Blockchain Technology is Set to Transform the Supply Chain

Blockchain Technology is Set to Transform the Supply Chain


How Blockchain Can Transform the Supply Chain

Supply chain has become complicated. Some would say cumbersome. It takes days to make a payment between a manufacturer and a supplier, or a customer and a vendor. Contractual agreements require the services of lawyers and bankers, each of which adds extra cost and delay. Products and parts are often hard to trace back to suppliers, making defects challenging to eliminate.

Friction in the supply chain is a big problem. There are too many go-betweens. There is too much back and forth. The rise in uncertainty stops supply chains from working well. Suppliers, providers, and clients must interact via central third-party entities instead of directly with each other. Ostensibly simple transactions turn into lengthy multi-step procedures.


Blockchain could be the answer to many of these issues. This recent technology is what drives Bitcoin and other so-called cryptocurrencies. However, it goes much further than an unhackable way of holding and exchanging money. Blockchain can manage any form of exchange, agreement, or tracking process. In a supply chain, it can apply to anything from self-executing supply contracts to automated cold chain management.

What is blockchain?

Here’s a simple explanation.

A blockchain is a distributed, digital ledger. The ledger records transactions in a series of blocks. It exists in multiple copies spread over multiple computers, typically known as nodes.

Because it is decentralized, the blockchain ledger does not depend on any single entity (like a bank) for safekeeping. The nodes connected to the blockchain network get updated versions of the ledger every time a new transaction takes place.

The multiple copies of the ledger are the “truth” about every transaction made so far in the blockchain. Any attempt at falsification would mean having to tamper with all the copies at precisely the same moment. The chances of being able to do this in blockchain networks of any useful size are negligible

Applications of Blockchain in Supply Chain


Automotive Supplier Payments

Blockchain allows the transfer of funds anywhere in the world without the need for traditional banking transactions, as transactions are made directly between payer and payee. It is also secure and rapid; taking minutes, compared to days for automated clearing house payments, for example.

Bitcoin transfers specifically also incur lower fees. Australian vehicle manufacturer Tomcar uses Bitcoin to pay some of its suppliers. Currently, three partners in Israel and Taiwan accept payment from Tomcar using Bitcoin.

Tomcar’s supplier agreements use standard terms. The advantage is in the cost savings. On the other hand, the firm is careful to avoid hanging onto too much Bitcoin. While Bitcoin is international by nature, some national governments see it as a way for companies to invest. Companies may therefore be subject to taxation on Bitcoin holdings

Meat Traceability

Companies can use distributed ledger systems (blockchains) to record product status at each stage of production. The records are permanent and immutable. They make it possible to trace each product to its source. Global retailer Walmart uses blockchain to track sales of pork in China. Its system lets the company see where each piece of meat comes from, each processing and storage step in the supply chain, and the products’ sell-by date. In the event of a product recall, the company can also see which batches are affected and who bought them.

RFID-driven Contract Bids and Execution

RFID tags are commonly used in supply chain to store information about products. IT systems can read the tags automatically and then process them. Therefore, the logic goes; why not use them for smart contracts in logistics?
The possible setup could be as follows. RFID tags for cartons or pallets store information on delivery location and date. Logistics partners run applications to look for these tags and bid for a delivery contract. The partner offering optimal price and service gets the business. A smart contract then tracks status and final delivery performance.


Blockchain can transform supply chains, industries, and ecosystems. Interestingly, even organizations like banks, that would appear to be losing out to the new technology, can see opportunities to exploit it in the streamlining of their operations.

In-depth transformation of supply chains will not happen overnight. However, supply chains can already start using blockchain in some areas of their operations. Smart contracts can help eliminate costly delays and waste generated by manual handling of paperwork. From there, new doors may open to faster, more intelligent, and more secure processes throughout the entire supply chain.

Why Is Supply Chain Management Necessary in the Current Market?

Why Is Supply Chain Management Necessary in the Current Market?

