logistics

Review
Influence of Blockchain Technology in Manufacturing Supply
Chain and Logistics
Abirami Raja Santhi 1 and Padmakumar Muthuswamy 2, *

1 Communication Business Unit, ThinkPalm Technologies Pvt. Ltd., Chennai 600119, India;
abiramirajasanthi@gmail.com
2 Technology Center (KSSPL GES), Kennametal India Ltd., Bangalore 560073, India
* Correspondence: mpadmakumar86@gmail.com

Abstract: Background: Blockchain is a digitally managed, distributed, and decentralized ledger used
to record transactions in an immutable format. Its characteristics in providing trust, transparency, and
traceability make it attractive for applications where transactions are involved. Originally intended to
support financial transactions, the technology has gained attention even in non-financial sectors such
as health care, manufacturing, retail, and government services. Methods: For centuries, the various
functions of manufacturing industries have worked based on the relationship and trust that they
have with their upstream and downstream stakeholders. In addition, as the conventional factories are
growing into giant gigafactories, the participation of several intermediaries further complicates the
supply chain and logistics operations. Hence, the article aims to provide a comprehensive overview
of the role of blockchain technology in addressing supply chain and logistics-related challenges
by analyzing, organizing, and reviewing the literature. Results: The study shows that blockchain
technology can transform the supply chain and logistics into secure, agile, trusted, and transparent
functions. A conceptualized application scenario demonstrates the benefits of blockchain technology
in providing provenance and traceability to critical products. Conclusions: In particular, a private or





 permissioned blockchain is suitable for multi-organizational businesses such as supply chain and
Citation: Raja Santhi, A.; logistics. In addition, IoT-blockchain integration, smart contracts, and asset tracking has immense
Muthuswamy, P. Influence of benefits in the future.
Blockchain Technology in
Manufacturing Supply Chain and Keywords: blockchain; manufacturing supply chain; smart contracts; asset tracking; distributed
Logistics. Logistics 2022, 6, 15. ledger; consensus mechanism; cyber security; Industry 4.0; Industry 5.0; cryptography
https://doi.org/10.3390/
logistics6010015

Academic Editor: Robert Handfield

1. Introduction
Received: 15 December 2021
Accepted: 7 February 2022
The four major departments of the manufacturing industry are engineering (research,
Published: 8 February 2022
design, and development), operations (production planning and control, manufacturing,
quality control, maintenance, supply chain, logistics, packaging, and dispatch), information
Publisher’s Note: MDPI stays neutral
technology and finance (information technology, financial control, human relations, and
with regard to jurisdictional claims in
administration), and sales and marketing. However, the supply chain is considered the
published maps and institutional affil-
heart of businesses, as a seamless flow of commodities across various manufacturing
iations.
functions until it reaches the customer is essential to achieve the goals of the business.
The term “supply chain” in a broader connotation refers to the complete cross-functional
coordination within an organization, and the backward and forward integration with its
Copyright: © 2022 by the authors.
suppliers and customers, respectively [1]. In simple words, it can refer to all the activities
Licensee MDPI, Basel, Switzerland. (such as demand and supply planning, forecasting, production, and transportation of
This article is an open access article products) involved in processing and transforming the raw material into a value-added
distributed under the terms and finished product, including post-sales support, logistics, and reverse logistics [2].
conditions of the Creative Commons Although many large-scale organizations have long ago moved from the conventional
Attribution (CC BY) license (https:// methods of tracking their products using physical ledgers, emails, and excel sheets to
creativecommons.org/licenses/by/ an IT-based technology infrastructure such as EDI and SAP (Enterprise Resource Plan-
4.0/). ning systems), the real challenge in tackling the seamless flow of products and achieving

Logistics 2022, 6, 15. https://doi.org/10.3390/logistics6010015 https://www.mdpi.com/journal/logistics

