What Is Supply Chain Management On Blockchain?

How do you know that the shirt you are wearing, the imported wine you are drinking, and the food you are buying from the mart are fair, safe, and not the counterfeited one?

Well, the answer is you don’t know that. You trust.

You trust because there is no efficient way to find the answers to these questions. Either you use the products by compromising or just opt-out.

But what if you no longer will need to compromise or opt-out of buying and enjoying things that you want? And that with guaranteed fairness and safety!

Surprised, aren’t you?

Well, at least I was when I got to know that all these things are possible in an effective manner through a revolutionary technology called “the Blockchain”. Read more about blockchain here: The Ultimate Guide To Understanding What A “Blockchain.

For the uninitiated, the blockchain technology was introduced to the world by the pioneer cryptocurrency, Bitcoin, the blockchain of which is simply a shared and open ledger that is impossible to tamper with fraudulent transactions.

While it all started with Bitcoin’s blockchain, which is a blockchain of Bitcoin transactions, blockchain’s use and implementation are not just limited to financial transactions. Instead, it can be extended to areas like supply chain management (SCM) also for different goods and products.

And that’s the agenda for today – to discuss how blockchain is finding its use case in supply chain management.

But before that let’s see a simple overview of what supply chain management actually is.

What is Supply Chain Management (SCM)?

In commerce, supply chain management (SCM), the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption.

And within the supply chain management, a supply chain is the connected network of individuals, organizations, resources, activities, and technologies involved in the manufacture and sale of a product or service. A supply chain starts with the delivery of raw material from a supplier to a manufacturer and ends with the delivery of the finished product or service to the end consumer. (Source: Wiki & Investopedia)

Proper Implementation of SCM can:

  • Increase Revenues
  • Decrease Costs
  • Improve Quality
  • Increase Sales
  • Accelerate Production, Distribution, and Sales etc


Supply Chain With Blockchain

Supply chain management on blockchain is the new thing in the market.

Let me begin with an example.

Let us say you want a very rare, costly, and important medicine for cancer treatment from a pharmacist and while checking out the details of the product, you read –“Store the medicine in dry and cold place below 20-degree Celsius, failing which it is not fit to use”.

The pharmacist has taken precaution for it because the person has a setup at the store, but how do you know that during transportation or transit, the distributor had taken complete care?

You simply don’t know and you just have to trust the process and hence compromise to buy it. But what if the medicine has lost its effect due to mishandling?

Well, this is where blockchain can help. Let us say you have microchip sensors (IOT chips) in the package of medicine that records everything about it, right from the departure from the manufacturing unit until you lay your hands on it. And this data is regularly updated on a shared and censorship-resistant blockchain ledger.

This way you can simply use your phone to scan the detail of the medicine to verify if at any point in time it wasn’t kept in the required environment.

With the merger of IOT with a smarter ledger, the i.e. blockchain, one can verify the product and you are no longer required to trust the pharmacist or the process.

This will naturally increase the sales and also provide handy data for the manufacturer to improve the process of transportation and also help in keeping a check on the distributor’s contract by leveraging the data obtained during the transit.

This was a simple example of a supply chain element with blockchain but there are many more complicated as well as simple implementations of the same.

Another example of Blockchain improving supply chain that I personally like is: Everledger

Everledger has created a diamond provenance protocol with the help of blockchain which can be incorporated into the industry as a standard. Let’s give the name to this standard as “Everleder Satisfied”.

Now, once you see a merchant selling diamonds with a tag of “Everleder Satisfied”, you can actually use your phone and scan the diamond to find the entire history of the diamond before it came into your hands. Watch this short video to understand more about it.

Conclusion: Supply Chain Blockchain & Cryptocurrencies

Though we talked mainly about the transparency aspect of the blockchain-based supply chain in this article, in reality, there are many more uses of this tech.

Some more process-problems that you can improve via blockchain based SCM are:

  • Traceability
  • Contract Enforcement & Management
  • Damage & Mishandling Management
  • Oversight On Counterfeiting
  • Supply Chain Auditing

Also, parallelly, the onset of supply chain management blockchain is catching up very fast and the cryptocurrency space has developed quite a few supply chain management blockchains by now for various uses, some of which are:

The blockchain will not solve all the ills of the supply chain, but will definitely have answers to a majority of them. Also, if the innovators are able to combine blockchain with AI, smart contracts, and IOT-like technologies efficiently, all the ills of the supply chain management can be cured.

But despite all the knowledge and facts, the comprehensive blockchain-based SCM package is still not at its full potential and technical developments are underway and it will not be long before they are available.

Stayed tuned to CoinSutra for more blockchain and cryptocurrency related information. We are going to do a fundamental analysis of some of the supply chain cryptocurrencies very soon.

Hope you enjoyed this write-up. If you did, do share it with your friends and family.

Further suggested readings from CoinSutra:

6 thoughts on “What Is Supply Chain Management On Blockchain?”

  1. Б
    Биткоин Копаене

    Technology is good, but indeed we need to find the right way to present it to ordinary people.

  2. E

    Thanks for the nice overview! Did you consider mentioning Devery $EVE. In my opinion a gem in the projects focussing on the supply chain. Very good and hardworking team with focus on the project and refraining from hyping the token. Doing a project for the UN in Tunesia and partnering with JD.com.

  3. S

    Hi Harsh,
    Thanx for narrating the entire story in a very simple way.
    I am Sonali from Surat, a prospective Ph.D. student want to do a research in the topic of supply chain management in pharma industry using blockchain. Could you please suggest, a survey study on this topic is possible or the entire technology implementation is needed for the thesis.
    Please guide me with a good topic for my thesis on the same.

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