blockchain and supply chain management best implementation practices

Key takeaways

  • Blockchain supply chain software enhances transparency and reduces costs by eliminating intermediaries.
  • In 2023, 87% of KPMG survey respondents identified supply chain visibility as a key operational priority.
  • By applying blockchain in supply chain management, businesses enable secure audit trails, ensuring trustworthy logistics synchronization, real-time shipment monitoring, and automated settlements.
  • The blockchain supply chain market, valued at $2.08B in 2024, is expected to grow at a 29.14% CAGR, reaching $9.77B by 2030.

Since logistics has become a highly automated and digitized sphere, each of the many moving parts requires comprehensive oversight. As goods move from one location to another, it can be challenging to track all the transactions accurately within outdated supply chain systems.

This is where blockchain and supply chain management meet to ensure transparency — the key success metric. Considered one of the most impactful logistics tech trends, blockchain technology doesn’t only validate and store digital transactions; it protects systems from fraudulent activities.

With 10+ years of automating and strengthening logistics operations with AI/ML, IoT, and blockchain-based tools, Acropolium has gained strategic insights for advanced tech implementations.

Today, we will explore how blockchain in SCM can enhance transparency, traceability, and efficiency with use cases, success cases, and best practices.

What is Blockchain in Supply Chain Operations?

statistics and projections of blockchain in supply chain management

Blockchain is a decentralized ledger for storing and recording transactions securely, initially introduced for Bitcoin in 2008. It links transaction blocks in a chronological, immutable chain, verified by multiple participants without central control.

The combined power of blockchain and supply chain management lies in the secure operations of all logistics parties on a shared, usually cloud-based platform. This technology ensures a trusted, tamper-resistant audit trail, allowing for synchronized logistics, shipment monitoring, and automated settlements with minimal system changes.

Thus, anyone from manufacturers and shippers to carriers and brokers can maintain comprehensive records and prevent data breaches. And, with the huge impact on core industry activities, the blockchain supply chain market is forecasted to grow impressively. Valued at $2.08B in 2024, it is anticipated to expand at a CAGR of 29.14% and reach $9.77B by 2030.

Why Operate with Blockchain in the Supply Chain?

benefits of blockchain in SCM

In 2023, 87% of KPMG survey respondents stated that supply chain visibility is a vital operational priority. Indeed, the transparency brought by blockchain supply chain software can cut costs by eliminating intermediaries. At the same time, it reduces administrative overheads from development to delivery and returns.

Cost savings, however, are not the only ways you can benefit from blockchain technology.

Enhanced Transparency

By integrating blockchain through smart sensors and RFID tags, companies can accurately track goods through the supply chain. Such IoT and blockchain-powered tools record conditions such as temperature and humidity at each stage.

With blockchain in SCM, transactions are time-stamped and up-to-date, sending the data to logistics management systems and supply chain analytics software in real time.

Improved Traceability

In supply chain management, traceability refers to tracking inventory locations and custody from raw materials to end customers. Blockchain enables efficient live tracking with decentralized ledgers. Often found in multi-carrier software, the technology allows stakeholders to access detailed product information such as dates, prices, origin, quality, and certification.

Increased Efficiency

Blockchain technology in supply chain management also contributes to timely resolved compliance problems and automated workflows, resulting in higher efficiency. The enhanced visibility helps detect and address issues like compliance violations, counterfeits, delays, and waste more rapidly.

In fact, the KPMG’s report says that blockchain is set out to be a game-changer in adherence to regulatory compliance within supply chains.

Stronger Security

The cryptographic features protect sensitive information, making it harder to access or alter data for unauthorized entities. Supply chain and blockchain transparency allows all stakeholders to verify transactions independently, lowering the risk of compromise and errors.

Smart contracts automate processes, enable immediate invoice payments, and establish a transparent payment system, thereby reducing human error and fraud.

Use Cases and Applications of Blockchain in Supply Chains

blockchain supply chain use cases and applications

There are many companies using blockchain in supply chain operations, and each of them fulfills different needs with the technology. Now, let’s explore the most common blockchain supply chain use cases that represent the above business benefits.

Provenance Tracking

Blockchain enables accurate tracking of a product’s origin, ensuring authenticity. For example, De Beers uses blockchain to track diamonds from mines to retailers, thus preventing conflict diamonds from entering the market.

Counterfeit Prevention

Blockchain in SCM helps verify product authenticity, reducing counterfeit goods. IBM and Walmart, using progressive logistics and shipping APIs, have implemented blockchain to trace the origin of food products. This way, the companies ensure food safety and prevent contamination.

Inventory Management

Blockchain provides real-time inventory tracking, reducing discrepancies. Maersk and IBM’s TradeLens platform uses blockchain to track shipping containers and warehousing automation, improving visibility and reducing delays.

