Effect of Block chain on Supply Chain


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Supply chain has become complicated. It takes days to make a payment between a manufacturer and a supplier, or a customer and a vendor. Contractual agreements require the services of lawyers and bankers, each of which adds extra cost and delay the process. Products and parts are often hard to trace back to suppliers, making defects challenging to eliminate.

The rise in uncertainty stops supply chains from working well. Suppliers, providers, and clients must interact via central third-party entities instead of directly with each other. Apparently, simple transactions turn into lengthy multi-step procedures.

Blockchain could be the answer to many of these issues. In supply chain, it can apply to anything from self-executing supply contracts to automated cold chain management.

One of the most appealing benefits of using blockchain is that it allows the data to be more interoperable. Due to this, it becomes easier for companies to share information and data with manufacturers, suppliers, and vendors. Transparency in Blockchain helps reduce delays and disputes while preventing goods from getting stuck in the supply chain. As each product can be tracked in real-time, the chances of misplacements are rare.

Ultimately, blockchain can efficiently increase the transparency of supply chains and positively impacts everything from warehousing to delivery and payment. 

Blockchain’s Value in Today’s Supply Chains

Any supply chain progresses by initially delivering the raw materials from a supplier to a manufacturer and eventually ends by delivering the final product to the consumer. The interconnectivity of different elements in the supply chain gradually becomes more inefficient when a business grows. Blockchain can be applied to many challenges of the Supply Chain industry such as complicated record-keeping and tracking of products. 

Automotive Supplier Payments

Australian vehicle manufacturer Tomcar uses Bitcoin to pay some of its suppliers. Tomcar’s supplier agreements use standard terms. It is helpful for cost savings. The firm is also careful not to hang onto to Bitcoin too much. While Bitcoin is international by nature, some national governments see it as a way for companies to invest. Companies may, therefore, be subject to taxation on Bitcoin holdings.

Meat Traceability

In the food industry, it’s imperative to have solid records to trace each product to its source. Companies can use blockchain to record product status at each stage of production. The records are permanent and immutable. It makes it possible to trace each product to its source. Global retailer Walmart uses blockchain to track sales of pork in China. This system lets the company see where each piece of meat comes from, each processing and storage step in the supply chain, along with the product’s sell-by-date. In the event of a product recall, it is easier for the company to see which batches are affected and who bought them.

Electric Power Micro-grids

The use of blockchain in electric power micro-grids can be an example of how entities of any size can use blockchain. Smart contracts are being used to redistribute excess power from solar panels. The Transactive Grid is an application running on blockchain to monitor and redistribute energy in neighborhood micro-grid. This program automates the buying and selling of green energy to save costs and pollution. 

The introduction of blockchain in the energy industry will not only disrupt the traditional structure of the market but also increase the efficiency of payment, energy usage, and energy storage.

Cold Chain Monitoring

Every single food pharmaceutical products can be assigned a cryptographically unique identifier at the start of the cold chain. This unique, strongly encrypted code can be entered into the shared data ledger, and the history of all products can be accessed on the blockchain archive. Sensors on sensitive products can record temperature, humidity, vibration, and other environmental conditions. This end-to-end transparency and traceability will streamline the entire process. Any issues resulting in unsafe food or medication can be detected swiftly and resolved within a matter of hours. Response times can be minimized and overall food and medicine safety can be improved.

Similarly, Blockchain can be applied in RFID-driven contract bids and execution, seafood verification, coffee supply chain, shipping industry, etc.

Blockchain has introduced its potential to bring out positive changes in many industries and businesses till date including the supply chain industry. In fact, the supply chain management is one of the most obvious and useful applications of Blockchain technology, therefore, we can expect it to grow at a very fast pace in the near future. The source of the successful operation of the supply chain management system is to keep a robust, transparent and end-to-end communication.


The value of adopting blockchain technology can be taken from the fact that it has the potential to connect different ledgers and data points while maintaining data integrity among multiple participants. The properties of transparency and immutability of blockchain technology make it useful for eliminating frauds in supply chain and maintaining the integrity of the system. Now-a-days, companies are bringing more rigors to purchase order payments or demand chains where ‘real demand’ signals can propagate the upstream supply chain faster. 


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