Blockchain in supply chain means using a shared, append-only ledger so that suppliers, carriers, banks and retailers record goods and payments in one tamper-evident history, instead of each keeping its own records and reconciling them. The data structure comes from Bitcoin’s design (Nakamoto, 2008); supply-chain pilots followed in the late 2010s, led by Walmart in food traceability and Maersk and IBM in shipping. The results are mixed: the technology works, but it only pays off when enough of the industry joins.
A farm, factory, carrier or warehouse writes an event (harvested, packed, shipped, received) with a time stamp and an identifier for the batch.
02
Chain the records
Each block of records is linked to the one before it, so changing an old entry would break the chain and be visible to every copy holder.
03
Share one history
Permitted partners read the same ledger, which cuts the cost of checking each other's records. Economists Catalini and Gans call this a lower <em>cost of verification</em>.
04
Automate the rules
Smart contracts can release a payment or raise an alert when a recorded event, such as a delivery sign-off, meets agreed conditions.
In September 2018, after an E. coli outbreak in romaine lettuce, Walmart asked its leafy-greens suppliers to trace products back to the farm using blockchain, working with IBM. Its food-safety team said a paper-based trace could take seven days, while blockchain tracking took a couple of seconds (Walmart, 2018).
The TradeLens shutdown
Maersk and IBM announced the blockchain shipping platform TradeLens in 2018 and said in November 2022 that they would discontinue it, because the full industry collaboration it needed had not been achieved (Maersk, 2022). It is the clearest lesson in the field: a shared ledger is a coordination problem before it is a technology problem.
What research says holds it back
A widely cited review (Saberi et al., 2019, International Journal of Production Research) groups the barriers into four kinds: inter-organisational, intra-organisational, technical and external, and describes true blockchain-led transformation of supply chains as still in its early stages.
Ledgers and AI on shared data
AI planning and forecasting tools are only as good as the supply data they read. A shared ledger can show where a record came from and whether it changed, which helps when several firms feed one model; it cannot check that a sensor or a person entered the right fact in the first place.
Blockchain vs other ways to share supply data
Paper and email
Who controls the dataEach firm, separately
Works best whenFew partners and low traceability needs
Works best whenA dominant buyer can make suppliers join, as Walmart did
Industry blockchain
Who controls the dataShared among members under agreed rules
Works best whenRivals need a common record but no one is trusted to run it
Public blockchain
Who controls the dataNo single party; anyone can verify
Works best whenOpen verification matters more than privacy and speed
How to use it
Start with the trust problem: name which partners dispute or re-check each other's records today, and what that costs.
Ask whether one strong party could simply run a shared database; if so, a blockchain may add cost without adding trust.
Secure the partners before the build: TradeLens shows that a working platform fails without industry participation.
Fix the data at the point of entry with scanners, sensors and audits, because the ledger will faithfully store wrong facts.
Pick one narrow, high-stakes flow, such as recalls of a fresh-food category, and measure tracing time before and after.
The Business Engineer lens
A supply chain is a network of parties who do not fully trust each other, and blockchain is one way to lower the cost of checking. The Business Engineer view is that the winners are decided by who controls the network and its data standards, not by the ledger itself.
It is a shared, tamper-evident ledger in which supply-chain partners record the handovers of goods and payments, so they can trace products without reconciling separate records.
What are the main use cases?
Traceability and recalls (for example in food), provenance checks, shipping documentation and payments triggered automatically by smart contracts when delivery is recorded.
Why did TradeLens fail?
Maersk and IBM said the full global industry collaboration the platform needed was not achieved, so it did not reach commercial viability as an independent business.
The complete explainer, cleaned up and reformatted for mobile.
The management of today’s supply chains across all industries is incredibly challenging. In order for supply chain operations to remain successful, end-to-end communication is absolutely essential. Whichever form this end-to-end communication takes, it requires no global restraints while remaining robust and transparent. In this context, the role of blockchain in Supply Chain Management is growing in popularity due to the complexity and lack of transparency in today’s supply chains.
In business, vertical integration means a whole supply chain of the company is controlled and owned by the organization. Thus, making it possible to control each step through customers. in the digital world, vertical integration happens when a company can control the primary access points to acquire data from consumers.
The use of blockchain in the supply chain can improve transparency and traceability while also lowering administrative expenses.
This research will look into how blockchain is or will be improving Supply Chain Management.
