The past decade has seen much discussion about blockchain around the supply chain. The delay of its widespread use has been widely debated, as have the reasons why it has not yet taken a centralised role in the multi-national supply chain strategy.
Blockchain is a revolutionary technology that enables secure, transparent, and decentralised record-keeping. Originally developed as the underlying system for cryptocurrencies like Bitcoin, its applications have expanded far beyond digital currencies to various industries, including supply chain management, healthcare, finance and more.
Unlike traditional centralised databases managed by a single entity, a blockchain is maintained by a network of computers (nodes) distributed across different locations, reducing the risk of single points of failure and increasing the resilience and reliability of the system.
Once data is recorded on a blockchain, it cannot be altered or deleted – each block of data is cryptographically linked to the previous one, forming a chain. This ensures data integrity and trust, as tampering with records is practically impossible without altering the entire chain, which is computationally infeasible.
Blockchain technology is undeniably transforming supply chain management by enhancing transparency, efficiency, and trust.
Traditional supply chains often lack visibility as consumers, manufacturers, and regulators struggle to verify product origins, authenticity, and movement. By providing a decentralised and immutable ledger, blockchain enables end-to-end visibility, with each transaction or movement of goods being recorded in a tamper-proof manner.
This means that consumers can trace products back to their source, ensuring ethical sourcing and quality – especially beneficial in industries like food (tracking farm-to-table), pharmaceuticals (tracking drugs to prevent counterfeits) and luxury goods.
Many industries face major challenges with counterfeit goods and fraud, especially in high-value products or regulated sectors. Blockchain’s immutable nature prevents data tampering and fraud, as every action on the chain is time-stamped and publicly verifiable. Smart contracts ensure that predetermined conditions are met before executing transactions, therefore the risk of fraud is minimised and trust among participants is increased, particularly in complex supply chains involving multiple entities including suppliers, manufacturers, distributors and retailers.
The automation and streamlining of processes by replacing manual paperwork with digital information increases the efficiency of the supply chain, also reducing time spent on manual processes and the reliance on intermediaries.
Blockchain also facilitates verified contracts and transactions (smart contracts), which are executed once all conditions are fulfilled.
Real-time visibility is crucial for industries like pharmaceuticals, where temperature-sensitive drugs must be kept under specified conditions. Enabling real-time, secure data sharing is a key benefit of blockchain for participants in the supply chain and IoT devices can further enhance this by feeding real-time data – monitoring can then trigger automatic actions if conditions deviate from the norm.
A further challenge faced in global supply chains is verifying the sustainability and ethical practices of suppliers. Blockchain allows companies to ensure that raw materials are sourced ethically and sustainably by providing transparent records of each step in the supply, particularly valuable in industries like mining and fashion, where consumers and regulators increasingly demand proof of sustainable and ethical practices.
Managing supplier contracts and ensuring compliance can be cumbersome, especially in complex supply chains. Smart contracts on the blockchain can manage supplier agreements, with payments and actions automatically triggered based on compliance with terms, thus improving supplier relationships by ensuring timely payments, automating audits and reducing disputes.
Cross-border transactions often involve significant paperwork, regulatory challenges, and compliance issues. By digitising and recording all transactions in a secure, transparent ledger, blockchain can simplify customs processes, reduce paperwork, and ensure compliance with local regulations.
Whilst we have outlined the huge benefits of blockchain, there are some challenges to adoption as with any major industry changes.
Current blockchain networks may struggle to handle large volumes of transactions and integrating blockchain with existing legacy systems and technologies can be complex.
Initial setup and ongoing maintenance costs can be high, especially for small-to-medium enterprises and there is currently a lack of universal standards across industries, making interoperability problematic.
In summary, blockchain holds immense potential to revolutionise supply chain management by increasing transparency, reducing fraud, improving efficiency, and building trust. However, widespread adoption will depend on overcoming technological and integration challenges.
