Why are companies using blockchain in their supply chain?

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The rising popularity of online shopping in the United States has led to increased exchanges between consumers and companies. But unfortunately, each interaction creates additional opportunities for errors, mishaps, and misconceptions.

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When shoppers rely on digital tools more than ever before to facilitate their shopping experience, retailers must be able to provide peace of mind by providing transparency through the supply chain process.

Blockchain technology is being used to create a new level of transparency across the market. It allows retailers to track products at each stage along the supply chain lifecycle with unprecedented detail, increasing efficiency and reducing risk for all involved parties: manufacturers, distributors, certification agencies, and end-consumers.

The stakes are high as customers have become accustomed to instant gratification, with access to any product they want, anytime they want it.

A considerable portion of the e-commerce market relies upon vendors providing products at ever-increasing rates. As a result, customer demand has made delivery time expectations shorter than ever before.

Blockchain technology has the potential to help retailers meet this demand head-on by creating a shipping confirmation process that is both timely and transparent.

By using it to track products from the point of origin through transport and beyond, manufacturers can create more efficient supply chains while building consumer trust with unprecedented transparency.

why use blockchains in supply chain

What is a supply chain?

The supply chain is a process that involves mutual interdependence of various levels and stakeholders. Each company has unique procedures for maintaining its supply chain, which is mainly internal to that company and does not involve a continuous exchange of information between them.

It makes it difficult to provide users with valuable information about the supply chain or comply with regulations or customer requirements. Companies can split the supply chain into three main phases – production, transportation, and distribution. First, let’s discuss the reasons why companies are using supply chains.

1. Avoided return and loss risks

The faster the product moves through the supply chain, the more risks are associated with shipping it. The supply chain is a complex network involving multiple connections and entities, which adds to the overall impact of delays at each relevant entity. It is why the transport time is included in standard transportation costs.

The best way to reduce these risks is by reducing delays as much as possible by using effective planning and distribution methods using improved tracking systems and efficient distribution networks. With blockchain technology able to provide transparency in information exchange, this will be possible for companies in the retail and e-commerce market.

2. Expense inefficiency

The inventory cost is a significant part of the retail and e-commerce market. A retailer must manage its inventory effectively to save significant amounts of money.

According to the Global Retail Chain Association, the average total supply chain management cost per retailer was $7.43 billion in 2014, with retail supply chain costs rising by 50 percent between 2012 and 2014. In addition, the rapid increase in online shopping and greater consumer expectations have dramatically increased these costs over the last several years.

It can be attributed to more than just an increase in product supply; it also reflects more sophisticated logistical requirements placed upon retailers demanding quicker delivery times across all tiers of the supply chain process. Blockchain technology reduces these costs by providing transparency and traceability, ultimately leading to more efficient supply chain processes.

3. Customer experience expectation

Consumers have evolved over recent years, placing a much greater emphasis on the practical aspects of shopping rather than the experience itself. In other words, shoppers demand more from retailers concerning product selection, shipping, and delivery times.

They want to be able to shop on their terms when it fits into their everyday schedules. Blockchain technology can provide timely and accurate answers for companies that need to meet these informational needs through current transparency options in the retail and e-commerce marketplace.

4. Customer retention and trust

The retail market increasingly relies on the customer experience as a source of competitive advantage and brand loyalty. As a result, companies that can meet their customers’ needs, both their functional and practical requirements, will be in a better position to retain customers, gain market share and build value.


Ninety percent of consumers say they have left a store because the self-checkout system was not working or was out of service. It shows how much the customer experience matters as it allows them to choose another company that provides good services. Different industries are using blockchain technology for different purposes, which can be one of the purposes where businesses can use this technology.

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