Blockchain Supply Chain

Blockchain For Supply Chain Management

The concept of decentralization has been around for decades; however, the World experienced its practical and most disrupting implementation in the form of blockchain technology in 2009. Previously, it was only meant to support cryptocurrency transactions (Bitcoin in particular), but nowadays, the utility of blockchain covers almost every industry, and supply chain management happens to be one of them.

It is worth noticing that since there are dozens of organizations and hundreds of employees involved in each SCM solution, the pros offered by the blockchain technology in this sector (to address the prevailing issues) are unimaginable.

Supply Chain Management Problems Today

The supply chains are evolving drastically due to tech disruptions and in order to stay tuned with the market, managers and relevant decision-makers in the organization must incorporate the most suitable technology for each issue in order to stay afloat this tough competition.

Let’s have a look at three of the most concerning problems faced by the supply chain management industry as a whole.

1. Meeting Deadlines

First things first! There are plenty of people involved in moving a single unit of any product, let alone the heavy lots. It should also be noted that some people fail to remember the deadlines due to the manual operations at their end, thus affecting the performance of the entire supply chain.

Since this niche is quite time-bound and sensitive in some cases (e.g. pharmaceuticals), if a single intermediary skips the deadline, it does not only cost a hefty amount in terms of penalty, but it also becomes the matter of life and death.

So, the stakeholders involved in any supply chain need to think about automation and efficient data sharing to ensure their reputation is maintained, the clients stay happy and the team’s productivity boosts as well by meeting targets.

2. Counterfeit Goods

This has become a huge problem in pretty much every industry and since we are talking about SCM at the moment, the impact of producing, transporting, and receiving counterfeited goods implies that time, money, and resources are wasted at 3 different levels. Therefore, the cons are unimaginable!

According to a report, it is estimated that by the end of 2020, the value of (Global) counterfeiting is expected to hit about $1.82 trillion, which is more than the total net worth of many industries combined! This statistic suggests that counterfeiting is an International problem and the issues raised by this unethical practice undermine several associated industries. So, it must be curbed on a priority base with the help of efficient provenance.

Moreover, there is a dire need to introduce series of checks during exploration, extraction, production, and transportation to ensure that integrity is maintained right from the exploration of raw material until the time the final product reaches the consumer.

3. Transportation

While transportation serves as the backbone of supply chain solutions, it suffers from an array of problems and even in some multinational SCM companies, this is the only department that has not been fixed and due to the very fact, these organizations suffer heavy losses every year. Therefore, it is important to keep transportation as crisp as possible.

Since several companies do not give particular attention to tech-based transportation, the probability that the following activities remain neglected and unquantifiable remains high:

– Theft
– Accident
– Terrorism
– Fuel
– Fares

How Can Blockchain Help the Supply Chain Industry?

With the ingenious smart contract technology, blockchain can bring a variety of benefits in regards to the efficient tracking of physical assets. In some unique cases, it can also solve different problems by digitizing physical assets to transfer their ownership over the internet without moving the physical product at all. Sounds fancy? Well, let’s first discuss the easy and mainstream feasibilities provided by the blockchain technology in this sector.

1. Costs

There are two aspects of costing in the SCM industry. Firstly, with the help of blockchain, we can redefine how the payments are conducted by introducing digital currencies. These are not only efficient but reduce the transaction fee as well, thus ensuring that the burden on all stakeholders is reduced. Secondly, since suppliers often nudge their customers by calling them for advanced payments, smart contracts can be deployed to simulate an ‘escrow’ environment and ensure that consumers receive the products and suppliers ship away the lots – thus, reducing the element of doubt while conducting business.

It is also worth noticing that in decentralized systems, there is no need for database administrators or thousands of people who can monitor ‘how things work’. This is because of the consensus-based approach that guarantees a single state of the network at all times and gets rid of the centralized operational methods (e.g. log registers, databases, etc.)

2. Transparency

This is probably the best advantage offered inherently by the blockchain technology and it is also one of the by-products of decentralization. If a blockchain-based system is deployed across the supply chain, there is no need to trust a single entity for the source of truth as the unalterable transaction logs can be accessed at any time by the authorized stakeholders to view the provenance.

Food supply chains have utilized this benefit to a great extent and many companies have implemented end to end feasibilities. One of the use cases happens to be the provision of organic meat. The details of slaughtered animals are put on the blockchain ledger and intermediaries keep on adding their parts of the data as well throughout the supply process. By the time the food reaches the customer at the dining table, they can verify it in real-time to determine whether the meat is organic or not.

3. Immutability

Once the data is uploaded on the blockchain, it cannot be deleted or edited by anyone (not even by the CEO of a company), whatsoever. This is where it wins the trust of all stakeholders. Talking particularly about the supply chain management, it can be ensured that once a vendor supplies something to the consumer and the order is dispatched, the details are uploaded on the blockchain ledger. Since these details are unalterable, the consumer would know for sure about the condition and time of the shipment and at the time of receiving, everything can be verified without having to trust anyone.

You just need to trust the technology, not a person!

Apart from this, it is also worth noticing that in 2017, several retail giants teamed up to adopt IBM’s blockchain for their supply chains, and according to the news, their productivity boosted by several times.

How Can Blockchain be Implemented in the Supply Chain Industry?

Now that we have understood the generic benefits of blockchain technology in the supply chain industry, let’s shed some light on the specific use cases to understand how it can be useful in particular areas.

1. Electric Power Supply Chain

Electricity is all around us. However, we can revolutionize the way it is distributed in the grids with the help of blockchain technology. It would not only ensure efficient distribution but get rid of corruption as well by maintaining an immutable log that serves as the source of truth for all the entries made by the stakeholders involved.

2. RFID Tags

Nowadays, companies extensively use RFID tags (particularly for expensive shipments sent through cargo ships) to monitor the movement of products in their respective supply chains. However, since all the data is stored on centralized servers, it can be deleted in a single instant and this raises many concerns.

With the help of blockchain technology, a decentralized system can be deployed to ensure that data generated by RFIDs is stored after mutual consensus – it would not only ensure that the entire network agrees on ‘something’, but it would also help auditors in trusting the source of data and doing their actual job (i.e. auditing), instead of verifying the credibility of the source of data.

3. Mining

This is an expensive business, particularly when fossils and expensive stuff are involved, like diamonds. A couple of years ago, De Beers implemented a blockchain-based system for their supply chain to ensure that extracted diamonds are tracked at every instant until they are handed over to the end customer.

The same approach can be used in any mining business where provenance and minute-by-minute tracking holds primary importance.


It is quite evident that the overall supply chain industry is growing at an incredible pace and its applications have boomed in the last couple of years from mainstream supply chains (e.g. food and retail) to even some of the riskiest ones (e.g. diamond extraction).

So, it proves the market is gaining traction and in the near future, almost every major supply chain management company would go for blockchain technology in at least one of their use cases.

This is where LimeChain comes into play and provides you a comprehensive consultancy service on DLT technologies to plan feasibility for your idea. We also have a team of blockchain developers who specialize in creating private blockchains (ideal for sensitive products, such as diamonds, pharmaceuticals, etc.) and tools for helping your community to use the blockchain in a better way.

Sounds like something you need? Do get in touch with us at [email protected]


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Blog author Silvia


Silvia Ivanova
Head of Growth