3 Reasons Why Blockchain in Supply Chain Management is Revolutionizing an Antiquated Industry

3 Reasons Why Blockchain in Supply Chain Management is Revolutionizing an Antiquated Industry

The supply chain industry can be likened to a hybrid between the telephone game, the water bucket challenge, and a high school group project gone wrong. At 2 a.m. on the night before the project is due, the grade-A student is still waiting for everyone else to e-mail their parts but doesn’t know when or if they’ll do that. That pretty much defines supply chain management. Blockchain technology can solve many of these problems because distributed ledger technology enables secure, transparent, and tamper-proof transactions. IBM, Walmart, and many other high mighties in the supply chain industry are already leveraging blockchain. You, too, can use this solution to reduce costs, increase efficiency, and build customer trust. But first, let’s see how blockchain technology can work for you.

Advantages of Blockchain Technology in Supply Chain Management

Tech specialists have already recognized blockchain technology as an asset that can revolutionize entire industries. That’s why so many big names are already using it. Here’s how it can benefit companies in the supply chain industry:


The supply chain is a complex system that often involves multiple businesses and financial institutions working together to move goods from production to consumers.

Supply chain traceability


It’s the industry equivalent of the telephone game, plus some added trucks and bureaucracy. The problem with the current supply chain is not knowing where goods and information are in real time. Blockchain technology enables supply chain transparency by providing a secure and transparent way to track goods and manage the flow of information. That’s called traceability. With blockchain, each step in the supply chain is recorded in a secure digital ledger. This allows businesses to track goods as they move through the supply chains and identify any issues or bottlenecks. The results are multifold regarding supply chain visibility:

- Increased efficiency

- Better coordination within the supply chain

- Ensured product quality and safety

- Improved security


Blockchain allows all stakeholders to track the progress of goods as they move from manufacturer to customer. That’s because blockchain technology creates a digital record of every transaction in the supply chain. This transparency can build trust between buyers and sellers while also reducing the risk of fraud and corruption. In addition, blockchain can streamline supply chain operations by automating specific tasks, such as contract management and invoicing.


Blockchain eliminates the need for outdated and error-prone paper records. Instead, blockchain tokenizes each asset, splitting it into tradeable shares called tokens. And just like anyone can hold shares on the stock market, stakeholders in the supply chain industry can hold tokens. They can even transfer these tokens between to each other. Why are these supply chain solutions important? Because using standardized licensing procedures to accurately license services and keep track of past ownerships is extremely intricate. Blockchain simplifies every step of the process, streamlining ownership records, transfers, and audits.

Conventional vs. Blockchain Supply Chain Systems

Blockchain still needs to be chiseled, but it can solve execution errors seamlessly. Mistakes happen constantly, but fewer industries are more plagued by errors than traditional supply chains. That’s because all the cogs in the entire supply chain have to move in perfect sync for a transaction to happen. But people make mistakes: inventory data is sometimes miswritten, shipments can go missing without anyone learning why, and companies send duplicate payments. Audits are expensive, bureaucratic, and, most often than not, too late. And while they can accurately identify the problems, they cannot always do that in real-time or identify the causes. Imagine the thousands of transactions and entries an audit company has to comb through. By comparison, blockchain technology can (almost) instantly sleuth the issues and their causes. Why? Because all the parties involved have access to the ledger with all the transactions instantaneously and simultaneously.

What would a solution for this problem be in the conventional system? Establishing strict standards, tags, and codes to track all the operations on the supply chain. But that would mean each company would have to integrate this system into their business. That costs time and money. Conversely, blockchain records are straightforward because every participant and transaction receives a digital token. This is how participants’ interactions and dealings are recorded chronologically, correctly, and securely. Even better:Blockchain records can keep all transactions, even those that aren’t typically recorded in a financial ledger.

Blockchain ledger


That means increased safety, improved analysis and audits and increased optimization of all transactions and relationships within the supply chain.