Supply chain management (SCM) is a very important part of any organization as it deals with the effective management of supply chain activities to ensure and maximize customer value and achieve a competitive advantage. Companies who use strategic SCM are able to function at their best capacity to provide and distribute their products and materials efficiently.

What Is Supply Chain Management?

Supply chain management refers to the management of supplying goods and products required by the end customer. In other words, it refers to an organization that manages products that reach an end user. SCM deals with the management of a network of business processes and activities such as raw material procurement, logistics, and manufacturing and distribution of finished goods. Ensuring that the right product is supplied to a customer at the right time and place, as well as with the right cost is the mission of a good SCM provider.

The Importance of Supply Chain Management

There are various reasons that SCM is important to retailers and businesses alike. SCM can boost customer service, reduce operating costs, and improve a company’s financial position. Other benefits include reduced inventory costs, better information sharing between partners, improved process integration, and improved quality. Here is a breakdown of the benefits of SCM.

Boosts Customer Service

One of the most important aspects of a business is its customer service. The correct product assortment and quantity needs to be delivered to the customer on time and efficiently in order to ensure they are satisfied. Customers also expect products to be serviced quickly if repairs or replacement products are requested/needed. SCM can help ensure that customers are always satisfied, which can improve your business’s bottom line.

Reduces Operating Costs

Supply chain management decreases overall supply chain costs since retailers and manufacturers often rely on supply chain managers to create networks that meet customer service goals at the most affordable rate. Retailers also require supply chains to quickly deliver expensive products in a timely manner in order to limit inventory holds longer than necessary. SCM further reduces production costs because manufactures always require supply chains to deliver materials to assembly plants to ensure proper material supply.

Improves Financial Position

SCM increases profit leverage since supply chain managers help control and reduce the cost of the supply chain, which provides drastic increases in firm profits. Supply chain managers also decrease the use of plants, warehouses, and transportation vehicles within the chain so that fixed assets can be reduced. Lastly, SCM can increase your business’s cash flow given that customers can receive their products faster thanks to supply chain managers.

What’s the Difference Between Warehouses and Distribution Centers?

What’s the Difference Between Warehouses and Distribution Centers?

To many, the difference between a warehouse and distribution center may not be apparent but to anyone in the logistics industry, the two couldn’t be more different. They may look the same from the outside, but there’s a vast difference in the internal operations and what responsibilities each are meant to fulfill. If you’re confused about whether you need warehousing or distribution center services, we’ll fill you in on the details.

What is a Warehouse?

A warehouse is a commercial building that’s used to store goods—they’re mainly used by manufacturers, importers, exporters, wholesalers, and transport businesses, to name a few. Warehouses are used for storage, and storage only. They’re usually large plain buildings in industrial areas. They have loading docks to load and unload goods, but that’s usually the extent of the activity that goes on in a warehouse. They can be designed to receive goods directly from railways, airports, or seaports, and are usually equipped with cranes and forklifts for moving and organizing goods. Some warehouses are temperature controlled, making them well-suited for storing groceries, other perishables, and other materials including raw materials, packing foods, spare parts, and more. While warehouses can be useful to some, not all retailers use them since they’re better suited for those searching for a more long-term storage option.

What is a Distribution Center?

A distribution centers is a specialized building that’s designed to store products for retailers and wholesalers, to be redistributed to another location or directly to customers. Distributions centers are an integral part of the order fulfillment process, especially for online retailers and e-commerce businesses. The normal route of transport is usually as follows: the retailer ships the product to the distribution center, and then the product is shipped from there to the customer. They’re usually thought of as being demand-driven, since products move in and out at a fast pace. Distribution centers are often located in areas that are easily accessible, like near main roadways and highways; this makes it easier for transport trucks to drop off and pick up items more efficiently. Many distribution centers are part of a larger network of distributors, set up to serve a large area.

