One of the key challenges supply chains continue struggling with (aside from low engagement by young potential employees and equipment shortage) is the need for transparency.
Tackling this challenge requires a bigger focus on data collection, which often entails high costs, time-consuming efforts, and multiple communication-related complications across the supply chain. As a result, the pursuit of transparency increases operational complexity instead of reducing it—and stakeholders find themselves back where they started. To break this vicious circle, many companies turned their attention to blockchain, seeing it as the technology that can make a difference in supply chain management.
To make the task easier for decision-makers, we decided to break down the benefits and perspectives of blockchain in logistics, explore its effect on the industry—and provide some tips on adopting blockchain for supply chains.
Before we start outlining the benefits of blockchain in the logistics industry and mapping out its potential implementation, we need to go through the existing use cases and see how enterprises currently interact with the technology.
Applications of blockchain in logistics
- Invoice management
Security has always been a must-have component of supply chain digitization—and one of the strongest aspects of blockchain. Companies have been using blockchain decentralized data storage—for instance, Tallysticks developed a logistics blockchain platform capable of quick real-time processing of payments and invoices.
After integrating with stakeholders' ERP systems, the platform provides a shared digital ledger to view immutably recorded invoices, payment confirmation, reconciliation data, and other relevant information. Permission-based access ensures that no third party is allowed to view the payment data, increasing trust and providing enterprises with more accurate data gathering. - Freight monitoring
One of the most well-known blockchain-based cargo tracking systems is the TradeLens platform created by Maersk and IBM. Such a system allowed Maersk to considerably improve item traceability, letting each stakeholder track the cargo's journey across the entire supply chain, complete with all the accompanying documentation.
What is equally important, TradeLens provides users with safe data storage, ensuring that only stakeholders have access to the logistics data. Although TradeLens was discontinued in 2022 due to the lack of readiness for global adoption, Maersk had positive comments about the platform's performance. - Information processing
The way blockchain in supply chains prevents valuable data from slipping through the cracks has been explored by Provenance, a blockchain network that focuses specifically on tackling supply chain transparency issues. Currently used by The Grass Roots Farmers Cooperative, Martine Jarlgaard, and other companies, it collects and verifies product origin data, securing transparent and effective supply chain management. - Product track-and-trace
By building an immutable chain of data records, blockchain provides unique opportunities for supply chain management, especially when keeping up with product quality standards. Blockchain-based platforms enable micro-level management of products that arrive on supermarket shelves—which is why such major retailers as Walmart decided to leverage blockchain to track its specific products.
Before adopting blockchain technology, it took Walmart around 6 days and 18 hours to trace their products' journey from the farm to the supermarket. However, after implementing blockchain in logistics, it takes Walmart around 2.2 seconds to trace the product’s delivery route without missing a single detail. Such success prompted Walmart to invest in a Walmart Food Traceability Initiative where blockchain technology would allow businesses, farmers, and distributors to cooperate for creating a transparent food safety system.
There is much more to the application of blockchain in supply chains—such as ensuring pharmaceutical product integrity or transferring logistics-related paperwork to the blockchain. In general, the more enterprises realize what value they expect to unlock with the help of blockchain technology, the easier it is for them to see how it clicks with their niche.
Benefits of blockchain in the logistics industry
We should instantly cement down the most important advantage blockchain delivers to supply chains: trust.
Using blockchain in supply chains provides stakeholders with a reliable and trustworthy intermediary that lacks flaws associated with bodies of authority (bureaucracy, interference in the trading process, lack of compliance from government reps). At the same time, it eliminates data discrepancies, accelerates information exchange, and gives all parties complete control over their product journey, document flow, and financial data. The introduction of blockchain in logistics enables fair trade policies, facilitates compliance, and healthier communication even at micro-levels.
Speaking of other benefits of blockchain in logistics, it's worth outlining the following:
- Improved traceability
To continue with the subject of trust, blockchain streamlines communication between all the parties involved. Within a traceable blockchain-based supply chain system, farmers who grow produce for supermarkets can monitor how their product is delivered to its destination, keep track of quality standards compliance, and be guaranteed that they're provided with fair compensation.