Automated Payments

Smart contracts on blockchain automate payments upon delivery, reducing administrative overhead. BHP Billiton uses blockchain to streamline supplier payments, ensuring timely and accurate transactions.

Challenges and Considerations in Implementing Blockchain in the Supply Chain

blockchain supply chain challenges and solutions

Complexity and Fragmentation

Embracing blockchain in supply chain management can be complex due to the fragmented nature of global supply chains, which involve multiple stakeholders, systems, and processes. Integrating blockchain technology across diverse systems and ensuring compatibility can be challenging.

Companies can start with pilot projects before scaling up, establish industry standards and interoperability with big data frameworks, and collaborate with stakeholders to align on common goals and technical requirements to overcome complexity and fragmentation.

Lack of Transparency

Despite blockchain’s disruptive potential, achieving transparency is challenging due to stakeholder resistance and reluctance to share data openly.

For such issues, you have to build trust by demonstrating transparency benefits like increased efficiency, reduced fraud, and improved traceability. Try adopting incentive mechanisms for data sharing and use permissioned blockchains to allow controlled access to sensitive information, addressing privacy concerns while enhancing transparency.

Inefficiencies and Delays

Traditional supply chains often face inefficiencies and delays due to manual processes, redundant paperwork, and lack of real-time information. Moreover, employing blockchain for supply chain management requires re-engineering these processes, which can disrupt operations and face resistance.

To deal with it, businesses should conduct thorough process analysis and redesign workflows to leverage blockchain’s strengths, such as shipping automation and real-time data sharing. Integrating blockchain with IoT devices and smart contracts can automate data collection and processing, reducing downtimes and improving overall productivity.

Security Concerns

Although blockchain technology is secure, vulnerabilities like coding errors, poor key management, and insecure interfaces can arise during implementation.

Vendors providing blockchain supply chain solutions follow best practices such as rigorous testing, regular audits, encryption, and secure coding standards. It’s also crucial to operate with multi-layered security measures like multi-signature authentication and secure APIs. Lastly, continuous monitoring and updating can help identify and mitigate security threats promptly.

Why choose Acropolium?

Focusing on data security and industry regulations, Acropolium has delivered over 23 solutions to logistics and supply chain businesses of all sizes. As an ISO-certified provider of GDPR-compliant software, we guarantee exceptional service quality that drives client success.

Acropolium Case Studies

Blockchain technology also greatly benefits our clients and partners, as our advanced approaches to software development translate into tangible results.

Blockchain Supply Chain Platform

We discovered a real-life example of blockchain in supply chain activities with a client who aimed to develop a decentralized ledger system with smart contracts. For this project, we had to integrate IoT and RFID tags with sophisticated data analytics tools.

  • Acropolium’s developers have implemented blockchain in supply chain management using a decentralized ledger system and smart contracts to enhance transparency.
  • Our teams have enriched product visibility by integrating IoT technology.
  • Leveraging blockchain and IoT as information sources, we delivered robust data analytics.
  • Additionally, we designed an intuitive user interface for seamless access to data and functions.
  • Seamless tracking from extraction to delivery improved supply chain transparency and traceability.
  • Smart contracts and IoT automation optimized operations, reducing errors and costs.
  • Blockchain implementation prevented fraud, counterfeit products, and unauthorized access.
  • The blockchain-based supply chain platform also facilitated regulatory compliance and streamlined audits.

Shipping Web Platform

Another case where Acropolium used blockchain technology in supply chain management was when our client requested a shipping web platform that failed to meet initial requirements. We were tasked with an unfinished product from other vendors and had to audit it, fix the bugs, and develop customizable features for its users.

  • Our team conducted a thorough technical audit to pinpoint issues.
  • We fixed numerous bugs and optimized the code and architecture.
  • Within 2 months, our developers launched a functional solution that enabled client growth and revenue.
  • Our team continued to enhance and optimize existing platforms.
  • We integrated cost-saving third-party services, significantly reduced server load, and substantially reduced support and maintenance costs through code optimization.
  • By embracing blockchain in SCM, the client retained existing customers and attracted 25 new customers within 2 months.
  • The client saw a 600% reduction in monthly expenses, with a 37% profit increase and 57% of costs saved up annually.

Final Thoughts

A decentralized, immutable record of transactions allows stakeholders to track goods from source to delivery, enhancing transparency. However, widespread adoption is limited due to the required expertise and varying governmental regulations.

As blockchain technology matures, it will gradually replace traditional supply chain processes, though the transition will be incremental. And Acropolium is here to guide you in adopting this rising trend.

We can match you with a dedicated team of backend, frontend, and blockchain developers to develop anything from a logistics chatbot to a comprehensive management system. With our subscription-based cooperation model, you will get a flexible solution while sticking to your budget.

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