A supply chain encompasses the entire lifecycle of a product, from its production and distribution to its final delivery to the customer. To enhance its functionality, a new trend in the supply chain industry has started to slowly become popular. It is the use of blockchain technology to enhance transparency, traceability, and security.

Blockchain in supply chain management helps everyone involved to share a digital record that tells the truth about what’s happening. This can make things better in supply chains, especially when it comes to knowing where products are and making sure they’re real.

blockchain in supply chain management

Purpose of Blockchain Management

Companies are always trying to make their supply chains work better by keeping a close eye on where things are, where materials come from, and making sure things are genuine.

If lots of people use blockchain in supply chain management, it becomes a shared record that everyone trusts. Things, like products, are like special digital tokens on the blockchain, and we write down where they go. Everyone agrees on this before it becomes a permanent record on the digital ledger.

More than a ledger and a trusted source of information for various people at various positions in the company, the blockchain management software has other purposes. Let’s explore some of the blockchain technology benefits for companies.

Benefits of Blockchain in Supply Chain Management

  1. Increased Transparency in Supply Chain

Blockchain technology can help to improve transparency and traceability in supply chains. It offers a secure way to share data, streamlining management and cutting down on errors and fraud.

Specifically, blockchain can monitor the movement of goods from manufacturers to retailers, giving everyone involved real-time visibility and enhancing coordination. Blockchain in supply chain management also helps confirm product authenticity, reducing counterfeiting and ensuring customers get what they expect.

  1. Enhancing Traceability

Pharmaceutical companies must track and trace prescription drugs to protect consumers from counterfeit or unsafe products. Pharmaceutical firms are collaborating with blockchain in supply chain management. 

Each item goes through scanning and recording on the blockchain as it moves through the supply chain, creating a complete history from production to the end user. 

The required data exchange is minimal, not necessitating financial information to be on the same blockchain. This approach enables quick product tracing, supplier identification, batch tracking, and recalls in case of defects. 

Moreover, it aids in monitoring the condition of perishable items. It monitors the conditions of fresh produce or medications, by recording temperature fluctuations using IoT devices connected to the blockchain in supply chain management.

  1. Enhancing Efficiency and Minimising Disruptions

Collaborative organisations can achieve greater efficiency and decision-making autonomy by utilising blockchain to share inventory data. Employing a Kanban system, businesses regulate production and manage mutual orders. 

The items in question would get Kanban cards (a popular framework that implements DevOps software development), represented digitally by tokens stored on the blockchain. This boosts transparency in inventory flow and enhances lead time predictability.

What’s particularly appealing about these applications is that they necessitate the sharing of only limited data—specifically, inventory and shipment information—making blockchain in supply chain management, a valuable tool for improving supply chain efficiency and speed, even within large firms with multiple ERP systems.

  1. Simplified Supplier Onboarding

In today’s fast-paced world, people track progress in weeks and months, not years. Every forward-thinking company relies on its procurement department for seamless operations. 

However, the supplier authentication and onboarding process is a major pain point for most businesses engaged in buying and selling goods and services, plagued by inefficiencies and potential fraud.

For many businesses, the onboarding of new suppliers can drag on for up to 30 days, and payment to vendors can be equally time-consuming. To overcome these challenges and effectively learn how to use blockchain in supply chain management, consider the following step-by-step approach.

Step By Step Approach to Implement Blockchain in Supply Chain

  1. Define Your Problem

The first step is really important. Companies need to understand the problem they are trying to solve. Only then can they access the specific roles and benefits of a blockchain in supply chain management. Once you identify the problem, you can find the right solution.

  1. Do Research to Develop Proof of Concept

After you’ve identified the issue, the next step is conducting research. This involves exploring various blockchain platforms to find the one that best suits your requirements.

Next it’s time to create a proof of concept. You can assess the viability of your solution and even make necessary refinements before proceeding with the actual implementation of blockchain in supply chain management. 

  1. Create a Roadmap and Secure Funding

After you’ve developed a proof of concept, the next step is to establish an implementation plan. This plan should encompass schedules, key milestones, and financial considerations. 

As you finish planning, it’s time to begin seeking funding for your project. Without sufficient funding, your project is likely to encounter delays and may struggle to get started.

