Benefits of Blockchain in Supply Chain Management

What is Supply Chain Management?

Supply Chain Management (SCM) is a method of organizing the flow of goods, resources, services, and information during the process of transforming raw elements into a finalized product delivered at the consumer edge.

The supply chain process covers multiple core elements, like Plan, Information, Source, Record, Production, Location, Transportation, and Return of Goods, and these elements are consolidated to build the base of any organization. It feeds the present and future of any business, and thus, carries energy in the business world.

Hence, there are increasing security threats and varying user demands, the usual supply chains are battling various challenges in delivering a highly-efficient and trustable ecosystem to all.

Challenges In Supply Chain Management?

Lack of universal database

Even though in the digitalized world, organizations are maintaining their records in their database and available only to them. Each of them is separately handling their records and sharing only on request. It results in gaps between the parties in the same sectors.

Inadequate assets traceability

Another drawback is the incompetence to trace the assets in the supply chain management. The product manufactured is handled, but whereas in the case of moving out for the delivery process is quite difficult. The people involved in the distribution process may alter the original product with the dummy.

Undue costs

The resource involved in handling their database would be high, and this can be avoided by the method of maintaining a database in an organized manner that can be utilized by all the teams involved in the organization.

Blockchain Overview

A blockchain is a time-stamped list of an immutable record of data that is controlled by a set of computers and not controlled by any central entity. Each of these blocks of data is secured and connected using cryptographic functions.

The three properties of blockchain technology that is going to help disrupt the supply chain management system are:


The idea of decentralization is the core feature of blockchain. The data that is stored on the blockchain is not owned by a single entity but shared by everyone who is part of that blockchain’s network. These help the supply chain management to upload data on the Blockchain database that is not owned by any central controlling entity, the data is accessible by the authorized entity on the blockchain network.


Immutability means non-tamperable. Any data that you stored on the blockchain cannot tamper. The data uploaded on the blockchain database are impossible to alter the data, as they are encrypted with the cryptographic hash function, and interlinked with each other. Incase if hackers try to hack the data on a block that will result in the modification of linked blocks, and it is difficult to hack. The data like product code and cost are stored on the blockchain, No one can alter the data stored on it without proper authentication.


Transparency is a property that enables people to take part in the transactions and can view only the public address, and that will not give any personal details of that particular person. All operations held on the blockchain recorded on the shared distributed ledger that can be viewed by the parties involved in the transactions on the blockchain network.

Benefits of Blockchain in Supply chain Management

Automating the purchase process

Blockchain helps in automating the purchase process with the help of smart contracts. Smart contracts execute their terms– service payment, shipment authorization, etc.

Improving transaction flow

Blockchain is efficient in handling transaction within a few minutes, that were 3 to 6 days in usual transactions. Blockchain is exclusive in handling various transactions with smart contracts. This also enhances trust and transparency.

Securing the supply chain

The privacy of their organization data is preserved on the blockchain with help of authorized entity accessing blocks that are available only for authorized persons.

Assuring integral traceability

Blockchains assure the traceability of flows and goods by registering all transactions executed by users. These records are immutable and establish tamper-proof confirmation that confirms the integrity of information.

Data Integrity is achieved

The verified and validated data are stored on the blockchain that is accessible to all the parties involved in the transactions avoiding redundancy of the data.

Cost Reduction

Supply chain management is a tedious process it involves a lot of human source and paper records in verifying the quality and quantity of the goods delivered at the customer edge. The Blockchain helps in real-time tracking, it eliminates the middleman or human involvement in the tracking process. This diminishes the risks of frauds and dummy products and intensifies accurate record-keeping and savings.

Enhancing Trust

Supply chain management is an aggregate of multiple participants from various departments among the organizations, building trust among them is very crucial for successful business operations. Also, the governing authorities, stakeholders rely on the information and records. Blockchain automates the business process with the help of smart contracts, avoiding the middleman reducing the fraudulent.

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