Blockchain & Supply Chain

“I can still hear you saying you would never break the chain” – Fleetwood Mac, the Chain

Interesting to hear comments on blockchain from both speakers this week, with both Carl Eschenbach (Sequoia, ex-VMware) and Jeff Welser (IBM) making glowing comments about the underlying technology, while expressing concern about scale and minor mention of the speculation in cryptocurrency markets.

At the risk of posting yet another blockchain post, let’s investigate one of the most promising use cases for the technology: supply chain.

Before we get started, an important thing to remember is that the blockchain itself is simply a cryptographic, distributed ledger1. Significant uncertainty remains around how large the technology will get – it may be a bit like saying the internet is just a bunch of connected computers, or smartphones are just computers for your pocket. Or the final market for blockchain may be much smaller.

One thing that is clear about the distributed ledger is that it fosters transparent communication and data ownership. Sanjay Almeida of SAP calls it “a federated trust model” that distributes ownership of data that all participants agree is secure, and most importantly, correct ( It is unclear at this time whether the market-dominant blockchain for supply chain will be public or private, with small start-ups and even established companies such as IBM offering privately stewarded ledgers ( With advances in product tracking (i.e. RFID and/or more advanced sensors) and automation of terms such as payment through the use of smart contracts, the possibilities are significant for supply chain.

One current problem with the supply chain is that it spans hundreds of companies and geographic locations ( That means that at each transfer of custody, a product enters a new system and its history is lost to any subsequent customers. If there are any problems downstream of a given transfer of custody, it can be very cumbersome to track the issue back to the origin and at a minimum would involve individuals from a number of separate companies.

In contrast, a distributed ledger would track the entire history of a product and any associated data that the participants agrees is important. A common example given for when this can be a significant problem is in contaminated foods. When large organizations face issues with contamination at only one of their thousands of global suppliers, it can be very time-consuming to track down exactly where the contamination occurred and put an end to it, as Walmart and Chipotle both experienced in recent years (, This is especially problematic when a quick response is critical to avoiding a scandal. A distributed ledger could track the entire history of each delivery – including location, transit time, temperature, all the way back to the livestock or farm of origin and associated vaccination or sanitization record. This would make it easy for the organization aggregating the products, or even the end customer, to track the product’s history.

I will leave it up to Chipotle whether to disclose to its customers how many times the pig in their burrito bowl was vaccinated. It isn’t difficult to think of markets (diamonds? energy?) where customers may be more interested in the origin of the products they purchase.

1 3Blue1Brown, Ever wonder how Bitcoin (and other cryptocurrencies) actually work?


5 comments on “Blockchain & Supply Chain”

  1. Great post, this seems to be one of the most straightforward and promising uses of blockchain technology as it benefits from the core, underlying principles of the technology which is just that all transactions are verified, immutable, and do not get deleted. I thought of this when I read an article a while back about how much fraud there with fish in restaurants and supermarkets, and apparently the majority of it is earlier or towards the middle of the supply chain where little can be proven with the system as is.

    It seems like the system would take some time for trusted suppliers to gain a reputation but once they do the bad ones would have less and less business.

    It is interesting because in this case it seems like the technology would be being used for the opposite of the intended goal. The originators of bitcoin and the crypto community seemed to be pushing for increased anonymity, where this seems like it would behoove suppliers to build their block chain presence and reputation.


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    1. Thank you Kyle. I didn’t even think about the fish identification issue. Seems like a great opportunity for blockchain.

  2. Nice post with some interesting applications of blockchain I hadn’t thought of.
    IBM’s approach of using the “shadow blockchain” internally in the company, as mentioned at Friday’s lecture, was along a similar theme of “track[ing] the entire history of a product”. The same can be said to voting systems that run on a Blockchain, where the entire history makes manipulation harder, if not impossible, and also keeps a record of voting history (so we can see how active our congressman and senators are!)…

  3. Thank you for your great insight on this specific use of the blockchain.
    Because the author as well as the commentators pointed out the transparency aspect of the system, I propose we should think about this a little bit more.
    If we want to use the blockchain for more customer-safety and transparency, this includes the assumption that customers, or probably everyone who is affected by the “transactions” should be able to access this data. This lets come up the question whether this is an realistic assumption (now, in ten, or fifty years). I would argue, in order to really use the blockchain to improve transparency and customer safety there have to be general improvements in e-literacy, and/or the system must be linked to an open platform that is easily accessible and user-friendly.

    1. Agree completely Leon. It will be interesting to see who stewards the private blockchain, or whether big corporations get comfortable using a public blockchain.


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