Consequently, leveraging a blockchain platform can minimize most execution errors and traceability issues, allowing companies on the supply chain to coordinate better with each other or suss out bad actors. Read More on : Blockchain Powered Digital Logistics & Smart Warehousing - Bye Bye Traditional Warehouses

Blockchain Supply Chain Applications

Now that we’ve seen the theoretical side of using blockchain in the supply chain let’s also review some of its practical applications.


One of the most promising blockchain applications in supply chain management is financing. With traditional financing, businesses often have to wait 30 days or more for payment. This waiting period can cause cash flow issues and make it difficult to finance new orders. However, with blockchain-based financing, businesses can get paid almost immediately after shipping their products because blockchain-based invoices can be automatically verified. And the whole invoicing process would be streamlined. Blockchain promises instant, safe, and affordable international payment processing services with fewer fees. Then there’s the financing that companies get from banks. Often, banks do not give out loans to small companies. Their approval process for business loans is long and intricate. And the fees are considerable. That’s because banks have to control risks such as a company using the same collateral for two loans or being dishonest about its income and liabilities. Blockchain would solve these issues because banks could access the ledger with each borrower’s past activities. Therefore, they could disburse loans faster.


With traditional contracting, businesses often have to use paper-based contracts that are slow to process and easy to lose. Blockchain-based contracting allows businesses to store and manage their contracts on the blockchain securely. Using smart contracts, it’s:

  • Easier to keep track of contracts
  • Easier to track changes and transactions
  • Ensuring that all the multiple parties involved are up-to-date

As a result, blockchain-based contracting can help businesses save time and money. On the downside, your accountant may have a minor heart attack if you take away those paper-based contracts and Excel sheets.

Inventory Management

With traditional inventory management, businesses often have to use manual methods to keep track of their inventory. Conversely, blockchain-based inventory management allows companies to automatically track and manage their inventory on the blockchain, reducing time and risks.

inventory management record keeping


But that’s not all: Like in the water bucket challenge, The Walking Dead, or basically any aspect of life, a supply chain is only as efficient as its weakest link. Therefore, a slow or inefficient manufacturing process could hold up shipments and cause delays. Even more importantly, not knowing about a slow or inefficient manufacturing process causes multiple problems. Imagine this scenario: Company A needs products a1 and a2. Company B needs products a1 and b1.Let’s say their supplier has an issue and can no longer produce b1. As such, Company B ends up stockpiling too many a1s.Now also imagine that a1 is in scarce supply and that company A produces something that people cannot live without, like insulin or Instagram. A blockchain-based system would allow these companies to record their inventory and transactions more transparently, thus helping each other in times of need.

International Transactions

Traditional cross-border payments are slow and high cost, whereas blockchain payments are fast and cheap. Why? Blockchain-based payments are processed quickly and cheaply, and every involved party can see them immediately. But global supply chains and international transactions are not limited to payments. Before getting to that part, though, international trade is filled with paperwork, intermediaries, and endless checks each time you cross the border. At the same time, all these activities lack immediate transparency for all involved parties. Blockchain can solve those issues because the entire inventory, transactions, payments, and other information become immediately visible on the ledger. That means transactions become streamlined, and companies always have working capital. In today’s world, both traders and suppliers depend on bank loans. But those loans are usually tricky to get because the bank must check all the documents, transactions, and invoices to minimize risks. But if banks had instant access to all the information they needed, they could immediately disburse those loans. And companies could instantly repay them after their invoices are paid.


The issue of shipments is multi-faceted too. First, there’s the paperwork part. Businesses often have to use paper-based documents that are slow to process and easy to lose. By comparison, blockchain-based shipments allow companies to keep track of shipments better. This system also makes tracking changes easier and ensures that all parties involved are up-to-date. Secondly, blockchain increases the traceability of the material supply chain to ensure corporate standards are met and to avoid legal issues. With blockchain, businesses can trace the supply chain of materials back to their origin because all information about a material’s journey is imprinted on the blockchain. As a result, businesses can be sure that their raw materials meet their standards and avoid legal issues. Lastly, blockchain improves data quality and accuracy. All information about a business’s transactions is stored on the blockchain, which is resistant to cyber-attacks. No bad actors can tamper with the info on the blockchain without anyone else noticing. But it’s tough to change that data in the first place because each “block” of information is set in stone immediately after being inputted.

