How the Blockchain Is Revolutionizing Supply Chains

Blockchain technology (BCT) has created ways to inexpensively streamline numerous processes and operations around the world. In particular, it’s increasingly reducing the costs of maintaining and monitoring supply chains, helping suppliers, source agents, and logistics personnel to solve the problems that currently plague them. Here’s how investing in companies that use BCT may boost the performance of your portfolio.

How the blockchain benefits supply chains

Think of a blockchain as a string of beads. Every time people on the chain add information to it, they add another bead to it. Each bead contains information about transactions, deliveries, payments, contracts, etc. Anyone can look at the string and examine the beads. But only people with special access can add new beads to it.

 Overall, BCT increases transparency and security in every part of the supply chain, reducing costs in the process. In addition, BCT can help to minimize the number of middlemen involved. Key stakeholders no longer need their verification, reports, notarization, stamps, etc., to keep tabs on what is happening in the supply chain.

Other advantages of BCT include:

Source supplier verification: Customers increasingly want to know where the goods they buy come from. That means manufacturers and suppliers have begun to care more, too – especially when they can charge customers premium prices for environmentally sustainable, socially supportive, and fairly priced goods.

Unfortunately, some companies have misled customers about the regions and businesses from which they source their goods.BCT allows customers and companies in the supply chain to trace any product back to its origins.

More truth in advertising: As customers become more socially conscious, they have increasingly supported companies that claim to give back to local or specific communities. But it’s often difficult, if not impossible, for their customers to actually know if the companies are actually donating money and/or other resources to those communities.  With BCT, customers can go online and follow the money to where and how it’s being used.

Reduced transaction fraud: The manufacturing, production, transportation, distribution, and sale of goods can involve many different people in different parts of one or many countries. The creation, movement, storage, allocation, and sale of goods involves many different types of contracts, often completed in steps that are hard to monitor and assess from a distance. End buyers or distributors may realize that there were some problems along the way, but they may not know which company in the supply chain didn’t do its job.

Also, some members of the chain may need to modify commercial contracts during a transaction. But that can be a problem if it’s done without the consent and knowledge of others in the supply chain. Unfortunately, busy businesses often do not have time to carefully review all their contracts and follow up on perceived problems. But the BCT enables “smart contracts “ that all stakeholders can review and act on as needed.

Smart Contracts: BCT uses smart contracts, agreements in the form of computer code, to facilitate commercial activities in the supply chain. BCT makes smart contracts possible, and provides the infrastructure needed to use, process, and maintain these contracts, which can be agreed to, sent, verified, and enforced without third parties. Since smart contracts can only be fulfilled when all of a contract’s conditions are met, there are fewer trust issues between stakeholders.

Real-time information: BCT enables all of the parties in a supply chain to communicate and receive information and records about commercial activities in real-time. So the members of a supply chain know where the problems are, who is causing the problems, how efficient the supply chain is, and the current status of all the goods and services being managed by the supply chain at any given time.

Plus, the real-time information enables supply chain analysts to more easily analyze systems, processes, and supply chain structures. That information can help them to identify problems once hidden by a supply chain’s murkiness. The transparency of supply chains using BCT facilitates better analyses and models, which in turn enables businesses to actually make supply chains work better.

What we know . . .

As blockchain technology is integrated into supply chain management, we will see the reduction, if not elimination, of sourcing problems, repetitive costs, time delays, and fraud.

Investors can invest in blockchain technology that helps to streamline supply chains, like Inforand Elementum. You can also research which companies are investing in blockchain technology and actively incorporating it into their supply chain management systems.

When you see indications of growth, industry leadership, and improved sales in companies using blockchain technology, consider adding them to your portfolio.


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