Although blockchain in supply chain management offers various advantages across various industries, the implementation of this technology in supply chain operations presents several challenges and considerations that companies must address effectively. 

However, while blockchain technology offers many advantages, it also presents several challenges. Amongst the pros and cons of blockchain in supply chain, let’s assess some of its challenges. 

4 Challenges in Implementing Blockchain for Supply Chain Management 

  1. Scalability 

Amongst all the blockchain technology applications in supply chain, scalability remains a concern. It includes high-speed connectivity,  processing power, storage capacity, and energy consumption. 

Traditional blockchains require significant computational or reckoning power and time to complete transactions. It can lead to slower processing and limits scalability.

Scalability of blockchain in supply chain management is a pressing issue due to the extensive storage and processing demands. Every transaction records data on each network node, causing substantial storage requirements. 

As supply chains expand, processing demands surge exponentially, straining resources and hindering scalability. Potential solutions include sharding and layer-two protocols, which divide the network into smaller segments or process transactions off the primary chain. 

To overcome these hurdles, companies must precisely assess their network needs to deploy an efficient blockchain solution for their supply chain.

  1. Regulatory Compliance

The decentralised nature of blockchain technology raises legal compliance concerns. Varying data protection, intellectual property rights, and cross-border transaction regulations in different countries and regions require careful consideration when implementing blockchain in supply chains. 

Finding solutions, like zero-knowledge proofs or off-chain data storage, is vital. Collaboration between developers, stakeholders, and regulators, industry standards, and inclusion of import/export, trade sanctions, and product certifications in the blockchain in supply chain management are essential for compliance.

  1. Interoperability

As blockchain adoption is becoming more mainstream, there is a need for an universal agreement on interoperability. Each blockchain network has its unique structure and smart language. It makes it difficult to establish a standard protocol for data exchange. 

Scalability and performance may vary leading to more complications. Therefore there needs to be an universal consensus that secures compatibility across all blockchain platforms. 

Organisations should collaborate to develop common standards, protocols, and data formats that enable seamless integration and interoperability of blockchain in supply chain management. Let’s look at the last challenge. 

  1. Industry Adoption 

Industry adoption is another challenge. Technology is very powerful, thus how companies adopt it across industries is a concern. They must proceed with caution. Some companies refuse to embrace blockchain and their reluctance is due to various factors.

The perceived complexity of technology, concerns about how blockchain in supply chain management will integrate with the system and a lack of understanding of its benefits, stops many industries from adopting it. 

Achieving universal industry adoption of blockchain technology necessitates the cooperation of diverse industry stakeholders, encompassing manufacturers, suppliers, distributors, retailers, and regulatory entities. This requires harmonising operations and ensuring the transparent, secure sharing of data. 

Yet, this level of collaboration poses a challenge, particularly when trust is lacking, or interests clash. To overcome these hurdles, it’s essential to conduct industry-wide education and awareness initiatives. Demonstrating blockchain’s potential advantages, addressing concerns, and presenting successful case studies can instil confidence and promote adoption.

FAQs:Everything to Know About Blockchain in Supply Chain Management 

How can blockchain technology improve supply chains?

Blockchain technology enhances supply chains by providing transparency, traceability, and security. It enables real-time tracking, reduces errors and fraud, and ensures authenticity, streamlining operations and improving efficiency.

What is blockchain & why is it important?

Blockchain is a special kind of database. It stores information in blocks, like linked chains. It’s like a never-changing record of stuff. This helps track orders, payments, and more, making sure no one cheats. It also stops unauthorised changes, making everyone agree on what’s real.

Can blockchain unlock value for organisations?

Yes, blockchain can remove friction between organisations, reduce operating costs, and speed transactions. It creates a common platform that connects organisations without compromising security or transparency.  

How does blockchain technology prevent input of incorrect information?

To prevent fake or altered records in the blockchain, the system relies on trust through agreement. If most nodes in the network say a blockchain has a certain code, it’s considered true.


Supply chains still have a scope of improvement. When it comes to coordination, end-to-end traceability, speed of product delivery, and finance, blockchain in supply chain management emerges as a possible solution to all such issues. Companies must participate in efforts to create new regulations, test out new technology, run trials with multiple blockchain platforms under experts of Qodenext to create an ecosystem with other businesses.