Cloud Computing

3 Mins Read

Blockchain and Supply Chain a Beautiful Amalgamation

In this globalized world, Supply Chain has become exponentially complex. Connecting data, product, people and process across the world is becoming difficult and time consuming. IoT in Supply Chain Management is already making waves in this space.

Integration of Blockchain with Supply Chain Management would be the most pivotal advancement.

Yes, you heard it right. Till now we have seen Blockchain technologies being rapidly adopted by finance services industries. We all have heard of Bitcoin- The first decentralized digital currency. Some of us have used Bitcoins as well. Bitcoin uses Blockchain technology. Success and popularity of which made it feasible for financial sector to adopt it.

But, Blockchain is open-source and due to its peer to peer ledger system, it’s application is more than just for digital currency. Current challenge is to find relevant use cases for this technology. It is like walking out with hammer looking for a right nail.

Supply Chain industry will be early adopters of Blockchain, because of Shared Digital Ledger Technology. This protocol enables proof and transfer of the ownership from one entity to another entity without intervention of third party for example Banks. The value transferred at each point in the chain is chronologically recorded which will be updated and validated with each transaction, resulting in a secure, permanently recorded exchange. You also will get better traceability of any product at that point of time. This can be understood by IBM’s white paper Trust in Trade – Towards Stronger Supply Chain .

What currently happens in Supply Chain Management?

All the companies run Computerized Software or Supply Management Software or Enterprise Resource Planning (ERP). Computerized software tracks data right from procurement of raw materials to the final product, payments and shipping notices.

Due to few gaps in the system, it is difficult to have all the traces of the product. Purchase Order, Planning, Procurement, Process, Production, Quality Check may be recorded digitally. But, when it comes to shipping, the document(PDF) contains Label that fetches the information of the product and signature of authorized person for the shipment.

It is very tedious process to trace back to the information at that point of time. It takes lot of effort to know all the information about a product.

For example: You bought a 100% cotton shirt, made in XYZ country. Here, you just have a Label on the shirt which gives you the information of material, size and where it is manufactured (company and place). But, this single Label won’t assure you of the right information. It may be false information, may be the shirt is not 100% cotton or it is manufactured locally and labelled as XYZ country.

Integration of Blockchain and Supply Chain

Integration of these two will have jaw dropping effects in Supply Chain in numerous ways. Let us first understand, what is Blockchain?

It is a technology where each transanctional data is stored in decentralized storage called Blocks. Sum of several Blocks arranged in a logical fashion makes up Blockchain. These blocks are attached with time stamp and maintained in chronological fashion making it more secure. The chain is stored in each hardware which is part of the Blockchain network making it decentralized. Changes or new blocks are authenticated by Consensus principle, in which transaction must be verified by all members of the network at any time. Each transaction is recorded and encrypted in real time.

Let us consider previous example of 100% cotton shirt. If you buy a 100% cotton shirt you will have access to the details of production information. It gives provenance of the shirt. You can trust the provided details since each transaction is recorded and time stamped.

This way we have many more Benefits:

  1. Reduce or eliminate fraud and errors

    We saw this in previous example. Implementation of Blockchain will allow customers to have access to detailed production information. Since it is so transparent there won’t be any fraud or error.

  2. Improve inventory management

    The biggest problem in Supply Chain Management is inventory. Since the data on Blockchain is widely accessible, we can easily predict the demand and actions can be taken by avoiding over-stocking and streamlining waste reduction.

  3. Reduce delays from paperwork

    At present, transport depends on lot of paper work. If you want to send some shipment overseas there are bulk of signed and stamped papers that are required to be generated for customs. Sometimes a small error in the document causes lot of delays in the shipment and deliveries. Through Blockchain we can share the document with multiple institution by which lot of time and cost will be saved.

  4. Identify issues faster

    Since tracking the provenance of goods on Blockchain is easy, the issues can be identified faster.

  5. Increase consumer and partner trust

    Goods you purchase have complete trace of transaction in Blockchain, which builds trust between consumer and partner.

Blockchain is a beautiful technology. For now, we have seen its application only in Bitcoin. Soon we will benefit by the integration of Blockchain and Supply Chain. This will also change the way customers buy their goods.

Similarly, we can also explore where Blockchain would be more beneficial. We at CloudThat have introduced a new course on Blockchain i.e. Fundamentals of Blockchain – Level 1. If you are interested in knowing more about Blockchain, you can register for this course.




  1. Manoj gowda

    Nov 25, 2017



  2. Dhananjaya

    Nov 24, 2017



  3. Dhananjaya

    Nov 24, 2017


    Blockchain and Supply Chain integration is very interesting.

  4. Dhananjaya

    Nov 24, 2017


    Blockchain and Supply Chain integration is very interesting. Thanks for the good information.

  5. Srinivas Murthy

    Nov 21, 2017



  6. Click to Comment

Get The Most Out Of Us

Our support doesn't end here. We have monthly newsletters, study guides, practice questions, and more to assist you in upgrading your cloud career. Subscribe to get them all!