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Traceability to Transparency: The Role of Blockchain in Supply Chain Management

source-logo  financemagnates.com 23 March 2023 09:56, UTC

Supply chain management is a complex process involving numerous stakeholders, ranging from suppliers and manufacturers to distributors and retailers. Transparency and traceability throughout the supply chain are critical for building trust among all parties involved and ensuring safe and high-quality products.

However, achieving this level of transparency can be difficult, especially in industries where stakeholders lack trust. Here is where blockchain technology comes into play.

In this article, we will look at how blockchain can assist supply chain management in transitioning from traceability to transparency.

What Exactly Is Blockchain?

Blockchain is a decentralized digital ledger that securely and transparently records transactions. Each block of data in a blockchain is linked to the previous block, forming a chain of data that is difficult to tamper with or modify. Because blockchain is decentralized, no single entity has control over the data, making it a secure and transparent way to record transactions.

Blockchain's Role in Supply Chain Management

Providing transparency and traceability is one of the most difficult challenges in supply chain management. This is especially important in industries such as food and pharmaceuticals, where product safety and quality are critical.

By providing a secure and transparent way to record transactions and track products throughout the supply chain, blockchain technology can assist supply chain management in moving from traceability to transparency.

The ability to track a product from its origin to its final destination is referred to as traceability in the supply chain. This is accomplished by documenting each step of the supply chain in a centralized database.

While traceability provides valuable information about where a product has been, it does not always provide information about the conditions under which the product was manufactured or transported. This is where blockchain technology can help significantly.

By recording not only where a product has been but also the conditions under which it was produced and transported, blockchain technology can help move supply chain management from traceability to transparency.

Blockchain can, for example, be used to record the temperature and humidity conditions of a pharmaceutical shipment, providing valuable information about the conditions under which the product was transported.

Furthermore, by allowing stakeholders to access the same information in real-time, blockchain can help provide greater transparency in the supply chain. This can aid in the development of trust among stakeholders and reduce the likelihood of fraud or other unethical practices.

The Advantages of Blockchain in Supply Chain Management

The use of blockchain technology in supply chain management has several advantages. The ability to increase transparency and traceability throughout the supply chain is one of the most significant advantages.

Blockchain can help build trust and reduce the likelihood of fraud and other unethical practices by providing stakeholders with real-time access to information about the products they are handling.

Another advantage of using blockchain in supply chain management is the ability to improve efficiency while lowering costs.

Blockchain can help reduce the time and resources required to track products and ensure compliance with regulations by automating many of the processes involved in supply chain management.

Finally, blockchain can help improve product safety and quality by providing valuable information about how they were produced and transported. This can help reduce the risk of contamination or other safety issues while also ensuring high-quality products.

The Difficulties of Using Blockchain in Supply Chain Management

While there are numerous advantages to using blockchain in supply chain management, there are also several obstacles to overcome. One of the most difficult challenges is the need for supply chain standardization.

To be effective, all stakeholders in the supply chain must use the same platform and adhere to the same protocols. This can be difficult in industries where stakeholders do not trust one another.

Another barrier to blockchain implementation in supply chain management is the requirement for data privacy and security.

While blockchain provides a secure and transparent method of recording transactions, it is critical to protect sensitive information. This can be accomplished by employing encryption and other security measures.

Finally, the investment requirements for the necessary infrastructure are very high. The reason is that implementing blockchain tech into the value chain includes the creation of new systems and platforms to support it, as well as the training of personnel to effectively use these systems.

What's Missing?

Blockchain technology has gained significant attention in recent years due to its potential to revolutionize various industries, including supply chain management. However, despite its benefits, there are certain elements which blockchain technology should focus in order to fully revolutionize supply chain management.

Real-time tracking of goods

Blockchain technology relies on a consensus mechanism that requires nodes in the network to validate and verify transactions. While this mechanism ensures the security and immutability of data on the blockchain, it can result in delays in the processing and validation of transactions. This delay can make it challenging to track goods in real-time, especially in fast-moving supply chains where goods change hands frequently.

Data privacy

Blockchain technology is based on a public ledger, which means that all transactions on the blockchain are visible to anyone on the network. This feature can be a significant concern for companies that want to protect their sensitive data from competitors and other third parties. While some blockchain platforms offer privacy features, they still may not be sufficient for supply chain management applications.


Blockchain technology is still in its infancy, and it is currently facing significant scalability issues. As more nodes join the network, the processing time required to validate transactions increases, which can slow down the entire network. This issue can be particularly challenging for supply chains that involve large volumes of transactions.


Supply chains often involve multiple parties and systems, each with its own technology stack and data format. While blockchain technology can provide a secure and immutable ledger, it may not be compatible with all existing systems, meaning interoperability is a crucial element going forward.


Finally, blockchain technology has the potential to revolutionize supply chain management by providing a secure and transparent method of recording transactions and tracking products throughout the supply chain.

By shifting from traceability to transparency, blockchain can help stakeholders build trust and ensure that products are safe and of high quality. While implementing blockchain in supply chain management has its challenges, the benefits are clear.

Blockchain has the potential to transform supply chain management and improve the safety, quality, and efficiency of products all over the world with the right investment and support.