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13 May, 2024

Bliss or Woe: Do You Really Need Blockchain in Supply Chain Management?

Since the term blockchain has become more popular in the business world, many companies are consciously exploring how it might affect their operations. Let’s face it — supply chains are messy. Organizations usually have supply chains that span many countries and multiple suppliers. Yet companies like Walmart, Unilever and Nestlé share a common goal of providing safe food to their customers. So, wouldn’t it be easier for them to use blockchain for the entire supply chain?

The technology is improving the way businesses operate. But in the rush to adopt the software, some companies may introduce it into their operations when they don’t need to. In this article, let’s find out when blockchain makes sense in the supply chain sector.blockchain in supply chain_LITSLINK

What is the Role of Blockchain Technology in Supply Chain Management?

What is Blockchain Technology, and How Does It Work?

To understand how blockchain operates in supply chain management, we should learn more about this technology. It helps companies track all types of transactions and makes the process secure and transparent. Blockchain technology is a digital ledger that consists of transactions and records them chronologically in blocks linked by cryptography. Multiple parties verify these transactions before adding them to the ledger as a block.

There is no way to change the blocks once adding them to the chain, which makes them very secure and tamper-proof. This enables different parties involved in a process to view all the details of this transaction without having access to each other’s data or credentials, which increases trust between them. 

What is Blockchain in Supply Chain?

When it comes to the supply chain, blockchain is beneficial in many ways. First of all, it enables product tracking from the time of pickup to reaching the end customer. The technology permanently stores the digital ledger — thus preventing fraud through tracking fees. Emergen Research predicts that the global blockchain supply chain will reach USD 14,180 million by 2028. This indicates that the software is helpful in improving the processes in the industry, thus many companies adopt it to stand out in the market.

We see a number of scenarios where distributed ledger technology can add real value to supply chain visibility and sustainability programs. Operating a blockchain-based solution inevitably means bringing on board a number of stakeholders who can operate the multiple nodes and are therefore willing to make the investment. This is not only about the initial investment in the platform, but also about the management and maintenance of the blockchain across all nodes.blockchain in supply chain_LITSLINK

Blockchain for the supply chain is also useful in situations where there are multiple parties involved, but there is also a lack of trust between them — so, it is then essential to have your own copy of the database. With this technology, companies can trace the history of a product from where it originated to where it is now. Every time a product changes hands, the technology securely documents a transaction and creates a permanent history from manufacture to sale.

Using this powerful technology, parties collaborating on a common platform could dramatically reduce the time delays, additional costs, and human errors often associated with transactions. A shared blockchain ledger provides a trusted and tamper-proof audit trail for information, inventory, and financial flows within a supply chain. This allows companies to synchronize logistics data, track shipments, and automate payments.

Advantages of the Blockchain in Supply Chain Management

Blockchain technology is becoming more prevalent in supply chain management. Organizations can use it in a variety of ways, such as to reduce costs and increase transparency. However, before you decide to use blockchain in your supply chain, you need to consider all the benefits and risks associated with this technology.

Now, we’ll explore how distributed ledger technology can be handy in improving your existing supply chain management processes.blockchain in supply chain_LITSLINK

Helps Eliminate Breakdowns

Blockchain allows the creation of smart contracts between suppliers and customers. They enable companies to make payments only when certain conditions are met. For example, you can create smart contracts that require suppliers to ship products only if they align with certain criteria (e.g., quality standards). This can help prevent supply chain breakdowns because it ensures that each partner fulfills their responsibilities.

A supply chain breakdown can be an extremely costly event. It can cause significant damage to your company’s reputation and even lead to legal consequences. One of the main advantages of blockchain is that it helps you prevent these scenarios by providing a single source of truth about transactions. With it, you can easily verify every transaction that took place in your supply chain. This way, you’ll know if someone is trying to break the rules or if there are errors in your system.

