Ajeet Raina Docker Captain, ARM Innovator & Docker Bangalore Community Leader.

Using Blockchain to Drive Supply Chain Management System

9 min read

It really is an exaggeration to say that blockchain was among the most emerging technologies yet devised. Any business can benefit from incorporating blockchain, and this essay will focus mostly on Supply Chain circles.

In just these few generations, the industry has advanced significantly and has an environmental presence. However, its global expansion has resulted in a number of issues. Because customer expectations and behaviours change regularly, industries will need to adopt blockchain-based solutions to thrive in the future.

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To remain relevant, blockchain could provide capabilities like source tracing and accountability towards the supply management sector. The purpose of this article is to discuss how blockchain might come around such developments and what function it will play within Supply Chain Management.

Here’s all you need to understand concerning blockchain throughout the supply chain management sector.

What is Supply Chain Management (SCM) and how does it work?

SCM (Supply Chain Management) is a method of controlling the movement of resources, products, data, and activities during the transitioning of raw materials into finished products for end-users.

brown wooden shelf with books

Data, Sources, Strategy, Manufacturing, Inventories, Commodities Returnreturns, and Transport are the 7 critical parts of the complete procedure. The elements are utilized to construct a group’s basic structure. Because the parts are the company’s future, they are extremely important in the sector.

The only obstacles that plague the sector are shifting consumer demands and security risks; the traditional supply chain is struggling to stay relevant. Both issues are serious, however, they can be resolved with distributed ledger technology.

The Supply Chain Management Industry’s Challenges:

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The following were among the most common supply chain issues:

  • Not a global database.

Even though the global economy is interlinked, most companies don’t share their information. As a result, communication obstacles arise between businesses, aiding exploiters.

  • Asset Traceability Is Limited

Despite modern technologies and materials, tracing commodities in Supply Chain Management is tough. As a result, the exploiters substitute fake goods for originals.

  • Costs are unnecessary

Because data is stored within organizations, each company spends money collecting the same information. As a result, its investment and activities increase unnecessarily.

  • Long-term evaluations

Because of the length of the Production system, determining an investment’s quality is challenging. The business is undergoing serious repercussions since no efficient strategic management system has been created.

  • Consumer Needs are unsatisfied

Maintaining up with current customer demands is challenging, but devising credible countermeasures is much more difficult.

Blockchain in Supply Chain Management:

What is blockchain, exactly?

From financial to supply chain, blockchain, sometimes recognized as that of the technologies underpinning Bitcoin, has the power to transform the universe. Blockchain is a digital and decentralised database for transaction records in a transparent and non-tamperable method which can assist change and improving distribution networks.

Blockchain enables consistent and cost-effective product distribution while also increasing product provenance, cooperation among users, collaborators, and financial assistance. To be a blockchain expert, taking up blockchain training is very beneficial.

Key applications of blockchain in supply chain management Automotive supply chain:

Because blockchain technology enables funds to be transferred across borders, it removes the requirement for conventional financial transactions between payer and recipient. The use of a ledger supply chain system enables reliable document and traceability verification, as well as accessibility to information about the product via sensing devices and Radio frequency identification ( RFID). Blockchain technology could be a great way to safeguard their brands against copycats and build a customer-centric business strategy.

Contracts bidding and implementation powered by RFID

RFID tags enable IT platforms to process and analyze identifiers automatically, making RFID tags ideal for payment systems within logistics.

  • Utilising the following predefined, RFID tags might be beneficial:
  • Pallet Radio frequency identification holds information about the destination point and time.
  • Logistics providers can test the RFID tag’s capabilities and compete for a distribution contract.
  • After that, the logistics providers present unbeatable pricing and quality, as well as the business, is awarded to them.
  • The soft contact assists in monitoring the product’s progress and ultimate service quality.

IoT & blockchain surveillance of cold chains:

IoT blockchain system includes asset management only with the usage of IoT or blockchain technology. The blockchain serves as a point of reference in a distributed, tamper-evident ledger. The use of IoT enabling blockchain supply chain design process increases visibility and information from the physical universe, resulting in better mutual co – operation in the corporate world. The blockchain’s based shared ledger technology has allowed members in a corporate network to keep a tamper-proof log of commercial contracts that cannot be changed.

The IoT network on blockchain – based system enables IoT systems to engage in blockchain operations by validating market demands in a trustworthy irreversible blockchain ledger using diverse IoT & asset information.

Use Cases of blockchain in supply chain management:

– Tracking in real-time

To support decentralization and openness, a blockchain-based SCM technique has been implemented. It allows the company to keep track of all activities in real-time.

– Processing time is short.

Even though supply chains manage huge and complex datasets, the procedure is overburdened due to middlemen. Smart Contracts were developed to replace paper-based contracts.