Logistics 2022, 6, 15 2 of 22

the visibility of products at every stage is still unaddressed [3,4]. Additionally, as these
technologies are centralized database management technologies, they are vulnerable to
manipulation and security threats. The problem with these technologies also lies in the lack
of interconnection and visibility of information across the entire supply chain participants.
For instance, the higher number of intermediaries between the manufacturer and consumer,
and globalization have increased the length of the supply chain network which resulted
in lack of visibility to product origins and shipment details [5]. The challenge is both
quantitative and qualitative. Studies have also shown that gaps in sharing information
between the supply chain participants result in sub-optimal business performance [6]. In a
nutshell, the current challenges in supply chain and logistics can be termed as the lack of
trustworthy data and data visibility, which is primarily due to the participation of many
intermediaries. As multiple individual collaborators such as suppliers, manufacturers,
dealers, and resellers are an integral part of a supply chain, effective management of in-
formation flow between the parties with the required transparency and trustworthiness is
critical. In addition, the data are crucial for accurate forecasting of demand and inventory
records, schedule material and production planning, and better inventory management [7].
The onset of the COVID-19 pandemic and its impact on the supply chain is a well-
known issue that exposed the vulnerability of the current practices. Originally thought of
as a minor disruption, the semiconductor shortage has become a global crisis impacting
consumer electronics, automotive, medical equipment, power, and almost all the sectors.
It has put the existing supply chain network of many large-scale and well-established
industries in the spotlight and exposed their fragile infrastructure. Any such major dis-
ruption in the supply chain has the potential to derail the functioning of an organization
and can severely impact its sales and profitability. Organizations irrespective of their size,
sector, and geographical diversity were affected by the collective failure of their supply
chain network, clearly showing the inefficient processes that they currently follow. The real
problem lies in the lack of trustworthy supply chain-related data that even reputed firms
have visibility to [8]. Additionally, as many large-scale organizations rely on their multiple
vendors and suppliers throughout the globe to reduce manufacturing costs, the visibility of
data at every level and its integrity and reliability is highly critical. The increase in the num-
ber of products and global supplier network has added several complex interlinked layers
to the supply chain and lengthened logistics chain which means that there are multiple
places where something can go wrong. This made the industries realize the importance of
further digitizing their supply chain and logistics facilities and the need to adopt emerging
technologies such as blockchain to improve the integrity and visibility of data.
The arrival of “Industry 4.0” technologies, a term used to refer to the advanced digital,
computing, and networking technologies have revolutionized how different functions of
an enterprise communicate and collaborate to operate efficiently. The technologies such as
automation, artificial intelligence, blockchain, cloud computing, Internet of Things (IoT),
and big data analytics have the potential to modernize traditional supply chain practices
by transforming them into a digitally managed and connected infrastructure. In particular,
blockchain with its unique characteristics such as reliable real-time sharing of information,
security, traceability, and immutability would make it a strong tool in the integration of
the entire supply chain infrastructure [9]. However, as the technology is relatively new
and probably immature in handling complex real-world problems, it is critical to know
the fundamental working principle of the technology in order to set a realistic expectation.
Additionally, in the context of supply chain and logistics operations, it is imperative to
understand the complexities and challenges that manufacturing industries face to estimate
the possible benefits of the technology, which leads to the following questions:
(1) What is blockchain technology and what are its characteristics, and benefits?
(2) What are the complexities and challenges in manufacturing supply chain and logistics?
(3) How blockchain technology can help address supply chain and logistics challenges?
(4) How blockchain technology can provide provenance and traceability to critical prod-
ucts and what are the potential applications of blockchain in other sectors?
Logistics 2022, 6, 15 3 of 22

(5) What are the challenges in adopting blockchain technology that must be addressed
before widespread adoption?
Hence, this paper aims to provide a comprehensive overview of the role of blockchain
technology in addressing supply chain and logistics-related challenges and answering
the critical questions through various sections by analyzing, organizing, and reviewing
the literature. The research question 1 is answered through Section 2, and the questions
2, 3, 4, and 5 are answered through Sections 3–6, respectively. Finally, the consolidated
overview, key takeaways, and future directions are explained in Section 7. The study would
emphasize businesses to question their current practices and make them think about the
integration of data-oriented transaction-driven technology such as blockchain into their
supply chain.

