How Blockchain Solves Underlying issues of Supply chain

How Blockchain Solves Underlying issues of Supply chain

Table of Contents

Know everything about the underlying issues of supply chain systems and how blockchain technology can revolutionise the supply chain management.

blockchain in supply chain

We consume a variety of products daily ranging from food to beverages. But, have you ever wondered how far these products must travel? They travel across a supply chain to reach us from the farmers. However, the supply chain management has a lot of issues with the presence of many middlemen and rising number of frauds. So, the blockchain technology is here to rule the supply management systems now. Though it is a panacea for all supply chain challenges, one must know these issues that our systems are facing today. So, what are the underlying issues of the supply chain? How does blockchain aid in improving them?

Supply Chain Challenges And Blockchain Solutions

Well, why do we need the blockchain technology at all? Are there any problems in the existing supply chain systems? Is it affecting the productivity of manufacturing? Does it lead to loss of money? To answer these questions, let us delve deeper into the challenges faced by supply chain systems today. How can blockchain help in providing solutions to these challenges?

Establishing Trust and maintaining Integrity

Supply chains generally have many participants. So, having trust in such huge and complex supply chains with many members is often an issue. Moreover, it can hamper the smoothness of operations across the supply chain too. Also, it can harm the reputation of the supply chain companies involved in the whole process.

For instance, when manufacturers share products with suppliers, they must follow the factory safety standards. This brings the factor of trust between the suppliers and producers. Also, trust plays a vital role in following regulatory compliances like custom enforcers.

But, the immutable nature of blockchain helps in reducing tampering. This also leads to establishing trust between the different participants. Further, blockchain has the potential to connect different ledgers and data points in a better manner. This helps in maintaining the data integrity among the participants.

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Reduction of unwanted costs

Well, blockchain helps in real-time tracking of a product in a supply chain. Thus, it reduces the overall cost of moving items through a supply chain. In fact, as per a survey, more than one-third of people agreed that the reduction of costs is the best benefit of blockchain for supply chain management.

Not only does it speed up administrative processes but also guarantees the security of transactions in supply chains. Moreover, the removal of intermediaries in the supply chain helps to get rid of any potential risks of frauds. It also reduces manufacturing and circulation of any fake products apart from saving money.


Besides, the processing of payments by suppliers and customers within the supply chain will be simplified. This is because of the use of cryptocurrencies rather than depending on EDI( Electronic Data Interchange). According to a report by the Accenture, the compliance costs could drop by 30%-50% at the product level due to the improved transparency in transactions using blockchain. Further, it will also improve efficiency and lessen the risk of losing products with accurate recordkeeping.

Provenance Tracking

Keeping a track of all elements in supply chains for big companies and organizations can be tedious. Thus, it becomes very difficult to maintain the record for such multinational corporations.

Besides, the lack of transparency can lead to a loss of money with the number of middlemen in the traditional supply chains. Also, it can dilute the brand name if any customer relations issues occur.

However, in a blockchain-based supply chain management, these issues don’t exist. This is because of the embedded sensors and RFID tags that make tracking much easier. So, product information can be easily accessed.

Also, record keeping and provenance tracking become easy. In fact, anyone from the supply chain can trace the history of any product from its origin to its destination, through blockchain. Such accurate tracking methods can also aid in detecting frauds in any part of the supply chain.

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Benefits of Blockchain for Supply Chain Management

No wonder the use of blockchain technology for supply chain management is growing day by day. According to Statista, many global organizations had adopted the Enterprise blockchain technology until April 2018. In fact, almost 53% of respondents agreed that their companies were working on the use case of supply chains.

It is clear that the numerous benefits of blockchain technology are attracting companies to use it for supply chain management. So, what are these benefits? Let us take a look.

  • Ability to interoperate:

    Blockchain makes data more interoperable. Thus, companies can easily share information with manufacturers, suppliers, and vendors.

  • Transparency:

    Blockchain helps in reducing any delays. Also, it reduces disputes and prevents blockage of goods in the supply chain. Real-time tracking of products minimises the chances of misplacements too.

  • Scalability:

    Using blockchain, one can access large databases from multiple locations around the world. Thus, it helps in increasing the scalability.  

  • Security:

    Blockchain provides high security for supply chains. Besides, it allows customization according to the data feed. Moreover, private blockchains can allow explicit accessing of data too. Thus parties who have permission can access such blockchains.

  • Eliminating frauds:

    Tow of the most vital properties of blockchain technology include transparency and immutability. In fact, these play a huge role in eliminating frauds in the supply chain. Also, it aims at maintaining the integrity of the system.

Blockchain use cases in the supply chain

Well, provenance tracking and traceability are the most important benefits of blockchain for managing supply chains. Besides, it will also allow manufacturers and end-users to collect data and monitor the whole process for better product experience. So, what are some potential use cases of blockchain for supply chains?

Verification of seafood

The seafood supply chain has often an inefficient system. This is mainly due to the lack of a transparent system and improper food storage conditions. Also, the prevalence of unregulated practices and frauds involved in the chain leads to lack of trust. But, blockchain technology has solved these issues. Projects like the Hyperledger Sawtooth is transforming the whole seafood supply chains in the following ways:

  • It is bringing traceability and accountability through the blockchain platform.
  • It uses the Proof of Elapsed Time(PoET) consensus algorithm. This enables an environment where counterparties can be aware of each other’s information.
  • Sensors can help in detecting the seafood in the supply chain. It will also transmit the location and time of the products to the blockchain.

Coffee Supply Chain

Some of the major issues with the coffee supply chains are that it has a highly complicated supply chain. Also, there have been cases of abuses of farmers and labourers in the coffee supply chains.

However, there is a blockchain development solution to these problems. The Bext360 uses a blockchain enabled machine called “bextmachine” for analyzing the coffee beans from farms. What are its benefits?

  • It makes more room for improvisation. This is because the machine provides quality details about the coffee from the farm level.
  • It brings more productivity. It is more transparent too as the system ensures direct payments to the farmers after the sale of final products.
  • End consumers can also trace the origin of the coffee and take a look at the data.

There are a lot of blockchain use cases for supply management other than these. Some of these include the food supply chain and the pharmaceutical supply chain. Besides, blockchain technology has the ability to revolutionise the whole supply chain systems worldwide. So, it is the best solution for connecting manufacturers with customers in a better way.

Signing off...

To sum up, those were a few ways how blockchain can help in minimising the underlying issues of the supply chain. In fact, blockchain has immense potential to bring positive changes in all industries and businesses.

Moreover, supply chain management is one of the most useful applications of Blockchain technology. It will definitely grow at a faster pace in the near future. Which manufacturer would not want a transparent and end-to-end communication with their customers? Of course, all would want this. So, are you ready to embrace this new change?

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