Reduces Supply Chain Complexity

Blockchain improves supply chain transparency by providing visibility into all stages of the shipping process — from order placement to delivery confirmation — so there’s less misunderstanding about where shipments are at any given time. This allows you to manage your inventory more efficiently and eliminate waste caused by over- or under-production of goods, as well as excess inventory waiting in warehouses for orders from customers who may not even require them.

With blockchain, there is no need for intermediaries, such as banks or other financial institutions, to clear payments between two parties. This reduces complexity and makes transactions cheaper because fewer parties are involved. Blockchain supply chain solutions also make it easier for companies to find new suppliers because they no longer have to go through middlemen who may take time to check credentials before approving them.

Enhances Traceability & Ensures Better Control

Blockchain technology enables better transparency and traceability throughout the supply chain. This allows companies to track items from source to buyer. This way, they can monitor deviations from expected behavior and take corrective action if needed, before any damage is done.

In processes such as sourcing raw materials or shipping goods to customers, there are many opportunities for fraud and error. With blockchain for the supply chain, you can track all your products as they move from point A to B using smart contracts verified by consensus on a decentralized network. This makes it easy for you to keep tabs on everything that happens with your product at all times.

Allows Using Data to Anticipate Issues & Risks 

Companies can use data collected by blockchain-based systems to anticipate problems before they arise and take appropriate action. For example, if a supplier fails to meet its production schedule for two weeks in a row, the system will alert the company immediately, so they can take action before the situation gets worse. In addition, the software can use the collected data to predict issues such as climate change or political unrest that could affect deliveries.

Helps Cut Down Costs

Blockchain technology implications for operations and supply chain management include a more cost-effective way of running the business by eliminating the need for third parties. The technology does not require any intermediaries in transactions or settlements because it records all transactions on a public ledger. Thus, by excluding intermediaries who charge fees for conducting transactions, all parties involved in the supply chain save money on transaction costs.

Blockchain in Supply Chain Management Use Cases

Blockchain can make it easier for companies to manage their supply chain by providing real-time data on every transaction. In this way, companies reap many benefits, as we have already mentioned. Let’s now take a look at some examples of using blockchain in the supply chain.blockchain in supply chain_LITSLINK

Inventory Management

Inventory management is one of the most valuable applications of blockchain in supply chains. When used properly, the technology ensures that all transactions are transparent and verifiable. Tracking products helps reduce the time it takes to move inventory and ensure everything arrives safely at its destination on time. That means less money wasted on damaged goods replenishment and higher profits for businesses.

Transportation Management

Supply chain blockchain can also help with transportation management by providing an easy way to track shipments throughout the entire process from point A to point B. There are several ways the technology accomplishes this:

  • Using smart contracts to coordinate delivery times and coordinate logistics among multiple parties involved in transportation processes;
  • Creating a central database that stores information about each shipment so that everyone involved knows where their goods are at all times.

This allows companies to plan ahead and ensure that everything runs smoothly. This also helps reduce delays and prevent unauthorized changes to shipping details or pickup times that could result in missed deadlines or damaged goods due to improper handling.

Supply Chain Finance

Blockchain technology makes supply chain finance more efficient by providing real-time data on payment terms, credit limits and enforcement actions. This is a tool that allows companies to raise money by selling future cash receipts. The most common example is accounts receivable factoring, where companies sell their invoices to a bank or financial institution at a discount rate. The bank then collects the invoice amount from the buyer and gives the seller immediate cash. 


While distributed ledger technology is no panacea for supply chain management, it promises results for more efficient operations. From increasing speed to reducing costs, blockchain supply chain solutions have proven to be helpful in achieving better overall results. The technology offers a whole range of benefits for supply chain management. It enables more secure transactions between parties, as well as more transparent reviews of the procurement and transportation of goods around the world.

When considering the use of blockchain technology in the supply chain, a company should examine its current problems and consider how blockchain can provide an effective solution. To ensure positive business outcomes after implementing the technology, contact us and get state-of-art blockchain development services.

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