Meanwhile, the representatives of supermarkets can confirm that the products delivered are high-quality and provide their consumers with more accurate information on the product's origin, increasing buyer trust. - Fraud prevention
Different types of fraud (from financial fraud to product origin fraud) have always been the bane of supply chains, resulting in numerous delays, setbacks, and profit losses. The tamper-proof structure and immutable recordkeeping of blockchain allow for more secure data storage, enabling enterprises to monitor their payments, verify real-time transactions, and trace product origins, preventing financial or reputational damage. To reduce the risk of fraud even more, some enterprises can use ML for fraud detection and prediction in addition to blockchain data storage, closing down potential exploits and introducing effective anti-fraud measures. - Cash flow acceleration
Aside from removing intermediaries, blockchain also removes human error by letting smart contracts handle transactions and financial operations. While smart contracts aren't the silver bullet for all financial operations, they assist with minimizing the paper clutter and boosting the performance of activities by removing extra verification steps or long response times from intermediary banks. Therefore, adopting blockchain for supply chain management helps enterprises to rethink their approach towards a more dynamic and productive one.
Using blockchain technology for logistics is just one of the ways to unlock productivity-boosting opportunities for supply chains. But when it comes to building a new trust-based environment and transparent, friction-free communication between all parties, blockchain is the game-changer that ticks all the boxes.
Future uses of blockchain in logistics
With all the benefits of blockchain outlined, it becomes clear why the blockchain supply chain solutions market is expected to deliver $1620 billion in revenue by 2028. The value it brings to logistics is guaranteed to engage more enterprises, ultimately transforming the logistics and supply chain industry in the coming years.
What do we expect from the blockchain regarding the future of supply chains?
- Extending the control to buyers
In the long term, blockchain in logistics will let end buyers enjoy unprecedented transparency. For instance, any Walmart buyer will be able to track the product's journey from the farm, to the processor, to the distributor whenever they want to verify its quality, ethical origin, or compliance with regulations—which would leave them more confident about their purchases and vendors they interact with.
Similarly, pharmacy clients will have an opportunity to verify that they buy certified medicine from verified medical brands, minimizing the risk of fraud. This level of consumer control will positively affect the supply chain, increasing product demand and building more trust across all levels. - Bureaucracy-free logistics
Blockchain has already shown great potential for reducing the paperwork necessary to keep supply chains active. However, there is an opportunity for entirely digitized and fast supply chain management in the future, where processes aren't slowed down by bureaucratic loops and are overseen through smart contracts, distributed digital ledgers, and even more innovative co-planning features that help stakeholders make decisions faster. - New global collaboration
The potential of blockchain in logistics can assist enterprises with tackling other supply chain management issues such as underemployment. A modernized approach to supply chains creates opportunities for engaging and training young employees, who can quickly familiarize themselves with platforms and embrace the new, more dynamic way of handling logistics. This change would refresh the supply chain workforce with new skills and help companies inject the agility needed to maintain stability even in the unpredictable business landscape.
It may seem that the future blockchain in supply chains looks good and is inevitable. But, such a positive image can only become real with a realistic approach to existing challenges that, if not solved, will continue holding that promising future back.
Challenges of adopting blockchain technology
It's worth addressing that while blockchain has rapidly increased its influence, the technology is still not omnipresent—and there are discontinued projects similar to TradeLens. Logically, such drawbacks indicate that some pitfalls in blockchain adoption need to be evaluated before making a decision.
- Low stakeholder commitment
The most significant factor complicating blockchain adoption is usually not technological but human. Enterprises often struggle with issues that can potentially be solved with blockchain—and yet, since stakeholders perceive blockchain-based transformation as a massive digital overhaul, they lack readiness and motivation to commit. As a result, they end up contending with the technological issues and risk giving their competition a head start.
As a rule, this challenge can be overcome through constant, detailed communication with blockchain CoE team leaders who have an in-depth knowledge of the stakeholders' business vision and, therefore, can explain how blockchain solutions help them bring that vision to reality. - Obsolete collaboration culture
Blockchain in the supply chain offers new ways of collaboration and organization, not all enterprises are ready for. It shifts operations further into a decentralized direction, which stakeholders must adapt to.
