The Role of Blockchain in Supply Chain Management: All You Need to Know

Krunal Shah

May 13, 2022

8 min readLast Updated Jun 21, 2022

Blockchain technology was first introduced by the research scientists W. Scott Stornetta and Stuart Haber in 1991. It originated from the requirement of secure time-stamping of digital documents to protect them from data vulnerability, attacks, and other data threats.

The technology had then gradually become more popular and widely adopted around the globe. The turning point of its popularity was in 2008 when Satoshi Nakamoto popularized it further as the digital ledger for Bitcoins.

Over the past few years, the global blockchain market has grown further to reach over $7 billion in 2021. As stated in a recent market report, the global blockchain industry is expected to grow at 56.3% CAGR to reach $163.83 billion by 2029. This high potential of the blockchain industry is the outcome of its diverse adoption in various sectors. And supply chain management is one of such areas where the application of blockchain is getting more prominent with each passing year.

What are the blockchain supply chain examples, or what is the exact role of blockchain in supply chain management? In this blog, we will walk you through all you need to know about blockchain supply chain examples and related information.

What Is Supply Chain Management?

Before we delve deeper into blockchain supply chain examples and more, let’s have some basic knowledge of supply chain management. Supply chain management (SCM) is defined as the process of managing the complete production flow of goods and services. Supply chain management includes the handling of the full process starting from the sourcing of the raw materials to delivering the final products to the end-users.

The supply chain management is meant to optimize the products’ and services’ building and development cycle and process flow related to transportation, and the final delivery. SCM is an integral part of various industries due to its unlimited advantages such as resource optimization, reduced overhead related to the raw materials transportation as well as the final products delivery, better quality control, improved collaborations with the suppliers, and streamlined shipping workflow, to name a few.



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Challenges in the Supply Chain Management Sector

While supply chain management has become a common practice among the majority of businesses, certain challenges come into play. Let’s have a look.

Redundant Costs

One of the main difficulties in supply chain management is keeping up with the rising costs. As the relevant data access is limited within the organization, it requires additional time, cost, and effort to access it for the other firms related to the blockchain process. As a result, not only does it lead to unnecessary spending but also makes the data storage, access, and retrieval process inconvenient and complex.

Unfulfilled Customer Requirements

The customer requirements are highly dynamic. And while it plays an important role to determine how effective the supply chain management system is, it also makes it highly difficult to keep up with their changing demands.

The only solution is to regularly monitor and track the viable measures to take the right steps and provide exactly what they are looking for. But adjusting to the changing customer demand pattern often gets tough without a systematic approach.

Absence of a Universal Database

The global industry is meant to have proper interconnections among the relevant organizations. But despite this fact, many companies don’t share their database with others. As a result, several issues arise among such entities including communication barriers, lack of operational transparency, inefficient and lengthy workflow, exploiters interference, and others.

Low Traceability of Assets

Be it raw materials or core product parts or the final products - the traceability factor plays a crucial role in the assets in a supply chain management system. But in many cases, this becomes quite difficult to ensure as the SCM process is not confined to a single entity, but requires the involvement of multiple ones. This results in issues like poor quality assets, unwanted asset replacement, unfulfilled customer requirements, and others.

Keeping Up With the Digital Transformation

It’s been a while since the digital transformation has started impacting the conventional SCM process. While the incorporation of AI (Artificial Intelligence), electric vehicles, and new-edge technologies are aiding in improvising the traditional SCM system, at the same time it is raising the security concerns among the companies. It is becoming inevitable to adopt the new version of the SCM to stay ahead in the competition.

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Application of Blockchain in Supply Chain

Blockchain technology has a significant impact on the supply chain management system. You must be wondering how? Or, what are the blockchain supply chain examples? Well, we are going to guide you through that.

Advanced Cold Chain Monitoring

It is pivotal to monitor the cold chain, related processes, and metrics to ensure higher supply chain efficiency. And blockchain technology helps in doing that without much difficulty.

The blockchain offers a unique and secure point of information in the form of a fully secure, shared, and tamper-proof digital ledger. Equipped with advanced IoT (Internet of Things) and a network based on blockchain technology, the blockchain implements better visibility, efficient collaboration, and observation of the cold chain activities while keeping security impenetrable. Not only the participants of an SCM system flow can record the relevant business transactions securely, but the same can be used for the monitoring purpose without compromising the security.

Improved Supply Chain Management Process

Gone are the days when conventional bank transfers used to be the only means between the payer and payee in a supply chain management system. The application of blockchain technology has transformed this process by allowing global fund transfers easily and secure without any time lag.

