to be a disruptive force in supply chain industry over the coming years.

What is blockchain?

In short, blockchain relies on cryptographic techniques that allow each stakeholder to store, exchange, and view information, or blocks, within a shared distributed network. This is an extension of the peer-to-peer transaction model we’ve already seen, but blockchain has no centralized authority. Within this world, participants are made aware of all interactions, which are recorded on a digital ledger, making it easy to audit at any time. The blocks, once recorded, can no longer be manipulated unless the majority of users reach a consensus that the changes are valid.

This makes the technology very appealing for reconciling records among different stakeholders. Blockchain distributes identical copies of the information to multiple parties so there is no longer a need for third-party intermediaries. The data can be accessed in real-time, ensuring transparency and security, not inefficiencies and the potential for errors.

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How can it help the supply chain?

Blockchain technology allows operators from all sides of the supply chain to make transactions more securely and with greater transparency. This means products are tracked every time a product moves to the next phase, creating a permanent record of its history. The upside are reduced time delays and human error. Here are five ways blockchain will improve the supply chain:

• Linking physical goods to bar codes, serial numbers or digital tags like RFID.
• Exchanging data with suppliers and vendors about assembly, delivery, and maintenance of products.
• Tracking orders, changes to orders, shipment notification, and other data related to shipping.
• Recording the quantity of orders and method of transfer (pallets, trailers, containers) as they move through the supply chain.
• Assigning certifications of physical products, especially food and pharmaceutical products that need special storage.

Why is blockchain secure?

Blockchain represents the most secure system to fight beaches because of its innate ability to trace the data supply chain. The technology requires data verification and the ledger creates a record of previous time-stamped entries to make sure every new action has integrity with what came before. That means that supply partners can approve or deny any sharing or changes to their data and all participants in the data will know when data is verified — or not.

The end result is trust. All involved stakeholders will know with authority that what they’re seeing on the screen is accurate, despite it passing through many hands from many locations.

Examples of blockchain success

Blockchain strengthens billing management. Streamlining data into a transactional ledger reduces manual administrative costs because it eliminates the need for third-party intermediaries. Australian vehicle manufacturer Tomcar uses blockchain to pay its suppliers through Bitcoin, not a traditional bank.

Then there’s Walmart which uses blockchain to track sales of pork meat in China. Through blockchain, the retailer’s suppliers can see where each piece of meat came from, its processing and storage and its sell-by date.

Finally, diamond manufacturer De Beers uses blockchain to track stones from the moment they are mined all the way to the jeweler counter. The company says this helps them track stones they deem as authentic and to weed out what are considered “conflict” or “blood diamonds” from the chain.

Do you feel ‘blockchain’ is just the latest buzzword and what is your understanding of it? Do you see it being something that needs to be considered in the near-future and in what aspect of your operations? Let us know in the comments below!

Frequently Asked Questions

What are the main challenges companies face when implementing blockchain in supply chains?

Companies typically face integration complexity with existing systems, high initial setup costs, and the need for technical expertise. Additionally, getting all supply chain partners to adopt the same blockchain platform can be challenging, as it requires coordination across multiple organizations with different technological capabilities and priorities.

How much does it cost to implement blockchain technology for supply chain management?

Implementation costs vary significantly based on company size, supply chain complexity, and chosen platform. Small to medium businesses might spend $50,000-$200,000, while large enterprises can invest millions. Costs include software development, system integration, staff training, and ongoing maintenance. However, long-term savings from reduced intermediary fees and improved efficiency often offset initial investments.

Can blockchain work with existing supply chain management systems?

Yes, blockchain can integrate with existing ERP, WMS, and other supply chain systems through APIs and middleware solutions. Most implementations use hybrid approaches where blockchain handles verification and tracking while existing systems manage day-to-day operations. This allows companies to gain blockchain benefits without completely overhauling their current infrastructure.

What types of products benefit most from blockchain supply chain tracking?

High-value, regulated, or safety-critical products benefit most from blockchain tracking. This includes pharmaceuticals, luxury goods, organic foods, electronics, and automotive parts. Products with complex multi-tier supply chains, strict compliance requirements, or authenticity concerns see the greatest return on investment from blockchain implementation.

How long does blockchain supply chain implementation typically take?

Implementation timelines range from 6 months for simple pilot programs to 2-3 years for full enterprise deployments. Factors affecting duration include supply chain complexity, number of partners involved, integration requirements, and regulatory compliance needs. Most companies start with limited pilots before expanding to full-scale implementation across their entire supply network.