– Improved Traceability

The use of blockchain within the distribution network has decreased the number of counterfeit goods on the market. Such behaviours are massively diminished with enhanced traceability.

– Relationships with Customers That Are Healthy

With blockchain, responsible for supplying product-related data is simple, elevating the consumer learning to new heights. It also helps them to verify the company’s authenticity.

– High Return on Investment

Companies are developing premium product reputations with blockchain, which leads to increased return on that investment.

– Trading Enhancement

With the assistance of blockchain, property and licensing evolve a little. Because each company has a comparable accounting version, the property records may be simply tracked.

What Role Does Blockchain Play in Supply Chain Management?

A blockchain is a chain of digital ledgers or decentralized databases that can be used to store information. The ledger maintains a record of the trading activities inside the sequence of blocks that are linked together in the manner of a network. Each entry of the ledger is modified for every update inside the chain, and the book is accessible on several computers.

Immutability is the most essential characteristic that promotes usage applications and the advantages of blockchain within the supply chain. There is no ability to change information on a block until it has been put into the network, ensuring that all operations have a unified view. As a consequence, implementing blockchain for the supply chain may allow for more accuracy in the classification and auditing of transaction flow.

As a result, businesses may use blockchain to verify all supply chain activities are safe and accurate. Companies may, for instance, keep track of all aspects of their operations without needing to depend on 3rd parties or intermediates. For its supply chain management routines, blockchain allows firms to function in a ‘0 trust’ context.

Applications of the supply chain in real-time:

  • Straits

Stratis, an England company that focuses mainly on using Microsoft technology, is currently collaborating with developers all over the world to develop an optimal supply chain management solution which is enabled by full transparency in a permissionless, highly secured decentralized environment. This means that programmers all over the globe will be currently developing and dedicated to producing a variety of solutions, exhibiting the strength of a Stratis framework and assisting in the development of Stratis BlockChain technology.

  • Treum

Treum seems to be a blockchain-based infrastructure and distribution system which prioritizes transparency, openness, and traceability. It enables manufacturers to evaluate if the distribution network is meeting their business goals by effortlessly capturing end-to-end data on assets, allowing them to develop confidence with their clients.

  • Farms Nature

Naturipe farming employs a Cloud-based Blockchain technology to monitor blueberries from farm to plate. QR codes are placed on open boxes of fruit, so customers may scan the barcodes with their cellphones to see how the berries are produced and also what farm techniques were suited for them.

  • Tony’s Chocolonely is a chocolate shop in New York City:

Millions of tonnes of cacao beans are harvested yearly by child labourers and slaves in several areas of Africa; nevertheless, Tony’s Chocolonely, a cocoa company headquartered in Amsterdam, has begun to move forward in working to stop child labour and contemporary slavery. They’re putting together a bear tracking system core value chain system, which comprises a measurement system which can determine the position of bears.

  • GlaxoSmithKline

GlaxoSmithKline, several of the globe’s largest listed companies, is collaborating with IBM as well as other major corporations to introduce a successful blockchain logistics system. The firm’s platform uses data encryption and cryptographic protocols to continue providing corporate perspectives as well as investment management but also dissemination across their supply chain.

This decentralized solution, together with an irreversible audit trail built on blockchain, eliminates traditional, time-consuming operations while also decreasing the chance of mistakes, paving the way for frictionless supply chain interconnectivity.

– The WWF is working on a blockchain tuna experiment:

The World Wildlife Fund (WWF) intends to bring efficiency and transparency to the fisheries sector. Criminal and uncontrolled fishing is a major concern in the Pacific, and blockchain technology can give an ideal answer by scanning tuna containers. It will give a mobile application which will retain all of the data on a canned tuna from start to finish, such as where and once the fish got acquired, which vessels acquired it, and how it was managed to catch.

  • LuxarityLuxury:

LuxarityLuxury recently worked with major digital solutions businesses to use blockchain technology to enable total visibility of the contribution cycle. They want to create a user-friendly contribution tracking system that integrates smoothly with their current customer experience and encourages consumer engagement without causing any hassle. It aims at producing an irreversible history of just how donations are distributed, allowing customers to choose the cultural and academic organizations they would like to promote.

  • GenuineWay

GenuineWay is really a Swiss tech company that intends to provide businesses with ready-to-use digital solutions while also promoting ethical and sustainable businesses. The IT company specializes in creating and selling blockchain-based products for consumer electronics makers in foods, apparel, cosmetics, and other sectors. It uses QR tags to define food and beverages products, as well as decentralized applications to certify manufacturers who deliver handcrafted food products to the end-users.

