Blockchain in Supply Chain: The Use Cases of Blockchain in the Supply Chain

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, 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 business relationship 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. Invoice payment terms, for example, are typically 30 days but can be much longer. 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. This implementation o blockchain in the supply chain ensures direct payment to farmers as soon as their products get sold, thanks to the use of cryptocurrencies.

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.

Companies like Nestle, Walmart, and Unilever are utilizing blockchain to identify and eliminate the source of foodborne illness in 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 ensure that any readings that move out of range are automatically corrected.

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. Walmart now requires all of its spinach and lettuce suppliers to use blockchain due to the technology’s success in the supply chain.


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.

Learn More From The Book Blockchain Business Models


Read Next: EthereumBlockchain Business Models Framework Decentralized FinanceBlockchain EconomicsBitcoin.

Read Also: Proof-of-stakeProof-of-workBlockchainERC-20DAONFT.

Related Blockchain Business Frameworks


Web3 describes a version of the internet where data will be interconnected in a decentralized way. Web3 is an umbrella that comprises various fields like semantic web, AR/VR, AI at scale, blockchain technologies, and decentralization. The core idea of Web3 moves along the lines of enabling decentralized ownership on the web.

Blockchain Protocol

A blockchain protocol is a set of underlying rules that define how a blockchain will work. Based on the underlying rules of the protocol it’s possible to build a business ecosystem. Usually, protocol’s rules comprise everything from how tokens can be issued, how value is created, and how interactions happen on top of the protocol.

Hard Fork

In software engineering, a fork consists of a “split” of a project, as developers take the source code to start independently developing on it. Software protocols (the set of rules underlying the software) usually fork as a group decision-making process. All developers have to agree on the new course and direction of the software protocol. A fork can be “soft” when an alteration to the software protocol keeps it backward compatible or “hard” where a divergence of the new chain is permanent. Forks are critical to the development and evolution of Blockchain protocols.

Merkle Tree

A Merkle tree is a data structure encoding blockchain data more efficiently and securely. The Merkle tree is one of the foundational components of a Blockchain protocol.


The nothing-at-stake problem argues that validators on a blockchain with a financial incentive to mine on each fork are disruptive to consensus. Potentially, this makes the system more vulnerable to attack. This is a key problem that makes possible underlying blockchain protocols, based on core mechanisms like a proof-of-stake consensus, a key consensus system, that together the proof-of-work make up key protocols like Bitcoin and Ethereum.

51% Attack

A 51% Attack is an attack on the blockchain network by an entity or organization. The primary goal of such an attack is the exclusion or modification of blockchain transactions. A 51% attack is carried out by a miner or group of miners endeavoring to control more than half of a network’s mining power, hash rate, or computing power. For this reason, it is sometimes called a majority attack. This can corrupt a blockchain protocol that malicious attackers would take over.

Proof of Work

A Proof of Work is a form of consensus algorithm used to achieve agreement across a distributed network. In a Proof of Work, miners compete to complete transactions on the network, by commuting hard mathematical problems (i.e. hashes functions) and as a result they get rewarded in coins.

Application Binary Interface

An Application Binary Interface (ABI) is the interface between two binary program modules that work together. An ABI is a contract between pieces of binary code defining the mechanisms by which functions are invoked and how parameters are passed between the caller and callee. ABIs have become critical in the development of applications leveraging smart contracts, on Blockchain protocols like Ethereum.

Proof of Stake

A Proof of Stake (PoS) is a form of consensus algorithm used to achieve agreement across a distributed network. As such it is, together with Proof of Work, among the key consensus algorithms for Blockchain protocols (like the Ethereum’s Casper protocol). Proof of Stake has the advantage of security, reduced risk of centralization, and energy efficiency.

Proof of Work vs. Proof of Stake


Proof of Activity

Proof-of-Activity (PoA) is a blockchain consensus algorithm that facilitates genuine transactions and consensus amongst miners. That is a consensus algorithm combining proof-of-work and proof-of-stake. This consensus algorithm is designed to prevent attacks on the underlying Blockchain.

Blockchain Economics

According to Joel Monegro, a former analyst at USV (a venture capital firm) the blockchain implies value creation in its protocols. Where the web has allowed the value to be captured at the applications layer (take Facebook, Twitter, Google, and many others). In a Blockchain Economy, this value might be captured by the protocols at the base of the blockchain (for instance Bitcoin and Ethereum).

Blockchain Business Model Framework

A Blockchain Business Model is made of four main components: Value Model (Core Philosophy, Core Value and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.


