One of the most promising applications of emerging blockchain technology is supply chain management. Blockchain—the digital record-keeping system developed for cryptocurrency networks—can help supply chain partners with some of their challenges by creating a complete, transparent, tamperproof history of the information flows, inventory flows, and financial flows in transactions.
The authors studied seven large U.S. corporations that are exploring how blockchain might improve their supply chain operations. Their early initiatives show that the technology can enable faster and more cost-efficient product delivery, make products more traceable, streamline the financing process, and enhance coordination among buyers, suppliers, and banks.
There are special requirements for using blockchain in supply chain management: restricting participation to known, trusted partners; adopting a new consensus protocol; and taking steps to keep errors and counterfeits out of the supply chain. But if implemented thoughtfully, the authors suggest, blockchain could pay big dividends for companies in a host of industries.
Blockchain, the digital record-keeping technology behind Bitcoin and other cryptocurrency networks, is a potential game changer in the financial world. But another area where it holds great promise is supply chain management. Blockchain can greatly improve supply chains by enabling faster and more cost-efficient delivery of products, enhancing products’ traceability, improving coordination between partners, and aiding access to financing.
A version of this article appeared in the May–June 2020 issue of Harvard Business Review.
Vishal Gaur is the Anne and Elmer Lindseth Dean and a professor of operations, technology, and information management at the Johnson School at Cornell University.
