Use Cases of Blockchain in Supply Chain Management: What Are the Benefits?
Tags: blockchain, hyperledger, fabric, distributed
Published: 2024-07-01 09:28:37

A supply chain is a process in which different individuals, organizations, activities, and technology are involved in the creation and sale of a specific product.

Multinational companies have enormous supply chains where they deal with an immense amount of data updated daily. It is essential that the implemented architecture is robust and consistent to ensure the reliability of the data. A potential failure can lead to significant financial losses for the business.

![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/xeqzg56iyzjv3xvbphpu.png)
In the illustration, the different phases of a supply chain are shown.

Most companies have historically invested in database management systems, utilizing powerful software applications and advanced cloud computing solutions that analyze and integrate large datasets with millions of records. However, there are limits to the efficiency and reliability with which a database can manage and share such detailed information. Companies using the most advanced cloud database solutions often still rely on analog tools like phones, printers, and fax machines to ensure every node in their complex global supply chain is connected.

As a brief explanation of what Blockchain is, it is a decentralized technology where data is stored in blocks, meaning each block contains certain information and each one is recorded on the network, linked together to verify the immutability of the data on the network. Blockchain is an innovative technology that offers a significant improvement in reliability, transparency, security, traceability, and control of data, as well as reducing supply chain infrastructure costs. This is why it is increasingly being used in these business cases.

Benefits of implementing a Blockchain network in a Supply Chain:

Increase visibility and transparency. Supply chain networks can be limited by “one up/one down” visibility. This means managers generally can only “see” what their first-tier suppliers and immediate customers are doing. Through this technology, which provides a single, shared version of the truth, blockchain applications give authorized participants greater visibility into all supply chain activities.
Resilience. An unexpected event can cause a cascade of disruptions in the supply chain. Blockchain-based solutions use smart contracts that automatically activate when predefined business conditions are met. This provides near real-time visibility into operations and the ability to take action earlier in case of an exception.
Security and Immutability. Information on a blockchain cannot be altered or deleted unless all parties agree to the changes. This creates an immutable record that is extraordinarily difficult to overwrite, forge, or reverse. It also means the record is encrypted end-to-end on the network, providing greater security than a database against fraud and unauthorized activities.

![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/whe4rumqhdvy86r57qza.png)
Key aspects in a supply chain verified on a Blockchain network: Origin, authenticity, and traceability of the object.
But how do we integrate a Blockchain network into a company’s business?


For confidentiality reasons, companies often prefer to use private Blockchain networks that they own, deployed in the cloud, to which only supply chain participants have access, always granted and managed by the companies. While a supply chain can involve different actors such as carriers, manufacturers, and other entities, they will have access to this network and in different ways (via IoT, AI, robotics, among other integrated means) will record and update data daily.

In the end, the Blockchain network becomes another component that is part of the overall architecture.

And what about the company's existing system?

Interoperability and integration are always important questions. A blockchain-based solution does not have to replace a legacy system; it can be built alongside it as BaaS (Blockchain as a Service). Then, your company must determine what or who can connect that solution inside and outside your organization, and how easy, secure, cost-effective, and efficient that connection will be. Modern systems use APIs as robust, versatile, and consistent ways to facilitate this connection and data exchange. Many companies have dedicated platforms on-premises or in the cloud for API management. And enterprise-focused open-source blockchain projects, like Hyperledger Fabric, make secure and scalable data transfer straightforward.