Modernizing the Supply Chain Management through the Blockchain Technology

The introduction of Bitcoin not only brought the cryptocurrency rather it also brought a new technology, which has the potential to disrupt the business process from banking to supply chain industries. The disruptive technology is nothing else; it is a blockchain technology. The implementation of emerging technologies in the business process is a challenging task. Conversely, the benefits of new technologies are immense that creates value for the customers as well as for the organizations. Moreover, the goal of new technology is to minimize the noise and enhance the signal in the existing process or system.

What is blockchain?

Blockchain is a distributed database system in which data can share, encrypt and decrypt across the multiple channels that makes the warehouse of information or transactions indestructible and irreversible. Once data is entered in the system, it can’t modify, that means data is immune to further modifications and exploitation. These features of blockchain make it favorable for the supply chain management.  

Why implement blockchain in the supply chain?

The entire supply chain from the manufacturer to the supplier is dynamic in nature. The dynamic nature of the supply chain makes it vulnerable to error, which costs time and money to rectify it. The transparency of the entire supply chain is an important factor to prevent the error in the supply chain process. The blockchain technology can enhance the transparency and traceability of the entire supply chain. Furthermore, monitoring the supply chain through the blockchain helps the organization to prevent the illegitimate activities, which arises from the unfair practices such as the use of child labor, environmental issues and, mishandling of raw materials in the supply chain process.

What are the advantages of blockchain technology in supply chain management?

The utmost advantages of the blockchain are its transparency, traceability, and verifiability. The distributed ledger system of the blockchain makes it visible and verifiable across the entire supply chain. The transparency of the supply chain is manifested by the decentralization of the process. The blockchain provides a more efficient workflow for the supply chain. For example, it enhances the tracking, linking, sharing and recording of the products in the supply chain. Every time the product moves to the next stage in the supply chain, there is a transaction cost associated with each step. Blockchain reduces the transaction cost, time, and error of the supply chain.  It enhances the scalability of the supply chain through digital contacts and payments. It facilitates the supply chain process in a fast and effective way as the Internet has done for the communication.    

How to implement blockchain in the supply chain?

Implementation of blockchain in the supply chain process can be similar to mining of the Bitcoin. When a transaction event between two parties occurs in the supply chain, it would be mine by a miner. As a result, the transaction event will be permanently documented as a verified block in the blockchain network. The miner will be rewarded with the Bitcoin for mining the transaction of the supply chain and creating an irreversible block in the supply chain network.

Most of the firms use an enterprise resource system (ERP) for their supply chain and operation management. Firms can add blockchain to their existing ERP as an extra layer, which will provide transparency, traceability, and visibility of the products in the supply chain at a real time. There are several firms, who have started the blockchain as a service (BaaS). For example, IBM and Microsoft Azure provide the blockchain service to integrate into the current business process.

What are the complications of blockchain in the supply chain management and what are their solutions?

As the blockchain technology is new and complicated, most of the firms are reluctant to adopt the technology in their business process. The use of blockchain in the supply chain management may arise a regulatory and legal issue because the technology is new and virtually accessible beyond the geographical boundaries and territories. Furthermore, the different geographical region has different laws and regulations, which need careful evaluation before implementing the blockchain in the existing business process such as in the ERP system.

Cost of implementing the new technologies may be higher than its benefits. Therefore, careful evaluation of cost and benefit is an important factor for implementing the blockchain. Transparency of the blockchain might be an issue for the competing firm. Transparency issue can be rectified with the customization of the blockchain system, in which, the blockchain service provider could give access to the open ledger system to the close group in the supply chain. Notwithstanding, the cost and complications of blockchain technology the future of blockchain is bright for modernizing the supply chain management.

Note: This is a guest post, and opinion in this article is of the guest writer. If you have any issues with any of the articles posted at please contact at

Pranav has a Ph.D. in Life Sciences and an MBA in international business. Pranav is a research professional and consultant on medical writing and business development for life sciences companies. He has broad scientific and technical knowledge in life sciences, from basic to applied research. He is a certified Project Management Professional (PMP®) from the Project Management Institute (PMI). He also has a good knowledge of clinical research and pharmaceutical regulations.

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