Warehouses vs. Distribution Centers

When it comes to warehouse vs. distribution centers, your choice will depend on your specific needs. Both warehouses and distribution centers are virtually identical from the outside, but their inner workings are vastly different. In short, warehouses are more suited for those that need long-term storage and are not looking for items to be shipped out immediately. Distribution centers, on the other hand, are designed to see the fast intake and rapid shipment of items. While both of these options can be temperature controlled to store certain items, perishables like groceries are most commonly found in distribution centers since they’re not able to be stored for a long time. When you’re faced with the decision of choosing a warehouse vs. a distribution center, your answer should be clear, since they offer very different features.

Importance of Inventory Management

Importance of Inventory Management

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Few are the businesses that don’t rely on inventory. Even if yours is a service, rather than product-oriented enterprise, the chances are you have some need to move items through a supply chain.

It might be spare parts, consumable items, or perhaps equipment, but if it’s something you need to store and transport, then it requires treating as inventory and managing accordingly. Of course, if your company is providing products, the need to manage inventory efficiently is paramount. Just as customers are something on which your business depends, so is inventory.

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In the last section of this post, we looked at the importance of suppliers as a factor for business success. However, the way in which you deal with inventory once it passes from the suppliers’ hands to yours, will also make a huge difference in the fortunes of your business.

Why is inventory management so important? Primarily because it can dramatically affect working capital and potentially, cash flow too. If you want to reduce working capital within your business, you should certainly take the time to investigate inventory management and ask the following questions:

Is it possible to improve forecast accuracy to reduce the need for holding safety stock?

Can you find a way to reduce inventory holding costs?

Are you taking enough steps to prevent the costs of inventory obsolescence?

Are you achieving the shortest possible lead times from suppliers?

Can you speed up customer delivery lead times?

Are you losing money because of inventory shrinkage?

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The answers to these and similar questions will help you to secure business success by improving your working capital situation. You should also find that improvements in these areas will support increased levels of customer service and make your business more profitable.

Why Supply Chain Management??

Why Supply Chain Management??

A supply chain is basically a group of independent organisations connected together through the products and services that they separately and/or jointly add value on in order to deliver them to the end consumer. It is very much an extended concept of an organization which adds value to its products or services and delivers them to its customers. But what is the benefit of understanding the value adding from the supply chain perspective? Why managing supply chain is becoming necessary and important to today’s business success? These are some of the fundamental questions that must be first addressed before discussing the “how to” questions.

Over the last three decades, the concept and theory of business management have undergone profound changes and development. Many old ways of doing business have been challenged and many new ideas and approaches have been created, among them are business process re-engineering, strategic management, lean thinking, agile manufacturing, balanced scorecard, blue ocean strategy, … just to name a few. Supply chain management is undoubtedly one of those new and well grown management approaches emerged and rapidly developed across all industries around the world.

So, the question is “Why now?” A convincing answer to this question is that our business environment has changed, which includes globalization, more severe competition, heightened customer expectation, technological impact and geopolitical factors and so on. Under such a renewed business environment, an organisation focused management approach is no longer adequate to deliver the required competitiveness. Managers must therefore understand that their businesses are only part of the supply chains that they participated and it is the supply chain that wins or loses the competition.

Thus, the arena of competition is moving from ‘organisation against organisation• to •supply chain against supply chain. The survival of any business today is no longer solely dependent on its own ability to compete but rather on the ability to cooperate within the supply chain. The seemingly independent relation between the organisations within the supply chain becomes ever more interdependent. You “sink or swim with the supply chain. It is for this reason that gives rise to the need for supply chain management.

What’s more practical and indeed more assured way of better managing a business is to managing it along with the supply chain through appropriate strategic positioning, adequate structural configuration, collaboration, integration and leadership. The paramount importance of doing so does not derive from the theories or reasoning, rather it is withstood by the business performance improvement and market measured customer results. It is the tangible benefits and success that it delivers makes the subject important.

One can hardly find any aspect of business that has nothing to do with supply chain management. Take an example of quality management – a very important part of today’s business management, and ask yourself a question: can you manage and improve the quality standard of your product or service measured by the end-consumer without managing the suppliers and buyers in the supply chain at all? Of course not. Business value creation is always a collective contribution from the whole involved supply chain.