2. Blockchain Technology
Bitcoin was the first direct application of blockchain technology. Satoshi Nakamoto [10]
published a blueprint of blockchain technology in 2008 to avoid the double-spending
problem, over which cryptocurrencies such as Bitcoin and Ethereum were developed.
However, the roots of the idea can be traced back to 1991 during which the concept of using
a signed chain of information as a tamper-proof electronic ledger, and a consensus model
to reach an agreement were discussed [11,12]. Later, the technology has evolved to be
used in maintaining smart digital contracts [13]. Currently, the researchers are focusing on
optimizing the technology to make it work in sync with Industry 4.0 technologies such as
IoT in handling the digital data storage requirements [14]. The terms bitcoin and blockchain
are often used interchangeably and even few papers have used the term blockchain to refer
to the public type of distributed ledger, such as bitcoin. Although blockchain is a type of
distributed ledger that uses a sequence of blocks linked to a chain, not all distributed ledger
is blockchain and bitcoin uses blockchain technology for transactions [15].
Currently, all the financial transactions between two persons or entities are carried out
through a trusted centralized third party such as banks or financial institutions. However,
blockchain technology is used to create a decentralized mechanism in which the transactions
can happen between two users without a central intermediatory. Basically, blockchain is
a distributed ledger in which a block containing the details of records and transactions is
encrypted and stored permanently in a chain. Whenever a new transaction is performed it
is added as a new block, hence maintaining the history of all transactions in an immutable
form [16]. In other words, it is a technology for storing information in a way that is
impossible to alter, manipulate, or hack. Although the users are anonymous in a blockchain
network, their identifiers and all transactions are publicly available to all the nodes (a node
is an individual system or a computer within a blockchain network) [17]. Full nodes and
light nodes are the two major blockchain nodes. Full nodes have the complete transaction
history of the blockchain and are responsible for validating new blocks. Light nodes do
not have a copy of the complete blockchain but only have the headers of blocks and they
connect to full nodes to validate the information stored in the blockchain.
Additionally, the blockchain network can have private, public, and permissioned
networks based on the access level provided to the participants. The type of blockchain
decides if all or only a few of the participants can be a part of the consensus for a block. A
public blockchain (such as Bitcoin) is a fully open and distributed network that allows all the
participants to access, maintain, and validate transactions, whereas in a private blockchain,
the transactions are accessed and validated only by a set of authorized participant nodes.
A centralized authority grants access to the participant nodes in a private blockchain.
Data privacy and the ability to select network participants make a private blockchain an
attractive option for industrial applications [18]. A permissioned network is a hybrid
system (e.g., Ripple and Stellar) in which generally all the users have read-only access to
the blockchain while the permission to publish a new block is restricted only to a few key
users through the access granted by a centralized authority [19]. The recently launched
IBM Food Trust is a cloud-based hybrid blockchain solution that brings farmers, suppliers,
Logistics 2022, 6, 15 4 of 22

and retailers into an ecosystem to improve the traceability, transparency, and efficiency of
the food supply chain. It allows participants to set custom access levels and collaborate
securely. The typical flow of transactions in a blockchain network is shown in Figure 1.

Figure 1. Transaction flow in a blockchain network.

The major difference between a ledger or transaction stored in a conventional database

such as MySQL and a blockchain network lies in the distributed, decentralized, and
immutable nature of blockchain technology. For instance, as a conventional database is cen-
tralized, an administrator has the authority to control or manipulate the data. In addition,
the entire database itself is vulnerable to cyberattacks. However, as a blockchain network is
decentralized, all the transaction details are distributed across all the participating nodes of
the chain. Hence, all the participating nodes (based on public or private blockchain) are
responsible for validating the transaction and broadcasting the timestamped data to the
blockchain network in the form of blocks. So, any data manipulation must be performed
in all the nodes, which is practically impossible. Additionally, as the transaction is times-
tamped, any manipulation in a block would be added as a new transaction only to that
node. So invariably the transaction details cannot be hacked or faked, which makes the
system trustable.

2.1. Layers of Blockchain Architecture

As the scope of the paper is to explain the fundamentals of blockchain technology
and how it can help in streamlining the manufacturing supply chain, only an overview of
blockchain architecture is discussed in this section.
In principle, blockchain technology is a combination of various technologies such
as computing, networking, cryptography, and mathematics [20]. The previous section
explains what does blockchain technology does. Now, to understand how it is done and
how blockchain technology is different from other conventional digital data storage, it
is imperative to know the various layers of a blockchain, individual components of a
block, and the way data is stored in it. The various layers of a blockchain architecture are
shown in Figure 2. The hardware layer comprises of physical mediums such as servers,
nodes, cables, connectors, and all the basic infrastructure required to support and maintain
the functioning of a blockchain network [21]. The data layer is the core of a blockchain
which contains a linked list of data blocks that contains all the details of a transaction. The
contents of a block and its functionality are explained separately in the following paragraph.
Blockchain is a peer-to-peer network, and a peer is used to compute, validate, and store
Logistics 2022, 6, 15 5 of 22

transactions. The network layer contains the data transmission protocol and verification
system. In addition, privacy and security are a part of the network layer itself [22]. A
consensus layer is responsible for the generation and validation of the blocks and enforces
the rules to reach consensus within the decentralized system. Proof of Work (PoW), Proof
of Stake (PoS), Practical Byzantine Fault Tolerance (PBFT), Proof of Elapsed Time (PoET),
Proof of Capacity, Proof of Burn (PoB), and Delegated Proof of Stake (DPoS) are a few of
the consensus algorithms that can be used based on the individual business need [23]. Each
consensus algorithm works on a different principle and with an increase in the complexity
of the algorithm, the time taken to process each transaction increases. The application layer
provides the user interface that acts as the liaison between the user and the blockchain
network. Smart contracts, chaincode, and decentralized applications (DApps) are a few
examples of an application layer.

