Jacques Haddleton & Ian Kirby

29 May 2024
Topics in this article
  • Supply Chain & Logistics
  • Technology

Why is Blockchain important in supply chains?

Before GenAI dominated technology headlines, there was Blockchain. Each new buzzword indicates that the one before has moved past its hype cycle into real-world application. So, what do we understand about Blockchain today?

Perhaps most associated with cryptocurrencies such as Bitcoin, Blockchain has much broader applicability – and presents significant potential within supply chains. With an increasing need for transparency in supply chains – enforced by challenges surrounding the pandemic, the sustainability agenda, and risk management – business leaders are deploying blockchain technology for its capability in this area. According to Fortune, the Blockchain market is set to be valued at $470bn by 2030.

Organizations need to make informed decisions quickly to tackle the challenges of today’s business landscape. For that, they need data and insight in real-time—and for that, they need transparency in the supply chain. A clear view of your supply network enables you to take the required action to reduce risks, including supply disruption and regulatory non-compliance. Additionally, consumers demand more clarity on the source of their goods than ever before, with approximately 88% of participants in a recent survey expressing ethical sourcing practices as a priority in their purchasing decisions.

The challenge is that supply chains are often complex and widespread, and suppliers’ visibility (particularly beyond Tier 1) is opaque. This means organizations often lack a thorough understanding of their supply chain, creating vulnerability to security, cyber, compliance, and other risks. Moreover, where manual processes still dominate supply chains, such as purchase orders, shipping notifications, and fund transfers, there is significant inefficiency and an increased risk of human error.

To address these challenges and to build resilience into their supply chains, organizations must identify and implement the right solution that enables them to adapt and flex as required. Blockchain has a big role to play in that solution.

How and why?

Blockchain utilizes distributed ledger technology (which allows simultaneous access to, validation of, and record updating across a networked database) to ensure all stakeholders throughout a supply chain can see up-to-date product information. This information could include the source/origin, quality protocols, and delivery times, and ensures all stakeholders, including customers, have a single source of truth across the product life cycle, providing transparency. The information is indisputable and, therefore, ensures trust in the data.

Blockchain uses smart contracts to automate processes and ensure a consistent approach. Smart contracts are computer programs that execute upon predetermined conditions. For example, funds can be released upon the delivery of goods at a pre-agreed location to a pre-agreed standard. Businesses can use this to save time and reduce the chance of duplications and errors.

Data uploaded to a Blockchain is immutable, ensuring that once information is stored, it cannot be tampered with. This gives participants confidence that the data is consistent for all parties and cannot be changed. This feature can be leveraged as digital “passports,” which allow organizations to plug suppliers into their network, confident that the supplier data they review is accurate. This reduces risk by rapidly reacting to organizational needs as suppliers are added or removed from the wider supply network.

However, the complexity is that capturing accurate end-to-end visibility relies on all supply network members uploading their data. This is one of the key challenges for providers in developing countries, where doing so might be a step too soon in their governance and technology reporting capabilities. Conversely, organizations with strong supplier engagement initiatives can use this as an opportunity to improve and support the lower tiers of their supply chain.

where is blockchain being used?

In Retail, a leading organization has partnered with a large technology provider on a food safety Blockchain. Following several e-coli breakouts in the crop market, they retrofitted each step in their product supply chain with blockchain technology, reducing the identification period of contaminated products from 7 days to 2.2 seconds.

Elsewhere in the sector, a hardware retailer uses smart contracts to quickly resolve shipping disputes with vendors while keeping labor costs low. Smart contracts can trigger payments immediately on receiving goods—an activity that often takes days in traditional supply chains. They can also flag events that require manual intervention, such as the incorrect shipping of temperature-sensitive products.

In addition, global conglomerates in Pharma and Technology are leveraging the ‘Know Your Supplier Network,’ which facilitates cost-effective and automated supplier onboarding. Using digital passport technology to validate suppliers securely, this network offers time and cost benefits to both buyers and suppliers.


Blockchain technology is still in its infancy. Issues around cost, cross-integration, and skill shortages will be serious hurdles to widespread adoption. However, top organizations can already see its potential to revolutionize supply chain and procurement functions. Early adopters could see substantial value-add across their supply chain networks.

Related Posts

Let’s talk.

If you are looking to drive purposeful and profitable change, get in touch.

Contact us