Blockchain Technology- Coming Soon to a Supply Chain Near You

Blockchain technology will transform supply chains and will be here soon!

As I mentioned in the original Industry 4.0 blog, nine enablers support Industry 4.0 or Smart Manufacturing.  The nine enablers are listed below.  As the technology matures, more manufacturers will want to automate their supply chains.  To accomplish this, they will rely upon blockchain technology.


Most of us think of Bitcoin when we hear the term blockchain.  While you might think they are the same thing, an easy way to differentiate the two is to think of blockchain as an operating system like Windows.  Bitcoin is, in fact, a cryptocurrency that uses blockchain as its operating system.  There are other cryptocurrencies as well- Ethereum, Ripple and many others that use the blockchain operating system.

 Blockchain is a shared, distributed ledger that facilitates recording transactions and tracking assets in a business network.  These assets can be tangible like raw material, a machined part, or assemblies.

They can also be intangible like intellectual property, such as patents, copyrights, or branding.   Two key benefits of using Blockchain across the supply chain is that it is:

  1. 1. Efficient: You record the transaction information once and it is available to all parties through the distributed network.
  2. Safe and secure: The underlying ledger is tamper-evident. A transaction can’t be changed; it can only be reversed with another transaction.  In this example, both transactions are visible.

Think of it like this, instead of each company within a supply chain keeping their own records, there is a shared record and everyone that has the permission to access the record can add their information to the shared record.  When you add information, it keeps a shared record available for everyone in the blockchain to see.

To ensure that we keep the supply chain information secure, your transaction is secured using cryptography and consensus.  Cryptography is encryption that ensures security.  Consensus refers to the ability of the private blockchain to verify the information as correct.  As blocks (information) are added to the chain, they have a cryptography marker of the previous block (which links them together), a time stamp, and the transaction data.

Imagine the time and cost savings, enhanced operational efficiency, increased security, privacy, and auditability of going from this scenario:


To the use of a distributed, shared ledger using private blockchain technology:


I think you can see from this simple visual that there will be huge reductions in friction across an entire supply chain.

Imagine if customs officials could complete your legal paperwork at receipt of goods and that you could track your goods from that point forward.

If you are in a regulated environment like aerospace or medical device, what would it mean to you can capture details down to the machine program used for specific parts that are machined?  What if the inspection and certification paperwork could be included as well?

What would happen to your warranty costs if you could capture specific attributes such as torque readings, bolt patterns, etc. and those could be included in the manufacturing record.  Now you can recall specific units versus a more general lot.

The opportunities are amazing for companies of all sizes using blockchain as a backbone for Supply Chain activities.  Coming soon to a Supply Chain near you!

As always, it is an honor to serve you and I hope that you and your company are getting better every day!

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