ISSN: 2455 - 1597
International Journal of Engineering Research and Generic Science (IJERGS)
Available online at: https://www.ijergs.in
Volume - 11, Issue - 3, May – June - 2025, Page No. 33 - 39
Blockchain Technology in Supply Chain Management: Innovations, Applications and Challenges
1
Upasana Sharma, Research Scholar, Department of Computer Science, Arya College of Engineering, Jaipur.
2
Tanu Sharma, Research Scholar, Department of Computer Science, Arya College of Engineering, Jaipur.
Abstract
This report provides a comprehensive analysis of the transformative potential of blockchain technology in supply
chain management (SCM). It explores the key innovations driving its adoption, including integration with IoT and
AI, advancements in blockchain platforms, enhanced security features, sophisticated smart contracts, the emergence
of digital twins, and efficient consensus mechanisms. The report details diverse applications of blockchain across
various industries such as food, pharmaceuticals, automotive, luxury goods, agriculture, and electronics, highlighting
its role in enhancing transparency, traceability, efficiency, security, and cost reduction. Furthermore, it critically
examines the challenges associated with blockchain implementation in SCM, including technological barriers,
regulatory uncertainties, scalability issues, high implementation costs, and the necessity for stakeholder
collaboration. Finally, the report outlines future trends and the anticipated evolution of blockchain in supply chain
management, emphasizing increased adoption, convergence with other technologies, the development of industry
standards, and a growing focus on sustainability and ethical sourcing.
Keywords: Blockchain Technology, SCM, Iot, Scalability Issue.
Introduction
Blockchain technology, at its core, represents a decentralized and distributed digital ledger that records transactions
across numerous computers, ensuring transparency, immutability, and security. This fundamental architecture
distinguishes it from traditional database systems, which rely on centralized control and are more susceptible to single
points of failure and manipulation. The inherent characteristics of blockchain offer a robust solution for supply chain
management (SCM), an intricate network involving multiple stakeholders and complex processes. The ability of
blockchain to provide a secure and transparent record of transactions and the movement of goods addresses critical
vulnerabilities prevalent in conventional SCM systems. Traditional approaches often suffer from a lack of a unified and
verifiable source of information, leading to data inconsistencies, operational inefficiencies, and a lack of trust Modern
supply chains are increasingly characterized by their complexity and global reach, involving numerous participants across
diverse geographical locations. Existing management systems often struggle to effectively address the multifaceted
challenges arising from this intricate ecosystem. Issues such as a lack of end-to-end visibility, operational inefficiencies,
and susceptibility to disruptions are common pain points in traditional SCM. Furthermore, there is a growing demand
from both consumers and businesses for greater transparency regarding the origins of products and the ethical
considerations involved in their production. The integration of blockchain technology into supply chain management
presents a significant opportunity to overcome these limitations and revolutionize how goods and information are
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managed across global networks. The global blockchain supply chain market has witnessed substantial growth, estimated
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at USD 2.26 billion in 2023, with projections indicating a remarkable compound annual growth rate (CAGR) of 90.2%
Corresponding Author: Upasana Sharma, Volume - 11, Issue - 3, May – June - 2025, Page No. 33 - 39
Upasana Sharma, et al. International Journal of Engineering Research and Generic Science (IJERGS)
from 2024 to 2030. This significant market expansion reflects a growing recognition of blockchain's potential to address
critical challenges and deliver tangible benefits in supply chain operations.9This report aims to provide a comprehensive
analysis of the innovations driving the adoption of blockchain technology in supply chain management, explore its
diverse applications across various industries, and critically examine the challenges associated with its implementation.
The scope of this report encompasses global supply chains, with a particular emphasis on recent advancements and
anticipated future trends up to the year 2025.
