Blockchain technology making supply chain management easy and seamless for manufacturers with global stakeholders.

Digital globalization has shrunk the world into a global village, making connectivity and accessibility the least of our worries. Consumer behavior and demands are evolving faster than ever, making even winning business models of yesteryears completely obsolete. Trade has transformed, involving more stakeholders; the target market space for products as well as the resource pool for manufacturers have grown exponentially beyond borders. Geographical demarcations now exist to serve only as a means to mark one’s administrative territories. To maintain the fine balance between supply and demand, logistics and supply chain play a pivotal role.

Industry 4.0 and Emerging Tech

Today, industries are trying to adopt a never-ending stream of emerging technologies and figure out a way in which these innovations can bolster the revenue earning channels. This new revolution has been coined as Industry 4.0. Among the various technologies that have come into prominence in recent times, one that has created an instant buzz is Blockchain Technology. While it formed the underlying technology for cryptocurrency, Bitcoin – something which has split the financial arena into outright skepticism and wishful optimism, the technology itself is said to hold a lot of potential for various sectors. While a larger mass is yet to wrap their heads around how the technology works or can be leveraged for business, there are already multiple use cases to bear testimony to its capability. It is safe to say that just like other sectors, logistics and supply chain have a lot to gain from it. Even though the logistics models across the globe have evolved monumentally in the past few decades, there are still several caveats that need to be addressed, and blockchain technology can definitely pitch in.

What is Blockchain?

Fundamentally, a blockchain is a public or private ledger, comprising of transactional data that is stored in decentralized data structures, which are well aligned into a series of tightly connection blocks. The decentralized nature of the blockchain makes it immutable, thus making the network reliable and trustworthy and at the same time, eradicating the need for intermediaries. Initiatives such as asymmetric cryptography and consensus algorithms have been deployed to ensure ledger consistency, data integrity and authentication as a part of the basic security requisites.

Underlying Components

The blockchain ledger layer defines its basic network of functionalities. This layer focuses on ensuring consensus among the peer nodes and manage the transactions that are going to be registered on the ledger. The Consensus Module is endowed with the responsibility of transaction validation and deriving agreement among the nodes in the network. Private networks use new consensus protocols which are comparatively faster in reaching consensus and are more efficient than the traditional ones used by the public network. Transaction Module is responsible for storing the transaction on the ledger; and along with the Transaction Handle Module, it interacts with the middleware layer to complete the blockchain scheme.

In a supply chain management context, the middleware layer acts as a bridge between the blockchain layer and the higher layers that are in direct communication with the supply chain management system such as Enterprise Resource Planning (ERP) and related software packages. It is comprised of the following layers:


  1. Upload Handler: It regulates the upload of important documents such as e-invoices, receipts, and other official documents, by interacting with the application layer through appropriate APIs.


  3. Data Orchestrator: It is vested with the responsibility to store the information provided by Upload Handler with low latency in a secured distributed manner.


  5. Smart Contract Manager: This forms a crucial module as most of the operations run through its approval mechanisms. The creation, deployment, and triggering of smart contracts constitute its primary responsibility.


  7. Application Level Transaction Handler: This module regulates transaction management inside the supply chain management infrastructure of the participating parties and is responsible for all interactions that happen between the middleware layer and the application layer.


Blockchain technology making supply chain management easy and seamless for manufacturers with global stakeholders.

Blockchain vs Pain Points in Current Supply Chain Models

  1. Scalability: A large amount of time-sensitive data gets generated from innumerable transactions that take place in this industry every day but are not stored properly. Blockchain can support immensely in scaling up by providing a networked and decentralized database for storing such data and eliminate the risk of data loss due to any single point storage failure.


  1. Performance: During the transportation of freights, a lot of processes are carried out simultaneously that are prone to human error or worse – fraudulent activities. Implementation of blockchain will ensure the integrity of the process as well as enhanced efficiency. For instance, the use of smart contracts to carry out payment for freight delivery will instill transparency in transactions.


  1. Consensus: The uniqueness of this technology can be majorly attributed to its consensus mechanism. It harps on ensuring data immutability along the ledger by having a general agreement amidst the nodes of the network on the submitted transactions. Such a feature can turn out to be a boon for the supply chain network which has multiple players involved in the mix with equal amounts of discrepancies existing in the information exchange.


  1. Location: Blockchain offers functionalities to its users irrespective of their geographical locations. This can not only allow stakeholders in supply chain management expand their global reach but can also help in infusing time efficiency when it comes to payments. Traditional modes of payment take a considerable amount of time owing to the regulations of the location-bound banks or transacting agencies that one needs to adhere to. Through cryptocurrency, however, the same process can be reduced to minutes.


  1. Cost: Blockchain can aid in the reduction of costs that get incurred, especially on international transactions by traditional banking systems due to varying economic laws of different countries.


Future Prospects

Even though blockchain technology promises to fill several gaps in the domain, it is yet to become a full-proof solution. For instance, the Proof of Work (PoW) Consensus Algorithm is expected to consume a lot of energy in the process, thus adding an overhead to the supply chain cost. Not to mention, since the Proof of Stake (PoS) Consensus Algorithm exhibit results only after cumulative efforts have run their course. This creates new issues that need to be addressed.

That said, one has to really weigh the benefits against the probable drawbacks before making any decisions. The technology is still in its early days. As a starting point, one may consider consortium-based permissioned ledgers, which can be applied to cross-organizational domains for carrying out further research on the challenges and facilitate the required changes in controlled private ledger environments where the blockchain features can be handled efficiently. Conceivably, with numerous business giants joining hands globally to explore its potential, it’s safe to say that blockchain and supply chain management will see a strategic convergence.