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Blockchain Technology Use Cases in Supply Chain Management

22 Apr 2021 updated
11 min

Table of content

Blockchain is an innovative technology that allows you to manage digital supply chains. These processes are very troublesome. Think how much you have to bother with documents, information, communications if you deal with it yourself. In cases where you need to manage a large number of deliveries, blockchain development service saves. It improves the right area of business and unravels the problems that have arisen.

supply chain management

How blockchain technology works

People can share valuable data safely and securely. This is the essence of using a blockchain technology. The history of any digital asset becomes transparent and unchanging. Everybody now is responsible for the use of cryptographic hashing and decentralization.

Remember Google Docs. You can create a document, share it with a group of people, without copying or transmitting it. The distribution chain is created in a decentralized way. No one is blocked while waiting for changes from the other side. The owner can provide editable access. Changes are transparent, in real-time. The system of blockchain operation is more complicated than Google Docs. From this description we highlight the three most important characteristics of the technology:

  1. Distribution of digital assets, not copying and transfer.
  2. Real-time access.
  3. Transparent history with the preservation of all changes.

Blockchain is a revolutionary technology as it reduces the risk of fraud, and provides reliable work for many areas of business. It is used in medicine for the reliable exchange of medical documents of patients between employees, in business to track intellectual property, in music to protect the rights of artists, in finance to track fraud, and more. We are most interested in supplying.

Supply chains around the world are responsible for many areas, from packaged goods to product recalls. There are cases when the goods or raw materials need to be recalled. Blockchain technology improves product tracking by reducing counterfeits. Recalls are becoming expensive, and it is possible to find easily damaged products thanks to this system.

how blockchain technology works

Blockchain benefits and risks for the supply chain

Business logic + smart contracts = success of blockchain technology. The main advantages of the blockchain:

  • transparency of receipt of consumer goods;
  • high quality licensing of services, software, products;
  • accurate asset tracking;

87% of seafood is incorrectly labeled according to a nationwide study by the international ocean advocacy organization Oceana. These are data from 2010 to 2012 in the United States. Besides, mica in cosmetics, car paints, and electronics is obtained illegally. Even elite brands are prone to fraud. This was discovered thanks to blockchain technology. The introduction of the system at the state level ensures the transparency of the movement of goods.

  • reduction of costs for supply chain infrastructure;
  • accountability of all processes.

Counterfeits are unprofitable – in 2017, the United States suffered losses of $323 billion in lost revenue. What if the person checks the products, the process of their delivery using blockchain technology? Blockchain records verify certificates, diplomas, official legal documents.

Improved traceability

This effect encourages the introduction of hybrid, private and public blockchains. The technology is applied to logistics to make business processes more efficient and reduce costs accordingly.

High quality procurement

Blockchain has the potential to save on purchases and costs. This improves the consumer experience. Accordingly, all other features are connected here. Supply chains contain information about manufacturers, suppliers, distributors, retailers, consumers. At the very first stage of procurement, comfortable conditions for the transportation of goods are provided, and all participants in the chain see all the activities of the participants.

Enforcing tariffs and trade policies

The Chinese aluminum producer China Zhongwang has been accused of tax evasion of $ 1.5 billion. $200 billion in American trade secrets are stolen each year by Chinese organizations. This confirms the disregard for international regulation. The US Department of Justice has filed two charges. Thanks to the blockchain, a tariff of $50 billion has been introduced for Chinese-made goods. The supply sector requires a strong system of fiduciary oversight. People working with this case are convinced that tariff regulation in international trade is now less common.


The “only source of truth” is the blockchain. All business entities can be involved in the process. The database in the blockchain system stores all information from partners, which allows you to see the total volume of purchases at 360 degrees. The audit is performed automatically, without difficult processes, such as price verification. All the processes take place regardless of who managed the procurement.

For example, you want to sign a procurement contract with future partners. Ecosystem is a figure with data on purchases from you and your partners. If you store this data in a blockchain system, you can calculate the exact discount based on the total number of purchases. The correctness of calculations is also automatically proved.



Blockchain can log all transactions on an ongoing basis. This brings great benefits to all areas. In England, international consumers were willing to pay 22% more for British goods. Instead, the ability to show that a previously possessed product was owned by a celebrity increased the value of the item by 15%. So, people want to trust the quality of the product. Buyers are afraid of counterfeits and they want to know the origin of what they are buying.

The history of ownership of the object and its transfer confirms the authenticity of the goods. This means that it makes it more attractive to the buyer. There are different types of documentation of origin, such as a receipt, preliminary assessment, inventory number, and others.

