Blockchain & Supply Chain Management

today the process, tomorrow the system

Blockchain technology is, in a certain way, a “solution in search of a problem”. While it is clearly defined in its general elements and has abundantly proven its feasibility and soundness, it still misses a “killer application”, an easily recognizable use case where its contribution has made a deep change. At Blockchain District, we can say that we are actively searching for this Holy Grail, and we may even have seen some glimmers in the dark, but we are quite sure that one of the most promising fields is that of supply chain management.

Blockchain-based solutions improve supply chain management by enhancing traceability, transparency, efficiency, and trust across complex supply chains. They create a transparent, immutable record of all transactions, enabling precise tracking of products from origin to destination in real-time. This reduces fraud, counterfeiting, and errors by making all data verifiable and tamper-proof. Automated processes like smart contracts speed up payments and logistics, lowering administrative costs and human errors.

Key benefits include:

• Improved traceability and provenance, allowing businesses and customers to verify the authenticity and journey of products reliably.
• Increased transparency among supply chain participants, fostering trust and making product status publicly accessible if desired.
• Automation of processes such as payments, inventory tracking, and logistics to boost efficiency and reduce operational costs.
• Reduction in paperwork and administrative overhead through secure data sharing across all stakeholders.
• Enhanced compliance with regulations by providing a tamper-proof audit trail accessible to regulators.
• Better quality control by enabling quick identification and removal of substandard goods.
• Streamlined and more efficient product recalls by quickly locating affected products.

This technology can significantly help with sustainability in supply chains, as it enables all partners to record and share information in an immutable, chronological ledger, ensuring that each stage of the product lifecycle—from raw material extraction to end use—is verifiable and transparent. This transparency helps companies confirm that their suppliers follow ethical and sustainable practices, such as responsible sourcing and reduced carbon emissions.

With blockchain, stakeholders can precisely track product origins and production methods, which supports compliance with environmental and social standards. Smart contracts can automatically enforce sustainability conditions, like using eco-friendly materials or adhering to emissions limits. Additionally, blockchain helps reduce waste and inefficiencies by optimizing supply chain processes, improving inventory management, and lowering overproduction. This reduction in waste and carbon footprint contributes to more environmentally friendly operations.

The increased visibility and accountability also deter fraud, illegal practices, and corruption, which are barriers to sustainability. By promoting trust and verifiable sustainable actions, blockchain enhances brand reputation and meets consumer demand for responsible business practices. This technology plays a pivotal role in addressing complex sustainability challenges, especially in multi-tiered and global supply networks, by supporting more informed decision-making and fostering sustainable business models.

Several leading companies are using blockchain technology to enhance sustainability in their supply chains:

• Unilever: Uses SAP’s GreenToken blockchain platform to monitor sustainable palm oil sourcing, ensuring no deforestation and improving raw material transparency.
• Cargill: Employs blockchain to deliver end-to-end traceability in its turkey supply chain, improving food safety, quality control, and sustainability practices.
• Nestlé: Uses IBM Food Trust blockchain to track food products like milk and palm oil, enhancing transparency and compliance with sustainability standards.
• Mondelez International: Applies blockchain to improve cocoa supply chain transparency through its Cocoa Life program, supporting ethical sourcing and sustainable manufacturing.
• Kellogg’s (Kellanova): Partners with IBM to track raw material sourcing with blockchain, ensuring sustainable and ethical farming practices.
• Tentree: A Canadian apparel company using blockchain to track sustainable product and fiber supply chains.
• Veritree: Uses blockchain for tracking progress in tree planting initiatives linked to sustainability goals.
• Walmart: Uses blockchain to manage leafy greens suppliers, improving safety and sustainability in food sourcing.

As we can see, there is a conspicuous tracking record of proven applications of blockchain technology in this field. However, we are still experiencing an innovation of process, which improves how things are done but keeps doing the same things. The next step, the real challenge of technological innovation, is to enable an innovation of the system, to do new things. Well, we are working on it.