Blockchain companies use sharding to partition databases and increase scalability, allowing them to process more transactions per second. Sharding is a key mechanism underneath the Ethereum Blockchain and one of its critical components. Indeed, sharding enables Blockchain protocols to overcome the Scalability Trilemma (as a Blockchain grows, it stays scalable, secure, and decentralized).


A decentralized autonomous organization (DAO) operates autonomously on blockchain protocol under rules governed by smart contracts. DAO is among the most important innovations that Blockchain has brought to the business world, which can create “super entities” or large entities that do not have a central authority but are instead managed in a decentralized manner.

Smart Contracts

Smart contracts are protocols designed to facilitate, verify, or enforce digital contracts without the need for a credible third party. These contracts work on an “if/when-then” principle and have some similarities to modern escrow services but without a third party involved in guaranteeing the transaction. Instead, it uses blockchain technology to verify the information and increase trust between the transaction participants.

Non-Fungible Tokens

Non-fungible tokens (NFTs) are cryptographic tokens that represent something unique. Non-fungible assets are those that are not mutually interchangeable. Non-fungible tokens contain identifying information that makes them unique. Unlike Bitcoin – which has a supply of 21 million identical coins – they cannot be exchanged like for like.

Decentralized Finance

Decentralized finance (DeFi) refers to an ecosystem of financial products that do not rely on traditional financial intermediaries such as banks and exchanges. Central to the success of decentralized finance is smart contracts, which are deployed on Ethereum (contracts that two parties can deploy without an intermediary). DeFi also gave rise to dApps (decentralized apps), giving developers the ability to build applications on top of the Ethereum blockchain.

History of Bitcoin

The history of Bitcoin starts before the 2008 White Paper by Satoshi Nakamoto. In 1989 first and 1991, David Chaum created DigiCash, and various cryptographers tried to solve the “double spending” problem. By 1998 Nick Szabo began working on a decentralized digital currency called “bit gold.” By 2008 the Bitcoin White Paper got published. And from there, by 2014, the Blockchain 2.0 (beyond the money use case) sprouted out.


An altcoin is a general term describing any cryptocurrency other than Bitcoin. Indeed, as Bitcoin started to evolve since its inception, back in 2009, many other cryptocurrencies sprouted due to philosophical differences with the Bitcoin protocol but also to cover wider use cases that the Bitcoin protocol could enable.


Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.

Ethereum Flywheel

An imaginary flywheel of the development of a crypto ecosystem, and more, in particular, the Ethereum ecosystem. As developers join in and the community strengthens, more use cases are built, which attract more and more users. As users grow exponentially, businesses become interested in the underlying ecosystem, thus investing more in it. These resources are invested back in the protocol to make it more scalable, thus reducing gas fees for developers and users, facilitating the adoption of the whole business platform.


Solana is a blockchain network with a focus on high performance and rapid transactions. To boost speed, it employs a one-of-a-kind approach to transaction sequencing. Users can use SOL, the network’s native cryptocurrency, to cover transaction costs and engage with smart contracts.


In essence, Polkadot is a cryptocurrency project created as an effort to transform and power a decentralized internet, Web 3.0, in the future. Polkadot is a decentralized platform, which makes it interoperable with other blockchains.


Launched in October 2020, Filecoin protocol is based on a “useful work” consensus, where the miners are rewarded as they perform useful work for the network (provide storage and retrieve data). Filecoin (⨎) is an open-source, public cryptocurrency and digital payment system. Built on the InterPlanetary File System.


BAT or Basic Attention Token is a utility token aiming to provide privacy-based web tools for advertisers and users to monetize attention on the web in a decentralized way via Blockchain-based technologies. Therefore, the BAT ecosystem moves around a browser (Brave), a privacy-based search engine (Brave Search), and a utility token (BAT). Users can opt-in to advertising, thus making money based on their attention to ads as they browse the web.

Decentralized Exchange

Uniswap is a renowned decentralized crypto exchange created in 2018 and based on the Ethereum blockchain, to provide liquidity to the system. As a cryptocurrency exchange technology that operates on a decentralized basis. The Uniswap protocol inherited its namesake from the business that created it — Uniswap. Through smart contracts, the Uniswap protocol automates transactions between cryptocurrency tokens on the Ethereum blockchain.

Read Next: Proof-of-stakeProof-of-workBitcoinEthereumBlockchain.

Main Free Guides:

About The Author

Scroll to Top