Figure 2. Layers of a blockchain architecture.

2.2. Strucutre of a Block

A blockchain can be visualized as a write-once and read-only database that stores
data in the form of a block, and a few key data stored in a block are shown in Figure 3. A
block is divided into header and body, and each block is identified using a hash. As shown
in Figure 3, a block header is used to store the metadata and is composed of timestamp,
version, hash value, difficulty, nonce, and Merkel root [24]. The timestamp is used to
identify the chronological position of a block in the blockchain and as proof to know when
that block is added. Version denotes the blockchain version used. While version 1.0 was
predominantly used for cryptocurrency transactions, versions 2.0 and 3.0 are used for
smart contracts and decentralized applications, respectively. The yet-to-arrive version 4.0
is expected to provide interoperability and play a key role in industrial applications, and
may overcome the challenges in the previous three versions such as scalability, adaptability,
and affordability [25]. Hashing is a technique of applying a cryptographic hash function
to data. A hash function is considered the backbone of a blockchain network, which is
used to convert input data into a string of bytes with a fixed length and structure. It is
generated using the SHA256 cryptographic hash algorithm which acts like a fingerprint
or DNA that can be used to identify a transaction [26]. Every block contains a hash that
links it to the previous block and adding new blocks is the responsibility of the miners.
Logistics 2022, 6, 15 6 of 22

Difficulty is a number that denotes the time it would take to add a new block of the
transaction to the blockchain [27], and it depends on the number of mining nodes and the
hash rate of the network. The higher the difficulty, the greater the computing power to
verify transactions and the more secure the network. In the blockchain, mining is a process
to validate a transaction and add it to the existing blockchain network. A miner solves
a complex puzzle (termed Proof of Work or PoW) that requires hashing the transaction
and information from the previous block using a hash algorithm to create a new block and
obtain bitcoin rewards. In simple terms, hashing refers to transforming data into a digitally
encoded token that acts as a digital fingerprint of the underlying assets that can be traced
or traded using a private key. A nonce is an abbreviation for “number only used once”
and is a 32-bit random number that is used for authentication, hashing, identification, or
electronic signatures [28]. In short, mining is about guessing the nonce as fast as possible.
A Merkle root is a mathematical technique that summarizes the transaction in a block. It
validates data in a Merkel tree (or binary hash tree) and is used to verify whether the data
is corrupted, hacked, or manipulated [29]. The body of the block contains the business data
such as the transaction counter and the transaction details.

Figure 3. Structure of a block in blockchain.

2.3. Characteristics of Blockchain

Bitcoin is considered as the most popular and successful application which brought
attention to blockchain technology. However, over the years, the technology sector has
realized the true potential of blockchain beyond bitcoins and financial sectors. Hence, the
unique characteristics and features of blockchain technology that make it stand out from
the existing database management system are discussed in this section.

2.3.1. Immutability
Any transaction that is added to a blockchain network is immutable, which means it
cannot be altered or tampered with. The common misconceptions in maintaining digital
records such as data manipulation, deletion, or tampering of records are eliminated with
this unique characteristic of blockchain. Hence, even if a transaction is added with errors,
it cannot be overwritten or deleted, but a new transaction with correct details must be
added again as a new block. Additionally, both the original transaction with error and the
newly added transaction would be visible to the participants in chronological order with
an appropriate timestamp [30].

2.3.2. Decentralization
Decentralization is a core characteristic of blockchain, which means it neither has a
single authority to control nor a centralized server to manage or store data in the framework;
Logistics 2022, 6, 15 7 of 22

instead, it relies on a group of nodes. Hence, all the participant nodes of a blockchain net-
work act as a server that can store anything, such as cryptocurrencies, financial transactions,
contracts, or any important digital data which can be accessed using a private key [31].

