Use Case: Solving Supply Chain Management Challenges with Blockchain

Published : Nov 12, 2019

  • Supply chain management refers to the planning of the flow of goods, products, and services, including data and finances. It covers activities from the procurement of raw materials to their manufacturing and delivery as products to the final destination. SCM can also span across the processes for global trading such as the management of global suppliers and multinational production activities. However, legacy processes and opaque systems have created supply chain management challenges that blockchain technology can address.

    Benefits of Supply Chain Management System

    • Higher efficiency rate
    • Reduce cost effects
    • Raises output
    • Raise business profit levels
    • Boosts cross-industry cooperation
    • Lowers delays in processes
    • Strengthens the entire supply chain network

    How Does Blockchain Optimize SCM?

    With a blockchain technology-powered distributed ledger, diverse industries can optimize the overall efficiency of supply chain management. At Oodles, our blockchain experts suggest that blockchain solutions can address several challenges residing within complex supply chain processes and provide benefits like:

    • Reduced errors
    • No product delays
    • Prevention of fraudulent activities
    • Improved supply chain management
    • Increase consumer/supplier trust

    Additionally, blockchain technology provides the following advantages to SCM in a public or private network.

    • No Central Authority
    • Elimination of intermediaries
    • Real-time settlement
    • Drastic reduction in operational costs
    • High level of transparency


    Also Read:

    Strengthening the Procurement Process with Blockchain

    Making Logistics Processes Efficient with Blockchain Applications

    Supply Chain Management Challenges that Blockchain can Address

    Data consolidation and visibility

    Challenges: Manual, paper-based record-keeping and reporting systems often lead to scattered, incomplete, and unauthentic manifests, bills of lading, certifications, etc.

    Opportunities: With blockchain record-keeping solutions, all supply chain stakeholders can store and share this information securely and simultaneously.

    Traceability, transparency, and trust

    Challenges: It is always challenging to track the source of flawed parts and trace the provenance of previously shipped products.

    Opportunities: Blockchain SCM can have a product’s entire geographic flow. It enables users to track products’ source and flawed components, investigate industry certifications, find storage-condition anomalies, etc.

    Real-time issue resolution

    Challenges: Natural disasters and unplanned demand and supply often lead to faulty or delayed delivery, which affects the entire production.

    Opportunities: The delays involving weather or labor disputes are nearly unavoidable. However, blockchain-based SCM can provide solutions to resolve these issues in real-time. As per the occurred issue, it can instantly trigger actions like supplier substitutions or price adjustments.

    Realizing Blockchain's Potential in SCM with a Use Case

    Alice wants to buy a rare and costly medicine for cancer treatment from a medical store. The description on that medicine states that “store in dry or cold storage below 20-degree celsius, failing which makes it unusable.”

    The pharmacist stored the medicine according to the mentioned temperature as he had a proper setup at his store. However, what if the medicine has got misplaced during its journey from the production company to the medical store. Its effect will be lost if not preserved at the mentioned temperature.

    In this case, due to a lack of information tracking, Alice has no option except believing that nothing happened during the process. In such scenarios, blockchain can provide efficient tracking solutions.

    Let’s assume that there is a microchip sensor (IoT chips) attached to the package of medicine. It records everything about it, from the manufacturing to its end users. At each step, stakeholders make transactions and update data regularly on a blockchain ledger.

    Alice can use her phone to scan the barcode on the medicine package to get every detail. She can use it to verify that, at any point in time, it was in a mentioned environment.

    Essentially, the integration of IoT with blockchain solutions solves supply chain management challenges like tracking and traceability. It provides the provision to verify the product, without trusting pharmacist or the process.

    The following image demonstrates how a blockchain-based SCM solution enables information tracking of products.


    Supply Chain Management with Blockchain Hyperledger


    Although blockchain technology is not the panacea for all the supply chain management challenges, it can provide supply chain management solutions that can maximize its efficiency. Traceability and tracking features can bring the required transparency and establish trust in the entire supply chain network. It can enable every participant to trace and track information of products from their provenance to end-users.

    In the next blog, you can check how a Hyperledger Fabric-based solution enables the seafood industry to enhance fisheries management with features like traceability and transparency.

    Oodles is a blockchain development company that has experience in developing custom industry solutions with blockchain technologies like smart contracts. Take a look at how our blockchain development services can provide you assistance if you are looking to outsource your next big project.

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