Innovations Driving Blockchain Adoption in Supply Chain
The integration of blockchain technology into supply chain management is being propelled by several key
innovations that enhance its capabilities and address the evolving needs of modern logistics and commerce. One of
the most transformative trends is the synergistic integration of blockchain with the Internet of Things (IoT) and Artificial
Intelligence (AI). The combination of these technologies is creating "smart" and increasingly autonomous supply
chain ecosystems. IoT devices, such as smart sensors and RFID tags, play a crucial role in collecting real-time data
regarding the location, condition (including temperature and humidity), and movement of goods throughout the
supply chain. This data, captured at various stages, is then securely recorded on the blockchain, ensuring its
integrity and immutability. Furthermore, Artificial Intelligence (AI) and machine learning algorithms are being
increasingly employed to analyze the vast amounts of data stored on the blockchain. This analysis enables businesses
to optimize transportation routes, more accurately predict demand fluctuations, detect anomalies that might indicate
inefficiencies or fraud, and ultimately make more informed and proactive decisions across their supply chain
operations. For instance, blockchain-connected scanners, capable of reading barcodes and RFID tags, transmit
scanned information directly to the blockchain, providing precise and real-time tracking of an item's journey. The
synergy of these technologies fosters a more responsive, efficient, and transparent supply chain ecosystem, where
data integrity is assured, and processes are increasingly automated.
Significant advancements in blockchain platforms are also driving adoption in SCM. Notably, the emergence and
growing popularity of hybrid and consortium blockchains are addressing key enterprise concerns. These platforms
offer a compelling balance between the complete transparency of public blockchains and the enhanced privacy and
control afforded by private blockchains. Hybrid models allow organizations to leverage the benefits of both types,
while consortium blockchains enable a group of organizations to collectively manage a network, establishing shared
control and governance. This evolution is particularly beneficial for enterprise adoption as businesses often handle
sensitive data that necessitates controlled access and customizable permissions. Platforms such as Hyperledger
Fabric, Ethereum, Polygon, and Kaleido are prominent examples, offering distinct features and functionalities
tailored for various SCM use cases. For example, the IBM Food Trust, built on Hyperledger Fabric, is widely used
for enhancing traceability in the food industry. Kaleido, on the other hand, provides blockchain-as-a-service (BaaS)
solutions, simplifying the deployment and management of blockchain networks for supply chain applications. The
development of these more adaptable and enterprise- focused blockchain platforms is crucial for facilitating wider
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industrial integration.
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Upasana Sharma, et al. International Journal of Engineering Research and Generic Science (IJERGS)
Continuous enhancements in security features are also paramount for building trust and promoting the broader
application of blockchain in supply chain management. Advancements in cryptography, including sophisticated
encryption techniques and digital signatures, are bolstering the security of blockchain- based solutions, effectively
preventing fraud, tampering, and unauthorized access to sensitive supply chain data. The use of permissioned
blockchains further enhances security by ensuring that only authorized participants can access and modify data
within the network, fostering a higher degree of trust among supply chain partners. These continuous improvements
in security protocols are vital for building confidence in blockchain technology and encouraging its adoption across
industries dealing with valuable and sensitive goods.
The growing sophistication of smart contracts is another crucial innovation driving blockchain adoption in SCM. 1
These self-executing contracts automate transactions and enforce agreements based on predefined conditions,
significantly reducing the need for intermediaries and streamlining various processes. Applications of smart
contracts in SCM include automated payments upon verification of delivery, automated processing of orders, and
automated checks for regulatory compliance. As the technology evolves, smart contracts are becoming increasingly
capable of handling complex business logic and workflows, moving beyond basic transactions to facilitate more
sophisticated automation across the supply chain
The emergence of digital twins also represents a significant innovation at the intersection of blockchain and SCM.
Digital twins are virtual replicas of physical supply chain operations, allowing organizations to simulate various
scenarios and proactively mitigate potential risks. Blockchain technology enhances the functionality of digital twins
by providing a secure and transparent record of the underlying data. 45 This ensures the accuracy and reliability of
the simulations and predictions generated by the digital twins, offering a trusted and auditable foundation for risk
management and strategic decision- making in supply chains.
