A Beginner’s Guide to Blockchain for the

Supply Chain

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Blockchain is a digitized, verifiable, decentralized technology that’s used to capture and verify
transactions between two parties in a provable and permanent way. Due to its decentralized
nature, multiple stakeholders use the blockchain to efficiently record, report on and track verified
interactions.

Blockchain technology works with supply chain management (SCM) to provide an immutable
ledger for keeping and transferring records. This makes it easier to track and manage the
sourcing, manufacture, storage, transfer and distribution of raw ingredients, materials and
products.

When combined with other technologies like artificial intelligence or the Internet of Things, the
blockchain provides significant benefits for SCM. These include transparency and access for
supply chain data, rapid troubleshooting of inefficiencies and waste, real-time tracking and
authentication and faster movement of goods through the supply chain.

How Blockchain Relates to the Supply Chain

Blockchain technology is easily integrated into supply chain management in several areas.

Capture and Verify the Quantity and Handover of Materials and Products

The blockchain is an excellent way to record the quantity, movement, location and transfer of
materials, raw ingredients and finished products. A “smart contract” stored on the supply chain
captures various data about goods that can be verified by all stakeholders, providing transparent
information to all parties.

Track Where Goods Are Located at Any Time

IoT tracking devices are attached to goods, shipments and containers and provide real-time
updates on their location. Geographical and other information can be captured in the blockchain
to provide verified location data at all times for tracking goods. This helps to optimize the
movement of goods and can speed up sourcing, transfer, manufacturing and distribution.

Understand Where Goods Are Sourced From

The complexity of traditional supply chains makes it difficult to understand the history and
origin of raw materials, ingredients and finished products. Organizations in the blockchain can
record the sourcing and transfer of goods so SCM understands the history of specific products
and ensures quality and ethical standards are met.

Make Administration Much Easier

The verification and tracking of goods means SCM understands when and where goods have
been received which helps to optimize administration. This speeds up payments, manufacturing
processes, transfer and further distribution of goods. Additionally, documents like contracts,
shipping notes, barcodes, digital tags and more are recorded on the blockchain for improved
management.

Why Blockchain Matters to the Supply Chain

Blockchain technology delivers several benefits for efficient SCM.

 The blockchain introduces transparency to the supply chain. Open, real-time access to
data means SCM can query, verify, report on and optimize the sourcing, transfer,
manufacture and distribution of goods, wherever they are.
 If goods are lost or delayed, blockchain technology verifies their history and progress.
This makes it easier to understand potential issues and bottlenecks, resulting in greater
efficiencies, reduced waste, fewer delays and easier auditing of products.
 Understanding the progress of goods means SCM can optimize and streamline
manufacturing and distribution. A manufacturer can plan exactly when they will receive
materials and work that into their schedules, resulting in faster turnaround. Logistics
businesses can use blockchain reporting to make distribution faster and easier.

How Blume Global is transforming freight audit and pay with blockchain-enabled Blume
Finance. 

The Challenges of Using Blockchain in the Supply Chain

The main challenge with using blockchain in the supply chain is ensuring stakeholders and
organizations record data consistently and accurately. It’s vital that SCM requires all parties to
use the same integrated blockchain platform.

Additionally, the complexity of blockchain can be a challenge for many stakeholders. Ideally,
blockchain integration should be seamless and transparent, and be deployed through easy-to-use
platforms for maximum adoption.

Use Cases for Blockchain in Retail and Manufacturing

Supply Chains
 Manufacturers use real-time tracking of materials wherever they are in the supply chain
to prepare to receive the materials and manufacture them quickly. This is an excellent
way to optimize “Just in Time” manufacturing.
 Logistics businesses track and verify the distribution and final delivery of goods by
tracking delivery times and customer signatures for verification.
 SCM capture contract agreements on the supply chain and arrange for digital signing so
everyone is working to commonly agreed guidelines.
 Payment and escrow providers understand exactly when goods have arrived at specific
organizations or destinations and hold payment until receipt has been verified by all
parties.
 Insurers and auditors track the history and location of goods in case of products being
delayed, going missing or getting damaged.
 SCM optimizes the flow of goods through the supply chain by extracting data and using
machine learning and AI to streamline operations.