7 Ways Blockchain Is Changing Supply Chain Strategy

5 min readJan 6, 2018

People are going nuts for blockchain. As in, there are people who think blockchain can upend supply chain strategy, revolutionize the economy, or do something equally crazy like predict the probability of snow patterns in hell.

Okay, not so much the last bit. But there are people who believe blockchain has the power to transform supply chain strategy.

Here are 7 reasons why.

1. The Global Ledger

Let’s go back to the basics of how blockchain works.

Picture a ledger. A big book where you record the full contents of every transaction.

At its heart, blockchain is a ledger. Or, if you prefer, a database. A huge, decentralized digital database.

Let’s say you want to enter a transaction. You put in all the relevant information and enter it. That entry becomes a block in the blockchain you’re using. The blockchain stores all entries ever received to the chain chronologically, from the first to the most recent.

Anyone with access to the blockchain can see those entries. Every entry anyone’s ever made, and the contents of that entry.

2. Driving Supply Chain Transparency

What happens when every person in a supply chain strategy has access to every record in the supply chain, at every step, at all times?

Well, for starters, everyone knows what’s going on. At all times, at every point, at all points in the history of the supply chain.

This makes it easier to spot mistakes. It also makes it easier to validate transactions, because everyone has the information, and the information cannot be changed (more on that in a minute).

3. Tracking Digital Provenance

And since everyone has access to all parts of an entry, they also know who the entry came from and when — every block has a timestamp and a link to a previous block.

Think about that. You could have all the information you needed about a transaction — more information than you even knew you needed — at your fingertips.

4. Immutable Digital Records

Here’s the kicker about blockchain.

Everyone has access to all parts of the chain, right? Thing is, once a block has been added, it’s locked in. Set in stone.

Everyone can see it, but no one can edit it, copy it or delete it. Ever.

This is thanks to cryptography — everyone has the keys to edit the parts of the blockchain they own in order to make an entry. But even if they have the keys, they can’t retroactively rewrite the data.

It’s a digital record that can’t be changed, in a world where we’re constantly worried about the trustworthiness of digital records.

5. Decentralized Currency

Remember the word decentralized? As in decentralized digital database?

Hold onto your hats. We’re about to use that word a lot more. It’s an important word in blockchain.

Blockchain is made up of two parts. The database you can see and the enormous network facilitating and verifying transactions.

Think of Wikipedia. Verified users can make any changes they like, and visitors are presented with the master copy of those changes, but the data is ultimately controlled by administrators.

Blockchain doesn’t work like that. No one holds the keys to the whole network.

That’s why blockchain is so secure. The storage device for the whole network isn’t on one common processor that can be hacked. Besides that, the entire system is updated and verified every time someone uses their individual keys to add an entry.

Remember how we said every block contains a timestamp and link to the block that came before? That’s how blockchain verifies it as valid.

And because there is no centralized system storing all of the encryption information, the only way to hack a blockchain entry is to rewrite the entire history of transactions that came before. When anyone in the world with the correct keys can add an entry anytime they like.

It’s exactly as impossible as it sounds.

6. Creating a Trustless System

The blockchain is a trustless system. Which isn’t the same thing as a system where there is no trust.

It’s a system where no trust is required.

Think about that.

The system is impossible to hack, and you dodge the double-spend problem because you can’t hack an entry once it’s been made. So you don’t need to place trust in the other person or bring in a trusted third party to verify the data for you.

The blockchain verifies every entry every time it verifies an individual entry.

Think about how many corporate exchanges of data require weeks of chest-pounding and power plays just to change hands. Blockchain removes the need for all of that — the data is there and is being verified 24/7.

Think about how that applies to supply chain strategy. You can track a hamburger from the cow to the trash, every supplier it passed through, when and where.

7. Decentralized Data, Decentralized Trust

Let’s go back to the corporate power-plays required to verify and transfer even a small amount of data. Think of the cost required for even that simple transfer.

It’s expensive. And it isn’t sustainable — in the time it takes you to finish onboarding your suppliers, you’ve been outcompeted.

Now think about applying that due diligence process using blockchain instead, where you already know that the information you have access to is both verified and unhackable.

Think about how much easier it would be to track the components of your supply chain and spot mistakes in a system that requires no trust.

Let’s say you’re a food company with a salmonella outbreak. Somewhere along the line, someone messed up. You don’t have to worry about records being retroactively changed in blockchain to help people keep their jobs because the records are impossible to change.

That day is upon us. Click to keep reading about what that means for you.