ways blockchain can revolutionize the shipping industry


Why is that essential? Two words: quality control. Studies show that seafood is mislabeled in 87% of cases. That is extremely dangerous if someone suffers from food allergies. The same danger is worth considering with counterfeit medication, currently at a prevalence of 28.5%. The effects of people getting the wrong prescription drugs, possibly even dangerous medicine, need no further explanation. But blockchain solutions help pharmaceutical companies and all businesses lower their losses from counterfeit or gray market trading. Therefore, the global market would stop losing 323 billion USD annually because of that issue. People would stop counterfeiting diplomas or certifications, and the whole world would be a much safer place.

Improve Visibility And Compliance Over Outsourced Contract Manufacturing

With blockchain, businesses can provide greater transparency and visibility to their supply chain because all information about a product’s journey is recorded on the blockchain. As a result, businesses can be sure that their products are authentic and avoid losses from counterfeit or gray market trading. It’s not just about monetary losses, either. Some studies show that child laborers working in illegal mines are the primary source of mica. This substance is ubiquitous – from makeup to car paint or laptops and fridges. Luckily, blockchain could help people and companies fight against these types of injustices instead of using unethical products.

Reduce Paperwork and Administrative Costs

Paperwork isn’t just tedious, unreliable, and difficult to keep track of; it’s pricey. Some research shows it can amount to 50% of the transport cost. But leveraging blockchain into the supply chain industry reduces these costs, making it easier, faster, and safer for companies to document everything.

Organizations Utilizing Blockchain in Supply Chain Management

These uses of blockchain in the supply chain industry presented above aren’t hypothetical. They are practical advantages, and you can start leveraging them today. Many retail giant brands are doing it successfully. Let’s review just three cases:


FedEx has learned the hard way that delivering packages is not as easy as it sounds. People want to find out where their products are and what’s delaying the delivery process. Other times, they want to return certain products, but there aren’t any records of having them delivered in the first place. That’s why FedEx adopted blockchain, now offering better traceability and a transparent, comprehensive record of all transactions. It’s also why FedEx became part of the Blockchain in Transport Alliance, encouraging all parties in the supply chain industry to adopt blockchain.

members of the blockchain transport alliance



DeBeers is leveraging blockchain for its tracking abilities because they want a clean record of all its natural diamonds. They also want to avoid counterfeit merchandise or working with the grey market. Blockchain allows them to be more efficient and have more control over their inventory. DeBeers also takes advantage of an app called Tracr to show their customers where their gemstones come from. Solving these ethical sourcing issues strengthens DeBeers’ reputation among its clients and ensures its sales don’t plummet because of questionable gem sourcing.

Debeers diamond data blockchain use



Wal-Mart and IBM work together in the Food Trust program to ensure everyone can access fresh food. Wal-Mart can track every supplier and shipment batch involved when a faulty product is identified. That way, the company can execute product recalls immediately and without sacrificing good products. Wal-Mart can also automatically monitor the quality of perishable products via refrigerators using an IoT (internet of things) device. That's artificial intelligence one-on-one. Wal-Mart also uses blockchain to sleuth out counterfeit and potentially dangerous goods. Besides, Wal-Mart Canada uses blockchain with its trucking companies to keep track of its inventory, thus synchronizing all logistics information faster.

Shipping data on the blockchain


The Bottom Line

As you can see, there are many ways in which blockchain is revolutionizing the supply chain management industry. From financing to inventory management, blockchain is having a significant impact on the way businesses operate. As a result, we will likely see more and more businesses adopting blockchain in the years to come.

About The Author

Jesse Anglen, Co-Founder and CEO Rapid Innovation
Jesse Anglen
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Co-Founder & CEO
We're deeply committed to leveraging blockchain, AI, and Web3 technologies to drive revolutionary changes in key sectors. Our mission is to enhance industries that impact every aspect of life, staying at the forefront of technological advancements to transform our world into a better place.

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