Finally, the development of more efficient consensus mechanisms is addressing some of the historical limitations of
blockchain technology in SCM. Traditional mechanisms like Proof-of-Work (PoW) have faced criticism for their
energy consumption and scalability challenges. The emergence of more efficient algorithms, such as Proof-of-Stake
(PoS) and Proof-of-Authority (PoA), offers more sustainable and scalable solutions for SCM applications. For
instance, Ethereum's transition to PoS significantly reduced its energy consumption. These advancements are
crucial for enabling the deployment of blockchain in large-scale supply chain networks with high transaction
volumes and growing concerns about environmental sustainability.
Diverse Applications of Blockchain Across Industries
Blockchain technology is finding diverse and impactful applications across a wide range of industries,
revolutionizing how supply chains are managed and optimized. One of the most prominent applications is in
enhancing transparency and traceability throughout the supply chain. By providing an immutable and distributed
record of product journeys, blockchain enables businesses and consumers to track goods from their point of origin to
the final destination. This capability is crucial for verifying the authenticity of products, ensuring ethical sourcing
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Upasana Sharma, et al. International Journal of Engineering Research and Generic Science (IJERGS)
of materials, and facilitating swift and accurate product recalls when necessary.1 For instance, Walmart's Food
Trust network utilizes blockchain to track produce and pork products, enabling rapid identification of contamination
sources. Similarly, De Beers leverages blockchain to trace the origin of diamonds, ensuring they are ethically
sourced and conflict-free.
Blockchain also significantly contributes to improved efficiency and cost reduction in supply chain operations. 1
By streamlining processes, reducing the need for extensive paperwork, eliminating intermediaries, and automating
transactions through smart contracts, blockchain helps organizations achieve substantial cost savings and enhance
their operational efficiency. Studies indicate that blockchain technology has the potential to reduce supply chain-
related costs by approximately 20%. 8 Maersk's collaboration with IBM to develop blockchain applications for
freight tracking and administration exemplifies this, aiming to increase transparency, decrease idle time, and reduce
overall costs in shipping and logistics.
The inherent security features of blockchain technology contribute to stronger security and fraud prevention
within supply chains. The tamper-proof nature of blockchain records makes it exceptionally difficult to alter data,
thereby mitigating the risk of fraud and ensuring the integrity of information across the supply chain.
This is particularly valuable in combating counterfeit products, as demonstrated by Chronicled's use of blockchain
to verify the authenticity of pharmaceuticals. In the food industry, blockchain enables end-to-end traceability,
ensuring food safety and quality from farm to consumer, as seen in the initiatives by Walmart, Nestlé, and
Carrefour. The pharmaceutical industry utilizes blockchain to combat counterfeit drugs, enhance supply chain
integrity, and ensure the authenticity of medications, with examples like MediLedger and initiatives by Pfizer and
Merck. The automotive industry leverages blockchain for tracking components, managing vehicle history, and
ensuring transparency across the supply chain, as demonstrated by BMW, Ford, and Volkswagen. In the luxury
goods sector, blockchain is used for authenticating products and tracking their provenance, with notable examples
including initiatives by LVMH, Prada, Cartier, and De Beers. The agriculture industry benefits from blockchain
through enhanced transparency, fair compensation for farmers, tracking of organic status, and improved food safety,
as seen in the applications by AgriDigital and Ripe.io. Finally, in the electronics industry, blockchain is being
explored for combating counterfeit components and improving overall supply chain visibility, with initiatives by
companies like Infineon and the Mobility Open Blockchain Initiative (MOBI).1
Navigating the Challenges of Blockchain Implementation in Supply Chain
Despite the numerous innovations and applications, the widespread implementation of blockchain technology in
supply chain management is not without significant challenges. One of the primary hurdles is the technological
barrier associated with integrating blockchain into existing legacy systems. Many organizations rely on established,
often outdated, IT infrastructure that may not be readily compatible with blockchain technology. Ensuring seamless
interoperability between different blockchain platforms and these existing systems is a complex and resource-
intensive task. Furthermore, maintaining data quality and establishing robust data governance protocols on a
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distributed ledger present additional complexities.4 Ensuring the accuracy of data inputted into the blockchain and
maintaining its consistency across the network are critical for the reliability of blockchain- based SCM solutions.