For that reason, we suggest evangelizing blockchain technology in the company before adopting it—by familiarizing employees and stakeholders in advance. This way companies can mitigate the risks and ensure a lack of resistance when integrating logistics blockchain solutions with their systems and reimagining their supply chain management. - Technological barriers
Onboarding employees on blockchain can take too much time and resources because blockchain is a rather complicated system for new users—and certain age groups within the company and among partners will find the learning process daunting. Additionally, one company can’t unlock all logistical benefits of blockchain. A traceable blockchain-based system requires all participants to invest in digital recordkeeping systems—not all partners will be able to see the merit behind the expenses.
This is the issue Walmart is currently dealing with within their food safety initiative as they work on introducing the technology to not tech-savvy farmers and potential partners, who are yet to familiarize themselves with the blockchain. Naturally, downsides like these add to the stakeholders' hesitance to adopt the technology. - Poor UX/UI
Currently, blockchain UX/UI interfaces are far from intuitive. While users closely familiar with blockchain or involved in development have no issues with using blockchain-powered services, the barrier to entry remains high for users who have yet to gain experience with this technology.
From our point of view, usability problems must be addressed from the blockchain developers' side by bridging the gap between web3 components and employees' web2-oriented mindset through interfaces that duplicate data on blockchain operation, present it in a user-friendly way, and facilitate employees' interaction with blockchain components through proper interface visualization. This approach enabled us to avoid organizational resistance and provide a smooth and comprehensive introduction to blockchain-powered operations. - Bridging physical and digital
The main tech challenge of blockchain adoption for logistics is digitally tagging all products. This step is vital for benefiting from the trust, transparency, and traceability provided by blockchain technology. Still, it also requires overlooking an entire supply chain and finding ways to introduce digital tagging. The issue of linking physical products to digital tags is directly related to stakeholders' commitment issues, but it is usually settled through a dialogue with blockchain team reps who can strategize together with stakeholders and offer the most fitting and time-saving practices.
Every innovation comes with its challenges—blockchain is no exception. However, if implementing this innovation helps an enterprise eliminate a number of niche-related issues, build resilience, and discover growth potential, the result is worth the effort.
How to implement blockchain in supply chains
Blockchain in logistics can offer a new, transformative experience—if there is a need for it. Like all other innovations and disruptive technologies, blockchain isn’t the silver bullet. It's just a tool that can either fit the company's needs or end up incompatible with the end goals.
1. Discover the fit
Blockchain in logistics can offer a new, transformative experience—if there is a need for it. Like all other innovations and disruptive technologies, blockchain isn’t the silver bullet. It's just a tool that can either fit the company's needs or end up incompatible with the end goals.
For that reason, we always recommend making a decision after detailed research of the enterprise, its operations, its supply chain activities—and long-term objectives.
The main goal of such analysis is to avoid investing in blockchain adoption for the sake of adopting blockchain. There must be certain goals and needs that only blockchain can cover—then the enterprise will gain max value with minimal adoption risks.
2. Find intermediaries
Blockchain remains a complex subject for organizations and employees, so enterprises need more than blockchain developers who can build a solution. They need architects and engineers who can build bridges between web3 and web2 components and create a multi-layered architecture that lowers the learning curve for the employees.
In practice, it looks the following way: a blockchain center of excellence (CoE) designs and develops an architecture within the enterprise. Within that architecture, blockchain CoE handles and maintains all blockchain components within the enterprise. At the same time, other departments and employees are dedicated to managing their responsive tasks through special interlayer solutions with intuitive interfaces and data visualization for working with blockchain-collected data while maintaining the familiarity of web2 elements.
This approach helps companies avoid numerous adoption challenges and revolutionize their logistics.
3. Communicate and share your vision
Blockchain technology isn't without its complications and downsides—and yet, its rapid adoptions led to its evolution, with private blockchain showing more flexibility, becoming less energy-consuming, and demonstrating improved performance speed. That’s why it's important to consult with blockchain developers and architects before, throughout, and after the development journey, communicating needs, expectations, and ideas of synergy.
Take a step forward
Empower your supply chains with ultimate transparency
Ensuring transparency in collaboration will guarantee the creation of a logistics blockchain solution that will embed a transparent and collaborative approach into the company's logistics.
If you are ready to discuss using blockchain technology for logistics, let’s chat! With our insights-rich and result-driven blockchain development team, you will bypass all adoption bumps and go straight to empowering your supply management with a trust-building and process-accelerating solution.