This also lets the participants execute the record-keeping tasks, product information and related data storing, and secure access through advanced embedded sensors. No doubt that prevents the activities of product duplication and improves the overall supply chain management process.

Contract Bids Focused on RFID

RFID or Radio Frequency Identification is one of the top advantages of using blockchain technology in SCM systems. This enables the IT systems to read the tags and process them further automatically.

Due to this, RFID is being used at an increasing rate in the SCM process to leverage smart contracts in logistics. A smart contract refers to an electronic transaction protocol that can digitally verify the detailed terms of a legal contract related to the SCM process.

RFID tags can store vital information about the products including delivery date and location. This not only helps in maintaining the proper timelines, but also helps in bidding for the delivery contacts, checking the delivery status, tracking the performance, and others.

Fast Processing & Streamlined Workflow

In any SCM process, there are a lot of intermediaries in between the large databases. As there are interdependencies among them, they often stretch the whole process flow in terms of the process length and timeline.

But with the help of blockchain technology, such dependencies can be removed through smart contracts. As a result, the overall process becomes fast along with a streamlined SCM workflow.

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Blockchain Use Cases in Supply Chain Management

Before we talk about the blockchain supply chain examples, let's look at the list of the top use cases of blockchain in SCM.



Higher ROI

One of the common goals for any business that involves the SCM process is high ROI (Return on Investment). And blockchain technology helps achieve that by reducing unnecessary resource wastage and investment. Also, it improves the overall brand value and prestige leading to higher ROI.

Improved Trading

With the introduction of blockchain technology in SCM, organizations have witnessed better trading and results. As ownership, licenses, and information related to authentication play a vital role in trading, it gets improved with the availability of similar ledger versions, where the organizations can check the related ownership information. This in turn improves the trading activities manyfold.

Better Customer Relationships

Be it the information related to vital resources to build the product or the crucial information related to the products and services - blockchain technology allows to have better transparency and helps maintain the specific criteria as required by the end-users. This in turn strengthens the customer relationships.

Live Tracking

It is important to track various products, materials, resources, and others at different phases of the SCM process. Blockchain technology simplifies this by offering live tracking where the organizations can observe various SCM-related real-time activities as per their requirements.


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Blockchain Supply Chain Examples

Now that you have a better knowledge of the role of blockchain technology in supply chain management, the question comes - what are the blockchain supply chain examples? With a myriad of businesses adopting this technology, there are plenty of blockchain supply chain examples around the world. Let’s have look at the list of the top companies that adopted blockchain technology for their supply chain management -:

Abu Dhabi National Oil Company (ADNOC)

This leading oil company based in Abu Dhabi has adopted blockchain technology for their supply chain management process for a while now. Raw materials delivery, oil transportation-related activities, trading, and other related transactions tracking and handling - they are leveraging the blockchain technology in its best to strengthen their global position further and implement robust security.

Louis Dreyfus Company (LDC)

Louis Dreyfus Company, one of the world’s leading food trading companies has opted for blockchain technology to improve its SCM process. Collaborating with Dutch and French banks, not only have they executed the first blockchain-based agricultural commodity trade, but also have successfully optimized transportation cost, time, and resources, while taking their SCM-related activities and security measures to a whole new level.

Stratis

This UK-based platform, which is mainly focused on Microsoft technologies, has started unleashing the potential of blockchain technology to improve its SCM process. High transparency during the SCM process flow, completely secure decentralized environment, optimized transactional activities, easy and secure database access - they have successfully reached their SCM goals with the help of blockchain technology and more to come.

Naturipe Farms

Starting from tracking blueberries transportation to the farms, to co-ordinating during the SCM process or delivering to the end-users - this leading farms chain has started utilizing the blockchain technology for the best results. By letting the customers scan QR codes to get authenticated information about the products, they are improving the customer experience and relationships like never before.

Not only these, but many other companies have already taken the advantage of blockchain technology such as Luxarity, Brilliant Earth, GenuineWay, Tony’s Chocolonely, and the list goes on. No matter which sector you are in, if you are dealing with the SCM process, then it is time to adopt blockchain technology.


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Takeaway

Blockchain technology has its prominent transformational effects on the supply chain management system and most companies are utilizing it to make the best out of it. The above guide will help you understand blockchain supply chain examples, its roles, applications, and advantages in the SCM sector. And if you want to improve your SCM system, this can be your go-to option to meet your overall SCM goals.

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