2.3.3. Distributed Ledger

A distributed ledger is a database in which the data is shared, duplicated, and syn-
chronized among the participants of the network. Unlike traditional banking and financial
transactions which are controlled by a centralized authority, blockchain relies on decentral-
ized and distributed nodes. As all the participant nodes of the network (based on public or
private blockchain) have a copy of the transaction and require majority consensus to add
the details of a new transaction, this creates enhanced trust and integrity. Additionally, in a
shared ledger, as a transaction can be logged only once, it eliminates duplication. Although
blockchain is a distributed ledger, not all distributed ledger is blockchain [32].

2.3.4. Consensus Mechanism

The consensus algorithm is another core characteristic of distributed or multi-agent
systems such as blockchain technology. As there is no centralized agency to validate or
verify a transaction, blockchain uses a consensus mechanism in which the participants
of the network reach an agreement to accept or reject the transaction. In simple terms,
consensus refers to voting or an agreement between the active nodes of a blockchain
network to validate a transaction. This is essential in creating an environment of trust in a
distributed system and ensures that only legitimate data is added as a new block, especially
in a public blockchain [33]. However, with an increase in the complexity of the consensus
algorithm, the speed at which new blocks can be added is reduced. Hence, for a large
industrial application such as a supply chain, a private or permissioned blockchain with a
relatively simpler consensus mechanism can be used since the right to add new blocks are
with fewer known participants. The consensus algorithm also helps to ensure consistency
of data in the presence of several failure nodes. The two types of failure nodes are crash
fault and Byzantine fault nodes. A crash fault tolerance guarantees to reach consensus
even if certain components fail, whereas Byzantine fault tolerance helps the network to
function even in the presence of malicious nodes [34]. Although trust is built on the data
based on distributed ledger technology, blockchain is referred to as a “trustless system”, as
the transactions are executed by the participants of the network based on the consensus
achieved between them (especially in a public blockchain in which the participants do
not know each other), and not by a trusted centralized agency. The various consensus
algorithms used in blockchain are briefly discussed in Section 2.1.

2.4. Benefits of Blockchain

Trust, security, efficiency, and transaction speed are the key benefits of blockchain
technology. Although traditional financial consortia are a highly tested and proven solution
for making transactions, they are slow and expensive. The downside is primarily due to
the involvement of a centralized agency and third parties that receive multiple requests at
a time to verify and approve transactions which can lead to delays and poor performance.
However, as blockchain technology is a peer-to-peer network that does not have an ad-
ministrator or middlemen between the sender and receiver, it can provide a more secure,
quicker, and more cost-efficient alternative, especially for cross-border transactions. The
immutability feature ensures users that any data once added to a blockchain stays as it is for-
ever. Furthermore, the possibility to automate transactions through self-executing “smart
contracts” can highly reduce the overall time taken to execute transactions. These features
of blockchain make it a highly suitable technology infrastructure for multi-organizational
businesses such as supply chain, logistics, and financial entities [35].
Although blockchain technology has the potential in providing disruptive benefits
to various functions of the manufacturing industry, the involvement of a large number of
internal and external intermediaries makes the supply chain and logistics highly vulnerable
Logistics 2022, 6, 15 8 of 22

to manipulation of data, lack of trust, lack of visibility to information, and data breaches.
However, blockchain, by its inherent nature, can address all these issues and empower the
users who would like to see more information about their products. Hence, the application
of blockchain technology in the manufacturing supply chain and logistics is explained in
the following sections.

