How can blockchain improve the supply chain?

In the past couple of years, Blockchain technology has emerged as a revolution for various industries. You’d be surprised to know that the blockchain’s business value would exceed $ 3.1 TN by 2030

The high popularity of blockchain has allowed for the establishment of trust because of its shared public ledger. The supply chain is one of the largest industries that benefit from using blockchain technology as blockchains allow for better coordination between different organizations.  

Do you know that by replacing the traditional processes with a distributed ledger, technology could increase trade volume by 15%?  Blockchain technology can enhance supply chain transparency and traceability as well as reduce administrative costs.

Management of today’s supply chains is exceptionally complex. The supply chain can involve hundreds of stages, multiple geographic locations, a multitude of invoices and payments, and can expand over time depending on the product.

Due to the lack of transparency and complexity of current supply chains, there is more interest in how blockchains can transform the supply chain management.

Let’s take a look at what’s broken and how the blockchain’s unique features are impacting supply chains. So, without wasting any more time, let’s get started!

How is the supply chain broken?

The current supply chain is broken in many ways. Several years ago, supply chains were relatively simple because commerce was local, but it has become incredibly complex over time.

The history of supply chains has witnessed innovations that have led to dramatic changes in supply chain management. 

It is quite difficult for consumers to know the value of the products in the real sense, as there is a considerable lack of transparency in the existing system. Similarly, it is challenging to investigate the supply chain when illegal or unethical practices are suspected.

How is blockchain leveraging Supply Chains?

Blockchain technology, along with the ability to program business logic enables the following:

  • Transparency into the provenance of consumer goods
  • Precise asset tracking
  • Improved licensing of products and services 

Even in today’s technological world, supply chains can drastically enhance efficiency, audible tracking, and limit exploitative behaviors. 

Consumer goods, specifically electronics, pharmaceuticals, and luxury brands, are susceptible to fraud. A report by PwC claimed that more than 2% of global economic output comes from fake revenue.

The implementation of blockchain technology will bring transparency and accountability to the movement of goods. The technology can be applied to logistics to make business processes more efficient and cut costs from supply chain infrastructure.

Many blockchain development companies in India are exploring the benefits of blockchain technology in adjacent areas. These include introducing smart contracts, bringing more rigor to purchase order payments, or demand chains.

The power of blockchain-enabled Supply chain

Through the blockchain, companies obtain a real-time digital ledger of transactions and movements for all participants in their supply chain network. The benefits being gained will save your crucial time, money, and effort on multiple fronts and redefine how you do business.

Enhance visibility and more savings

Companies negotiate purchase discounts based on the total number of purchases. Your business may ask other people to make purchases on your behalf. Still, the result is that it is difficult to track the volume between subsidiaries, business partners, and everyone else in your supply chain network.

Blockchains make it simple. With a refreshed continuously ledger that incorporates all your related partners’ data, your company can see the total volume, irrespective of who directed the purchase activity – with each user sharing their operational data with others.

Without a blockchain, companies employ many people to audit their orders to capture these purchase benefits. Larger businesses may have dozens of professionals who are spending days and nights to conduct one-on-one audits and all the benefits they are about to receive. 

But blockchain does this without employees and without any extra time, eliminating the additional price-verification process.

Smart contracts to eliminate costly procure-to-pay gaps

Suppliers politely call customers to make costly payments, while customers aim to process invoices at a snail’s pace and sometimes “lose” them. This results in a gap between the supplier and the customer.

Blockchain can eliminate this by integrating delivery and payment into digital contracts and flows into enterprises.

Using smart contracts, where there are payable conditions on receipt, proof of delivery from the logistics carrier will instantly trigger automatic digital invoicing and payment through the banking system, with no difference between customer and supplier.

Smart contracts can help eliminate costly delays generated by manual handling of paperwork. From there, new doors can open up for faster, more intelligent, and more secure processes in the supply chain.

Data and analytics

To compensate for the uncertainty of the product or material in different locations and how much actual demand has been there over time, companies put in excess inventory.

In the technology industry, it is predicted that keeping $ 1 in inventory can cost from 20 to 40 cents per year when you account for both costs of capital and rapid depreciation of products.

With blockchain, the payoff requires higher accuracy and better forecasting and fewer inventory requirements to maintain the same service level through the ability to track and manage resources at the ecosystem level.

Minimizing supply-chain IT transaction costs

At this stage, this advantage is more theoretical than real. Bitcoin pays people to validate each transaction and requires those who propose a new block to include a fee in their offer.

Such costs will be prohibitive in supply chains because their scale can be staggering. For example, over 90 days, a single auto manufacturer typically issues about 10 billion call-offs to its tier-one suppliers.

Also, all those transactions will significantly increase the demand for simultaneous data storage, an essential component of the blockchain’s distributed-ledger approach.

Creating and maintaining multiple copies of a data set would be impractical in supply-chain environments, particularly in permissionless blockchains.

Putting a stop to the unethical users

Blockchain allows unifying these supply chain networks

Shared truth without an all-powerful, centralized intermediary. Every

participant has a copy of the ledger, and all transactions and operations are part of that ledger.

If any contestant tries to perpetrate fraud, that company is only manipulating its ledger. It is instantly out of sync with the rest of the ecosystem, a powerful deterrent to bad behavior.

Use Cases of Blockchain for Supply Chain Management?

Enterprise blockchain can transform the supply chains with these three use cases:


Traceability enhances operational efficiency by mapping and visualizing the enterprise’s supply chain. An increasing number of consumers ask for the product’s information. Blockchain technology helps organizations understand their supply chain and connect customers with real and correct information.


Transparency intensifies trust by capturing critical data points, such as certificates and claims, and then publicly provides open access. Once registered on the Ethereum blockchain, it can be verified by third-party verifiers, and information can be updated and validated in real-time.


Tradeability redefines the traditional marketplace concept. Using a blockchain, an asset can be “tokenized” by dividing an object into shares that digitally represent ownership.

Applications of Blockchain for Supply Chains

The examples below are now in use or can be applied today using existing technology.

Automotive Supplier Payments

Blockchain allows the transfer of money anywhere in the world without traditional banking, as transactions are carried out directly between the payer and the payee. It is also safe and fast in comparison to the days for automated clearing house payments.

RFID-driven Contract Bids and Execution

RFID tags are generally used in the supply chain to store product information. IT systems can read labels automatically and then process them.

Cold Chain Monitoring

Specialized storage is often required in food and pharmaceutical products. In addition, enterprises see value in sharing warehouses and distribution centers rather than each paying for their own.

On sensitive products, sensors can record temperature, humidity, and various other environmental conditions. Further, these readings can be stored on a blockchain.

Bottom Lines

Blockchain has the potential to transform the supply chain management. 

Even banks that would appear to be losing out with new technology can take advantage of this to streamline their operations. 

It is fair to say that many companies will join the blockchain initiative in the next or two years. Keeping all the benefits of technology in mind, you can hire blockchain developers in India to take your business at a whole new level.

Guest article written by: I’m Shefali Basu and I am a Sr. tech-consultant and writer working for PixelCrayons which is a leading app & software development company in India. I love to write about all the latest technologies.

3 thoughts on “How can blockchain improve the supply chain?”

  1. Interesting, Blockchain is the most promising technology in business world. Most of the businesses are ready to adopt and move into the blockchain technology.

  2. Wow! An insightful read, thanks for sharing this. Blockchain technology is renowned for its revolutionary ability, and it’s becoming clearer that businesses are embracing this shift.


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