With the introduction of Bitcoin in 2009, the world experienced the first and currently biggest and most well known blockchain. While Bitcoin is mainly focused as a monetary payment network, blockchain as a technology is increasingly being used in multiple industries with different applications. I personally follow developments with regards to blockchain and cryptocurrency for about 4 years now and the application of blockchain that intrigues me the most (after Bitcoin) is in supply chain management, especially after discovering the Dutch company ‘Open Food Chain’ which uses blockchain to make food supply chain more connected, transparent and sustainable.[1] This essay will therefore explore possible role blockchain can have in supply chains.
In short, blockchains are decentralized ledgers that store transaction in consecutive blocks (clusters). The transactions cannot be reversed, changed and are transparent. These characteristics are valuable in supply chain management since they allow for accurate tracking and traceability and current supply chain data is not always accurate, available or to be trusted.[2][3]
One of the biggest benefits of the implementation of blockchain in supply chains will be trust by consumers.[4] Due to the transparency and the traceability, supported by the security of the network, consumers in the future will be able to verify or have trusted third-partied verify the origins of their desired products. Transparency could allow consumers to know (‘trust’) that their products for example are ethical (no child labour involved), are the original product (reduced counterfeiting) and are safer (the entire supply chain is tracked).
While there are potential challenges such as high implementation costs and integration with the current systems and regulations,[5] I think in the future almost all supply chains will be built and tracked on blockchains because of consumer demand and pressure. As certain companies within an industry promote the transparency of their supply chains, this can result in a competitive edge that other companies will copy which in the end results in all companies following suit.
[1]Open food chain. (2024). https://www.openfoodchain.com/
[2] Building a Transparent Supply Chain. (2020, 14 april). Harvard Business Review. https://hbr.org/2020/05/building-a-transparent-supply-chain
[3]Blockchain for Supply Chain – IBM Blockchain. (2024). https://www.ibm.com/blockchain-supply-chain
[4] Melendez, E. I. V., Bergey, P., & Smith, B. (2024). Blockchain technology for supply chain provenance: increasing supply chain efficiency and consumer trust. Supply Chain Management An International Journal, 29(4), 706–730. https://doi.org/10.1108/scm-08-2023-0383
[5] Casey, M. J., & Wong, P. (2017). Global Supply Chains Are About to Get Better, Thanks to Blockchain. Harvard Business Review. https://hbr.org/2017/03/global-supply-chains-are-about-to-get-better-thanks-to-blockchain