Regulatory and legal uncertainties also pose a significant challenge to the widespread adoption of blockchain in
supply chain management. The legal landscape surrounding blockchain technology is still in its nascent stages, with
a lack of clear and consistent legal frameworks and standards governing its application in SCM. 3 Issues related to
data privacy regulations, such as the General Data Protection Regulation (GDPR), cross-border transactions, and
overall compliance with existing laws add further complexity for businesses seeking to implement blockchain
solutions.
Scalability issues represent another significant challenge, particularly for large-scale global supply chains that
involve high transaction volumes and massive amounts of data.1 The current blockchain infrastructure may struggle
to efficiently process and store the sheer volume of transactions generated by complex supply chain networks,
potentially leading to delays and increased costs. Ongoing research and development efforts are focused on
addressing these limitations through various scaling solutions, such as sharding and Layer- 2 protocols.
The high implementation costs associated with blockchain technology can also be a substantial barrier to adoption.
These costs include the initial investment in infrastructure setup, software development, the hiring of specialized
blockchain expertise, and the ongoing maintenance of the network. Such significant financial outlays can be
particularly challenging for small and medium-sized enterprises (SMEs) with limited budgets.
Finally, the successful implementation of blockchain in SCM necessitates extensive stakeholder collaboration and the
establishment of trust among all participants in the supply chain. Convincing diverse organizations with potentially
competing interests to actively participate and share data on a common platform can be a complex undertaking.
Establishing clear governance models and addressing concerns around data privacy are crucial for fostering the
necessary trust and encouraging widespread participation.
The Future Landscape: Trends and Evolution of Blockchain in Supply Chain
The future of blockchain technology in supply chain management appears promising, with several key trends
indicating its continued evolution and increasing impact across industries.
Increased adoption across various sectors is a strong indication of blockchain's future trajectory in SCM.1 Market
forecasts predict substantial growth in the blockchain supply chain market size, indicating a strong belief in its
transformative potential.
The convergence of blockchain with other emerging technologies like IoT, AI, digital twins, and 5G is expected to
create even more sophisticated and efficient SCM solutions. Efforts are also underway to develop industry standards
and best practices for blockchain implementation in SCM. Initiatives like the Mobility Open Blockchain Initiative
(MOBI) in the automotive sector aim to foster collaboration and establish common protocols. Finally, there is a
growing focus on leveraging blockchain to enhance sustainability and ensure ethical sourcing practices throughout
supply chains. Initiatives like Unilever's pilot project for tracing sustainable palm oil highlight this trend.
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Conclusion
Blockchain technology is rapidly evolving and demonstrating its potential to revolutionize supply chain management.
Innovations in areas such as IoT and AI integration, blockchain platform development, security enhancements, smart
contract capabilities, digital twins, and consensus mechanisms are continuously expanding the possibilities for its
application in SCM. These advancements are driving diverse applications across industries, from enhancing transparency
and traceability to improving efficiency, reducing costs, and strengthening security. The ability of blockchain to provide
an immutable and distributed ledger is proving invaluable in addressing the complexities and challenges of modern global
supply chains. Despite its transformative potential, the widespread adoption of blockchain in SCM is still subject to
several significant challenges, including technological barriers related to integration and interoperability, regulatory and
legal uncertainties, scalability limitations, high implementation costs, and the critical need for stakeholder collaboration
and trust. Overcoming these hurdles will be crucial for realizing the full benefits of blockchain technology in this domain.
Looking ahead, the future landscape of blockchain in supply chain management is characterized by promising trends.
Increased adoption across various industries, the convergence with other emerging technologies, the development of
industry standards, and a growing focus on sustainability and ethical sourcing all point towards a significant and lasting
impact. As the technology matures and these challenges are addressed, blockchain is poised to become a fundamental
backbone for more efficient, transparent, and resilient global trade networks.
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