Why Companies are Incorporating Blockchain in their Supply Chain
A distributed digital ledger gets referred to as a blockchain. Transactions get recorded in the ledger as a series of blocks that are linked together in a chain. The ledger gets distributed across numerous computers (for the cost side of computing today, see the economics of AI compute infrastructure), updated as the blockchain changes.
Due to the system that enables blockchains to work, data within a block cannot get changed, and tampering with blocks is nearly impossible. Every transaction has a single source, enabling a comprehensive transaction flow verification and audibility in the supply chain management. This feature means that, in the case of blockchain in the supply chain, businesses may develop trust that transactions are correct and secure — even when there is little to no trust between the participants.
For example, suppose a company works with suppliers and logistic carriers worldwide. In that case, it will track all parts and ensure that they are authentic without relying on third parties and intermediaries. Ultimately, blockchain technology enables firms to function in a “zero trust” environment in supply chain management.
Blockchain Use Cases for the Supply Chain Industry
Bitcoin is the most well-known Blockchain implementation. However, Blockchain’s distributed ledger properties enable it to help execute and monitor any transaction, not only cryptocurrencies. For one, the deployment of Blockchain in the supply chain gets driven by reliability and integrity.
When it comes to large-scale supply chain transactions, regardless of how strong of a businessrelationship two parties have, the added security of blockchain technology is beneficial. Since hundreds or thousands of partners must do business as efficiently as possible, supply chain management can use and benefit from blockchain technology.
Distributed Ledger Technology solutions that use blockchain in the supply chain enable worldwide trading partners to interact securely and with consensus over shared facts, increasing efficiency, transparency, and visibility. Immutability into the provenance of commodities, the elimination of reconciliation burden across numerous parties, real-time visibility to do track and trace analysis, identify risks, and expedite physical and financial supply chains are examples of blockchain use cases for supply chains.
Although supply chain blockchain implementations are still scarce, a growing number of many more supply chain management use cases for blockchain are being explored, including:
Supply Chain Logistics
With so many go-betweens and so much back and forth between partners, friction is a key issue in modern supply chains. As a result, suppliers, providers, and customers interact through third-party businesses rather than dealing directly with each other. In supply chain logistics, blockchain promises that transactions may be verified, documented, and coordinated autonomously without the involvement of third parties. This removes an entire layer of complexity from global supply chains.
Supply Chain Finance
Blockchain and supply chain finance solutions are growing in popularity. These solutions offer overall process efficiency improvements as well as enhance the transparency and security of all transactions. Companies may use smart contracts to trigger immediate payments when the product is delivered and signed for by merging supply chain financing and blockchain technology.
Supplier Payments
As blockchain technology currently stands, some solutions already offer fast, secure, and low-cost money transfers. They utilized encrypted distributed ledgers to track the transfer of funds using cryptocurrencies. With this distributed ledger, anyone can view the transfer of funds between two people. All they need is the wallet address of each party to verify the successful transfer of funds.
The coffee business is one example of a supply chain blockchain for supplier payment. Bext360 is employing blockchain technology to improve supply-chain productivity by better tracking all aspects of the global coffee trade, from farmer to consumer.
Food Safety
Cross-contamination and isolation are difficult to track and isolate in many food safety situations. Lack of data and insight into the supply chain results in sluggish response times when an issue develops. Plus, it results in excessive waste and recalls’ financial and reputational costs. Thus, a consortium is employing blockchain in supply chain tracking to ensure that all product movement and status are transparent across the supply chain.
Traceability of Cold Chain
Food and pharmaceutical products have a lot in common regarding storage and shipping. Temperature, humidity, vibration, and other environmental variables can get recorded using blockchain and IoT sensors on products. The data gets recorded in a blockchain, and smart contracts can automatically flag any reading that moves out of range.
Walmart’s creative use of blockchain to trace the source and quality of its pork products arriving from China is one early example of blockchain in the food supply chain. In September 2018, Walmart asked its suppliers of fresh leafy greens to trace their products back to the farm using blockchain technology.
Conclusion
A company’s ability to successfully implement blockchain in the supply chain is contingent on their solution’s ability to provide the performance and scalability they require. Moreover, supply chain development should look into methods to incorporate blockchain into operations where it makes the most sense now that the technology is constantly maturing. Blockchain technologies that can embed trust and efficiency into a wide range of transactions are needed to transform the supply chain business.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
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