  • Earth’s brilliance

Brilliant Earth, a reseller of sustainably sourced gems, is using blockchain to track the origin of its gems in collaboration with Everledger. Blockchain application aids in the monitoring of the gemstone as well as other documentary evidence like payments and certifications, making the storage in conjunction with the relevant data extremely safe.

Challenges that must be overcome:

Supply chains were complicated and lacking in fairness and integrity; nevertheless, a blockchain could assist bridge in such gaps, enabling logistics services and administration simpler for all relevant parties. While it, like any other innovation, provides a slew of advantages such as improved transparency and dependability, there are indeed a few roadblocks to overcome.

As a result, there are some issues to consider when deploying blockchain technology supply management software.

  • Decide if the business strategy will be entirely blockchain-based or will rely upon it for certain elements:

To begin, you must decide how much technological innovation will be used. Because converting an overall supply chain framework to such a blockchain might very well take a lot more resources as well as exertion, it’s important, to begin with just a few blockchain technology characteristics. For instance, blockchain could indeed increase the efficacy of logistics activities without having caused any framework casualties throughout delivery tracking. Likewise, you may gradually include blockchain elements throughout the supply chain.

  • Guarantee of Data Quality:

Data immutability is among the major benefits of blockchain; nonetheless, supply chain operations also are headed by information entered by humans, and humans make mistakes. In comparison to something like a non-blockchain system, it may be more difficult to restore poor data in the system with a database, so data must be free from mistakes and inaccuracies.

  • The right persons should have access to the data:

It’s critical to exchange information with the correct people under the proper conditions to minimize information leaks and economic difficulties. Identifying the various degrees of security and confidentiality prevents unwanted users (including third parties) from obtaining information customers will never need, so it helps you create a range of responsibilities with corresponding access privileges and allocates jobs to everybody in the supply chain.

Prerequisites for a Successful Blockchain Project:

The suitability of blockchain for such a supply chain enterprise will be determined by a few major factors:

Data Exchange: Blockchain seems to be an excellent contender as a remedy when digital information is transferred between several independent parties.

Trusted Partners: Because blockchain needs updates from numerous unconnected parties, you’ll like to make sure you could believe the development’s partners.

Shared Benefit: If indeed the project provides benefits to the organization, they will indeed be motivated to embrace the necessary systems and techniques.

Defined Guidelines: Keeping data accurate ensures a systematic and very well-defined methodology and information format which all stakeholders can operate with, preferably one that is already in place, such as electronic data interchange (EDI).

To get as much out of blockchain, this should be connected with the underlying IT stack, such as an ERP.

Cost-benefit interpretation: In addition to capital expenditures, one would have to include computing costs associated with blockchain. Based on considerations such as how quickly transactions must be performed, transactions executed by blockchain might well have greater or smaller costs. Such operational costs, which are sometimes neglected, would have a major effect on how a business is feasible.

If these aspects are missing, the idea is unlikely to be worth considering.

Benefits of blockchain in supply chain management:

Companies that use blockchain technology could anticipate to reap reading several advantages, including:

Increased Efficiency: The supply chain employing blockchain technology increases cooperation and interaction for all stakeholders since it depends on a common communications infrastructure. Fraud duplicated purchases, and payable accounts concerns like invoicing theft and errant spending are all eliminated with more transparency and visibility. Contract compliance clauses urge all participants to perform their agreement responsibilities on schedule, in full, and accurately. By decreasing ambiguity and danger, comprehensive transparency of accounting reporting and behaviour enhances small company funding sources and speeds up response time.

More Moral, Responsible Sourcing: Due to the obvious blockchain’s transparency & tamper-resistancetamper resistance, that’s simpler to confirm where resources and items originate from, why they go when they transit through all the distribution chain, and also exposure to those.

Increased Potential Savings: Utilizing blockchain technology, advances in productivity and decreases in inventory wastages are primary factors of efficiency gains. The necessity for publication operations and resources also was eliminated by a decentralised system exchanging assets and operations electronically. Going paperless not only saves money on paper but also saves money on maintenance and the manpower required for processing and maintaining all such physical records.

Extra Capabilities for Many other Digitalization Technology solutions: The blockchain provides integration of other digitalization innovations like automation technology and Internet – Of – things (IoT) things like sensing devices and Radio frequency identification ( RFID to increase performance, accessibility, and accuracy all through the supply chain.

Final thoughts:

When people demanded democratising apps and processes and making reliance on centralized 3rd party institutions like banks desirable rather than essential, they turned to the blockchain. The distributed ledger system is being used by businesses to tackle lengthy business difficulties. Supply chain management was progressively gaining traction in the international economy, but it faces several roadblocks. The majority of these stumbling hurdles can be overcome with blockchain, as this article has demonstrated.



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Ajeet Raina Docker Captain, ARM Innovator & Docker Bangalore Community Leader.