How Blockchain is Transforming Supply Chain

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Managing supply chains from creating products and distributing them is complicated. The supply chain can span over hundreds of stages, an abundance of invoices and various geographical locations based on the type of product. It also involves numerous individuals and entities and the whole process could extend over months. 

Since supply chains lack transparency, people are experimenting with the blockchain that can reconstruct the supply chain and logistics industry. Let’s understand what are problems in the supply chain, how capabilities of blockchain can transform it and some of the applications which are running on the blockchain technology. 

Challenges existing in the supply chain and logistics industry

Lack of Traceability

Traceability provides an accurate picture of where the products are at a particular time within the supply chain. Presently, every stakeholder involved in the supply chain ecosystem makes it complicated to maintain the supply chain by maintaining their own databases. Multiple databases lead to data silos and every member has to request other members for accessing information stored by them. 

It becomes challenging to perform predictive monitoring due to lack of traceability. 


Due to the absence of transparency, many counterfeits cases across the supply chain are reported with each passing year. The Organization for Economic Cooperation and Development says that the counterfeit and pirated cost approximately half-trillion dollars every year globally. Counterfeit goods not only affect the economy but can have an impact on lives as well.

For example, if counterfeit drugs are supplied to the distributors and medical pharmacies, it may affect the lives of patients. Products cannot meet the quality standards because of the lack of information about the origin of products. 

Documentation and lack of regulatory compliance

As the supply chain process includes contracts which are complex because of the involvement of long paper trails for the letters of credit, bills of lading and the change of ownership. Keeping records on the paper is complicated as it gets challenging to find the history of records. 

High costs

Currently, supply chain management comprises of various intermediaries, including regulators and lawyers, leading to extra high costs to the ecosystem. 

From the challenges mentioned above, it is clear that the supply chain process is cumbersome and requires a blockchain solution.  

Blockchain can be implemented across the supply chain industry to enable a seamless exchange of goods, manage complex agreements, allow real-time tracking and process quick payments. 

Let’s discuss how blockchain can help remodel the supply chain and logistics industry. 

Here’s what happens when Supply Chain meets Blockchain

Supply Chain meets Blockchain

Reduction in Cost

Real-time traceability of a product across the supply chain can reduce the costs of moving items with the help of a blockchain solution. Since the smart contracts used in the blockchain automates various tasks, intermediaries can be eliminated from the supply chain ecosystem, reducing the extra costs. 

Customers can directly interact with suppliers with a transparent view of the ledger storing information about the origin of the product. Therefore, a blockchain-based supply chain solution does not require additional parties to bring trust in the system. 

Provenance Tracking

Multinational companies do not even know about their products in the supply chain due to the lack of traceability. It may lead to high costs and custom relationship issues, impacting the brand’s reputation. 

With a blockchain supply chain ecosystem, provenance tracking, data exchange, and record-keeping can become efficient. Transactions once recorded on the blockchain cannot be altered or deleted. Every member involved in the supply chain process can trace back the history of a product in the supply chain from its origination point to the last destination. 

Establishing Trust

In the traditional supply chain process, you require third-party intermediaries to establish trust between parties and maintain credibility. Blockchain-based supply chain solution builds trust between parties within the supply chain ecosystem using timestamped records stored at all times. It allows every member to access the current or last record. 


Now, let’s discuss some of the real applications of blockchain in supply chain and logistics industry. 

Applications of Blockchain in Supply Chain 

  • Oil Supply Chain
    UAE’s state-owned oil company, Abu Dhabi National Oil Company (ADNOC) launched a blockchain supply chain solution in collaboration with IBM to track oil from the well to end-customers while automating transactions.

    Though this project is still in its early stages, the company has planned to expand it by including customers and investors, bringing more transparency to the business.

  • Food Safety and Walmart have decided to integrate blockchain technology into their supply chain systems to establish customer trust with transparency. They have collaborated with Tsinghua University and IBM to manage blockchain-based supply chain ecosystem.

    Walmart and manage production and shipment of products, while Tsinghua University and IBM maintain the blockchain network. Looking at the potential of the blockchain supply chain, Nestle, Tyson, Kroger, and Unilever have also planned to join the project.

  • Pharma Supply Chain
    LeewayHertz, a blockchain development company, has launched a pharma supply chain solution called TraceRx on the blockchain technology. The project allows UNO to track the drug distribution from the warehouse through the last destination and identify thefts and losses across the supply chain.

    TraceRx aims to reconstruct the pharma supply chain process and save the lives of patients by ensuring the authenticity of medicines. 


Blockchain’s potential has been experienced across many industries, including the supply chain and logistics industry. Supply chain management is one of the significant applications of blockchain that offers a robust, end-to-end and transparent communication. 

Organizations are looking to transform the way their supply chains work presently and implement the blockchain to bring that change. Blockchain will allow them to dump paperwork and get rid of centralized databases that are vulnerable to a single point of failure issue. 

How Blockchain is Transforming Supply Chain

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