Cross-border payments

The main and first option for using any banking system. Blockchain financing is used in terms of the potential issuance of own digital currencies and payment processing. The trend concerns cross-border payments that were previously made through Swift or Western Union. Payments are cheaper in a bank blockchain than in traditional schemes. For example, 2-3% instead of 5-20%. In 2016, one of Australia’s largest banks Westpac began working together with Ripple to introduce low-cost cross-border blockchain payments.

Syndicated lending

Providing loans to individuals, often syndicates (banks). Due to the involvement of several participants, the traditional processing takes up to 19 days on average. Banks are responsible for verifying the identity of the client, use the law on banking secrecy, and the fight against money laundering. Supply blockchain overwhelms this process and makes it more transparent.

This is a reliable scheme and therefore this item is an advantage. If one of the banks using the blockchain in the syndicate completes the compliance procedures, no other bank can do so again.

Digital identity verification

Identification is important in blockchain technology. However, the system needs to be adjusted for this check. For example, face-to-face verification (via video call), login authentication, authorization (proof of customer intentions). Blockchain allows you to use additional authentication for other services.

Credit reports

Blockchain is the future of many business areas. The question arises: will this technology replace banks? In any case, it becomes a motivation to learn new things about these systems.

Blockchain technology helps individuals and small businesses get loans based on credit history. Traditional reports that are large companies are often inaccessible to small business owners. Blockchain provides tools for accurate, transparent, secure reports of all shared shipments.

For example, the owner places the transaction history in the blockchain, while protecting it with a private key. Besides, the encrypted transaction is stored outside the technology. The buyer provides credit history criteria. The mechanism filters all data and then returns the results. Eventually, the cost and complexity of data verification are reduced. Ownership is returned immediately to individuals.

Everyone should know about the risks of using blockchain technology. Blockchain will optimize all the information but it will not solve the issue of data quality. However, it will solve the problem of its storage.

The most common risks are:

1. Poor evaluation of cryptocurrencies

A reasonable price for cryptocurrency changes the mood of the market under the condition of using blockchain technology. Bitcoin can make high jumps, and this often becomes impossible for investors. Prices can fall sharply, so the risk is obvious.

2. Protocol integration

The level of integration must be present to manage two or more different corporate systems. To learn about the corporate system, you need to constantly check the corporate blockchain. It becomes difficult to include protocols with the development of information technology, but this feature should not be ignored.

3. No standardization

This is due to the wide variety of frameworks. Current blockchain projects, namely ICOs, suffer from this. This is becoming a huge adventure for investors.

4. Undeveloped standards

It is easier for all companies in the world to take and apply a specific technology that will fit everywhere. However, the blockchain does not have enough standards for this application. The competition is fierce and experts carefully choose those to whom standardization will be sold. This also leads to privacy risks.


What to do if you are ready to switch to blockchain?

Supply chain managers first begin to consider all possible applications of the blockchain. People are set up for business, even if there are risks. In many cases, the blockchain should be covered by existing insurance programs. This strategy is relevant for many technology platforms and systems: 

  • identify any risks and create a plan to avoid and address them;
  • take care of constant updates after installing blockchain technology in your supply system; 
  • master the art of managing business results;
  • focus on gaining knowledge, building direct connections between sales partners, suppliers, customers;
  • streamline the entire supply chain in advance;
  • be T-shaped;

Many employers are looking for just such employees. A practicing member of the blockchain chain must have extensive interdisciplinary skills. The vertical bar on the letter “T” means skills, and the horizontal – design thinking. Business and technological experience is not enough. They must be more knowledgeable about the stages of the end-to-end life cycle, design, development, testing, operation, maintenance. These skills must also be successfully applied to business development.

  • get acquainted with the platform; 

Each of them offers something unique, but choose what is best to understand. 

  • identify the differences between all the proposals and study the one you want to choose;

Now you can learn to manage blockchain architecture templates. 

Partnerships with scientific institutions related to the blockchain will help to uphold the principles of a progressive system.


The effectiveness of blockchain development generates many experiments for its development. In 2015, Nasdaq and OMX Group Inc. tested stock trading on the private market Nasdaq. Many banks have been working on the evidence of their concepts.

Blockchain technology is gaining momentum every day, so you need to follow the updates and keep up with the times. The system benefits from the network effect. Critical mass accumulates in the supply chain, it is easier for outsiders to be added on board, and then get benefits. Companies pay attention to stakeholders in the supply chain and it is useful to indicate the time. If you want to learn more about supply chain innovation, download the full report on future management trends. 

Use a great blockchain and at the same time remember – this is not the solution to all supply problems. At the initial stage, it costs a lot, and then significantly improves workflows. Take care of risks and manage them.

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