Blockchain will Transform the Supply Chain Industry

Blockchain is associated with the financial sector, where its distributed ledger lets participants record and view transactions as they occur for real-time visibility and verification. That’s exactly what supply chain needs as well—for all parties in the global network to be able to see what’s happening in real time, to monitor compliance and make informed business decisions.

Blockchain provides a way to track transactions, goods, and events via a common digital ledger. In a typical supply chain, the parties record and maintain their own information separately; they don’t log anything beyond their domain. In blockchain, each transaction entry is linked together via encryption, and the collaborative, decentralized ledger is shared across the supply chain. Every transaction becomes part of the record and can be viewed on a “permissioned” basis, based on access granted to authorized roles. This lessens the time-consuming and error-prone process of exchanging updates and messages.

It also means near-zero latency, the goal of supply chains worldwide—each event and transactional process is immediately network-viewable across the chain. This has the potential to inject a new dynamism into supply chains—they can better track the movement of goods and information, make more accurate available-to-promise commitments, and quickly see where they might need to adapt schedules or strategies to respond to unexpected events, or changed market conditions.

Blockchain, the technology behind the digital currency bitcoin, found its early adopters in financial institutions as a way to track and trade stocks, bonds, and other asset classes. The IBM Institute for Business Value suggests blockchain is viable for shared logistics, coordinating “a vast array of activities, from sharing space in a warehouse to optimizing truck fleets and shipping containers. Retailers and manufacturers could greatly improve demand forecasting and stock replenishment. Regulators could trace the origin of goods from raw materials, making it easier to identify counterfeit items, as well as sources of tainted materials.”

Walmart is collaborating with IBM and Tsinghua University in Beijing to pilot the use of blockchain to track and trace pork in China and mangoes in the United States. Global shipping giant Maersk, also in concert with IBM, is employing blockchain to help manage and track the paper trail of shipping containers. In this application, each participant can view the progress of goods through the supply chain, and where a container is in transit. They can see the status of customs documents, bills of lading, and other data. No party can modify or delete any record without consensus from others on the network.

Maersk has transported goods from Schneider Electric on a container vessel from the Port of Rotterdam to the Port of Newark; it also shipped flowers from Kenya, mandarin oranges from California, and pineapples from Colombia to the Dutch port, to validate the blockchain approach.

The Maersk blockchain is based on the Linux Foundation’s open-source Hyperledger Fabric and hosted on IBM Cloud; plans are to support multiple parties across the ocean shipping supply chain later this year.

John Martin

John Martin writes about technology, business, science, and general-interest topics. A former U.S. correspondent for The Economist (Science & Technology), he writes for the private sector, universities, and media, and can be reached at