Managing a supply chain isn't easy, and that's the case even when you're running a small business. By the time that you start to look at larger national and international companies, the supply chain starts to look less like a chain and more like a web, full of interconnectivity and riddled with inefficiency.

Supply chain management is such big business now that all sorts of specialists are starting to crop up who make it their mission to iron out these inefficiencies and to save companies money. Artificial intelligence, machine learning and other new technologies are already being applied to the challenge of optimizing the supply chain, but there's another new technology on the block that's ready to change the game.

I'm talking, of course, about blockchain, the technology which underlies bitcoin and other cryptocurrencies and acts as an unhackable, decentralized ledger. It's been described as "a record-keeping mechanism that makes it easier and safer for businesses to work together over the internet." You can probably already see why it has a lot of potential when it comes to supply chain management.

Boosting compliance

It's true that blockchain was initially designed purely for financial transactions, but it's also true that it's a highly versatile technology with all sorts of potential use cases. When it comes to supply chain management, for example, it could make it easier for big businesses to track the whats, the whens and the whys for every single order on the supply chain. It could lead to the development of interoperable systems that allow you to get a much more accurate view of what's going on beneath the bonnet of your company.

Because blockchain is effectively an incorruptible ledger, it makes it much easier to track your compliance efforts by recording every single step of the way. At the same time, blockchain data can be made readily available to auditors and other third-parties such as compliance officers. It's a more open system, but the fact that it's a more open system will help to force people to work within the laws and regulations that are in place to protect consumers. The only people who'd suffer would be the ones who were breaking the rules.

The shift towards blockchain is already starting to happen. For example, Maersk and IBM have announced a partnership in which they're set to create a blockchain-based electronic shipping system which will allow companies to track their cargo in real-time. It's expected to save the global shipping industry billions of dollars every year.

How blockchain would work for the supply chain

As an incorruptible digital ledger, blockchain could effectively store records for every product. It would add to its record every time a product changed hands, storing data such as who purchased it and for how much. Imagine a permanent history for every single product that would follow it from when it was made to when it was packed, shipped, displayed and sold.

The advantages to this are pretty obvious. Analysts could identify new ways to reduce delays and remove human error, saving both time and resources. The data could also be shared throughout the company, enabling different departments to work more closely together towards a common goal. It could fundamentally change the way you work.

Blockchain can help supply chain management in a variety of ways, from recording the transfer of assets to tracking receipts, purchase orders and other associated paperwork. It could also store other identifying data such as whether packages need to be handled with care or whether fresh produce is organic or not.

The benefits of blockchain for the supply chain

One of the big benefits of blockchain is that it makes data much more interoperable. Companies could more easily share information with manufacturers, couriers and other suppliers and vendors. This increased transparency can help to reduce delays and disputes, and it can also prevent shipments from getting stuck in the middle of nowhere. You can't really lose them if they're tracked in real-time.

Blockchain is also much more scalable, offering an almost unlimited database that can be accessed from multiple touchpoints from around the world. It provides a higher standard of security and the ability to be customised to feed more specialized applications. Businesses can even create private blockchains to keep data internal and to share it only with those who they explicitly give permission to.

Still, private blockchains can only achieve so much, and most of the value from blockchain technology comes from the fact that it can tie together different ledgers and data points to provide one centralized bank of information. This can also help to fight fraud and other issues. According to Michael White, the former president of Maersk Line in North America, "One of the advantages of blockchain is the immutable record and trust people can have in it. If anything changes in a document, it's immediately apparent to all."


Blockchain technology is coming to change all sorts of industries, and supply chain management is only one of them. Nevertheless, it's also one of the more obvious applications of the technology, and so you shouldn't be surprised if you see it coming to a company near you sometime soon.

In many ways, it's inevitable. Eventually, the industry will be forced to make a choice, and we'll reach a point at which the short-term hassle of changing to newer systems will be outweighed by the long-term benefits. It'll be the supply chain teams who are the fastest to react who will be able to reap the rewards, enjoying a boost in performance that's comparable to the change from hand-written paperwork to electronic databases.

In the meantime, the best thing for supply chain teams to do is to keep an eye on new technologies and software as they're released. It's also a good idea to familiarize yourself with the underlying concepts of blockchain including how it works and why it's so versatile. That way, you'll be ready for the blockchain revolution when it comes. Good luck.