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Why Blockchain Technology Hasn't Dominated the Supply Chain... Yet Blockchain was believed to have transformative potential in supply chains, but surprisingly, this potential remains untapped years later. Uncover why..

By Asim Rais Siddiqui

Key Takeaways

  • Blockchain's potential to reshape the supply chain industry is massive, but it's a journey that requires collaboration, innovation and a willingness to embrace change.
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Blockchain technology has garnered constant debate ever since its inception, and the interest does not look like it will die out anytime soon. A piece of technology that holds the power to revolutionize existing systems, with experts back in 2017 predicting that the transformative powers of blockchain will be the perfect fit for supply chain management.

However, as we look at the supply chain landscape over the past couple of years, the results are very different from what was anticipated, and the question lingers — why hasn't blockchain taken over the supply chain yet?

Let's go over why this is the case.

Related: Disrupting Supply Chain With Blockchain

The promise of blockchain in supply chain

Imagine a supply chain where every step is recorded in a ledger that can't be altered and is accessible to all authorized parties. With this kind of transparency, businesses can expect to see a great reduction in fraud, improved efficiency, and streamlined operations.

With 2.8% of the world's population already on blockchain, the technology holds great potential for revolutionizing supply chains. Blockchain is a favorite among experts due to some of its core attributes. These include:


A major reason for blockchain's popularity is its decentralized nature, a breath of fresh air from traditional hierarchical structures. Since the launch of Bitcoin, the world has been moving towards decentralization, and it could mean big things for the supply chain realm.

Let's think about a network where all participants, from suppliers to manufacturers, distributors, and retailers, share equal authority, and no single entity holds disproportionate power. This balance of power may help cultivate trust among stakeholders, as each party can keep track of all transactions.

Related: Decentralization Can Be Your Friend


The transparency that comes with blockchain technology has the potential to revolutionize supply-chain networks. It ensures that every authorized party has access to the same real-time data, eradicating any data asymmetry.

This may especially be crucial in industries where accountability is important, like the pharmaceutical industry, where drugs can be life-saving or life-threatening. Knowing the authenticity of medication and keeping track of its expiration can help hold the right people accountable in case something goes wrong. Not to mention that it also increases customer confidence in the product.


According to the KPMG Global Fraud Survey, more than half of the frauds committed were aided by the business' own technology, with 24% of the frauds having used these technologies to create false or misleading information in accounting records.

One of the biggest advantages blockchain brings to supply chains is the inability to alter or erase any data that has been recorded on the network. This means that records of transactions, shipments and certifications are permanently etched into the digital ledger, which brings a new level of integrity to the supply chain.


With supply chain cyberattacks in the United States affecting 1743 entities in 2022 alone, security breaches and data leaks have been rampant in supply chains for years and are only on the rise. The security mechanisms of blockchain offer a potential solution to this extremely troubling problem.

Within a blockchain, transactions are secured using cryptography, and once validated, they are linked to the previous transaction, creating an unbroken chain. This makes altering old records an extremely difficult task. Apart from that, the business data will be spread across the network instead of being stored in a single location, making any centralized data breaches futile.

Related: How to Mitigate Cybersecurity Risks Associated With Supply Chain Partners and Vendors

Challenges faced by blockchain in supply chain

While blockchain technology in the supply chain shows incredible promise, the path to seamless integration is treacherous and fraught with Herculean challenges. Let's look at some of the challenges you might encounter:

1. Unfamiliarity with the chain. Understanding and successfully implementing blockchain is not everyone's cup of tea, especially if you're a supply chain professional accustomed to traditional systems. Blockchain consists of several technical intricacies, like consensus mechanisms, smart contracts, and cryptographic hashing, which require time and patience to learn. The learning curve can also be steep and often requires specialized training and expertise.

2. Scalability issues. The lack of scalability is one of the biggest hurdles facing blockchains today. This is mainly due to the blockchain's consensus mechanism, which requires all participants in the network to agree on which transactions are valid. So the bigger the supply chain, the more difficult it will be to scale it with blockchain because, as transactions increase, the network's performance can degrade, leading to delays and congestion.

3. Regulations and legal hurdles. The regulations and legalities that come with integrating blockchain can be daunting to many. There are many intricacies when it comes to data privacy and cross-border transactions in particular. The lack of knowledge available regarding these makes many business owners hesitate for fear that something might go wrong and they might encounter a legal pitfall instead.

4. Costs and resources. I believe the most obvious reason why blockchain isn't as common in supply chains as people believed it would be is the heavy investment required to integrate it. Implementing and maintaining blockchain requires building the infrastructure for the chain, hiring blockchain experts, and incurring operational costs as well. This alone is enough to deter any small businesses considering investing in integrating blockchain into their supply chains.

Related: Mass Adoption of Blockchain Technology by Entrepreneurs? Major Challenges Are Involved.

The future of blockchain in supply chain

Although these challenges are unnerving enough to scare away many keen entrepreneurs, some solutions are emerging to address them. These hybrid solutions involve integration with IoT devices, AI algorithms, and cloud platforms to reduce scalability and complexity concerns, making blockchain integration less complex and more desirable.

Asim Rais Siddiqui

Entrepreneur Leadership Network® Contributor

Co Founder & CTO at TekRevol

An expert in next-generation technology and software solutions, Asim Rais Siddiqui has over a decade’s worth of experience in development and enterprise digitalization. Asim uses his skills to scale businesses, capitalize on new market opportunities, and facilitate growth through calculated risks.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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