Idea in Brief

The Problem

Current approaches to recording the flows of information, inventory, and money in supply chain transactions leave a lot to be desired. There are blind spots, causing problems for the purchasers, suppliers, and banks involved.

A Potential Solution

Blockchain technology may help. Early explorations by seven major corporations show that blockchain record keeping can make product delivery faster and more cost-efficient, increase traceability, enhance coordination among partners, and streamline the financing process.

What Will Be Needed

Successful use of blockchain in supply chain management requires a trusted group of permissioned participants, a new consensus protocol, and protections to prevent the introduction of contaminated or counterfeit products.

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.