3. Complexities and Challenges in Manufacturing Supply Chain and Logistics

The raw material is an integral part of all products which takes a tour across various
manufacturing stages to gain value addition before reaching the customer as a finished
product, and the supply chain and logistics facilitate the movement of raw material. Al-
though the terms “supply chain” and “logistics” are often interchanged, there is a profound
difference between them. The supply chain refers to the complete network of planning,
sourcing, manufacturing, distribution, and delivery of products to the customers, while
logistics refers to the activities in moving and storing goods efficiently between two func-
tions within a supply chain. Hence, logistics is an integral or subset of the supply chain.
Managing the supply chain and logistics is regarded as one of the critical aspects of the
product life cycle, as highly efficient management is required to reduce cost and time with
minimal or no waste. Supply chain management involves streamlining both upstream and
downstream activities and ensuring the uninterrupted flow of goods and services. For the
manufacturing industry, the activities that involve the flow of material into the organization
right from the raw material stage until the product is manufactured are the upstream supply
chain, while all the activities that involve the flow of material post-manufacturing until it
reaches the customer are the downstream supply chain.
The term supply chain complexity (SCC) is used to describe the interdependencies
of the system wherein a change in one element affects the other elements of the network.
For instance, variables such as changes in the customer requirement, changes in industrial
standards, adoption of new technologies, competition, and changes in process, products,
suppliers, vendors, or distributors can act as the drivers of complexity [36]. Chand et al. [37]
have categorized the complexities into upstream, operational, downstream, and external,
based on their drivers. The activities related to the material flow into the organization are
upstream supply chain and the complexities that an organization faces while organizing
the material flow into the organization. It predominantly revolves around the suppliers,
including the number of suppliers involved, reliability of product quality and lead time,
geographical limitations, development of alternate suppliers, and building competencies
are a few examples of upstream complexity. The complexities that are a part of internal
manufacturing such as the large variety of parts, products, processes, multiple engineering
standards, poor forecasting, and lack of data transparency across functions are classified as
operational complexity. The activities related to the material flow away from the organiza-
tion are the downstream supply chain, which revolves around the distribution channels
and customers. Hence, customer-related complexities such as a vast variety of customers,
change in customer expectations in terms of product quality and lead time, geographical
diversity, shorter product life cycle, and quality of customer service are some drivers of
downstream complexity, while the complexity that is outside the control of an organization
such as economic downturn, changes in the political scenario, new technologies, competi-
tion, and change in regional laws are few examples of external complexities. The various
drivers of the supply chain complexities are shown in Figure 4.
Currently, most industries do not have a robust system to track the life cycle of a
product from the raw material stage till it reaches the customers. Until a few decades
ago, a life cycle of a product ends once a product is sold to the consumer. However, as a
measure to improve customer satisfaction and maintain their reputation, many automotive
and manufacturing companies have started recalling their products if they find that their
products were not meeting the required quality or regulatory requirements. Additionally,
the environmental laws in a few countries encourage manufacturers with tax sops and
incentives to collect the used products from the customers for recycling. In addition, by
Logistics 2022, 6, 15 9 of 22

adopting a suitable framework for sustainable practices and promoting a circular economy,
even businesses across the world have started focusing on how the profit is made rather
than how much profit is made. A circular economy is an alternate model to the linear
economy (take–make–waste economy), which is focused to maximize the value by reducing,
recovering, and recycling the resources to reduce pressure on the environment. This new-
age requirement for processes such as product recalls, recycling, returns, repairs, and
replacements, which are called “reverse logistics”, needs a modern solution to efficiently
track the products even many years after it has been sold.

Figure 4. Supply chain complexity categories and their drivers.

In addition, the other modern supply chain challenges such as the presence of mul-
tiple channels to reach customers (like eCommerce, traditional retailers, drop shipping,
and third-party marketplaces), heavy fluctuation in demand, cross-border sourcing of
raw materials and spares, just-in-time manufacturing, and customers’ need for highly
customized products increases the vulnerability of the system to collapse. In a nutshell,
challenges in the manufacturing supply chain and logistics can be boiled down to “lack of
data” or in other words, not having access to timely and trustworthy data. However, most
of the challenges can be brought under one umbrella and addressed using data-focused
technology such as blockchain at every stage of the product’s life cycle.

4. Blockchain Technology in Manufacturing Supply Chain and Logistics

While the traditional supply chain was all about focusing on the “where” and “when”
of a physical product, the modern supply chain is about the management of data, services,
and products bundled into solutions [38]. Although blockchain technology is not a panacea
that can fix all the supply chain-related challenges, it can play a vital role in addressing most
of the data-related challenges that a manufacturing supply chain faces, such as the lack
of a traceability mechanism for products, identifying counterfeit/grey market products,
improving visibility of products, and eliminating paperwork and administrative difficulties
throughout the product life cycle. For instance, the pandemic-driven surge in demand
for medical personal protective equipment such as masks and protective gear has flooded
the market with fake products. Hence, VeChain, a blockchain-powered platform, has
applied shipment boxes that bear a VeChain non-fungible token chip, and a two-factor
authentication QR code to assure the legitimacy of the products [39].
To provide a best-in-class user experience to their customers, manufacturers often
diversify their supply chain network to all parts of the globe. In addition, to leverage the
benefits of low-cost labor, availability of raw materials, favorable government policies, and a
large consumer base, manufacturing industries stretch their boundaries beyond continents.
Logistics 2022, 6, 15 10 of 22

In such a highly competitive market scenario, even a single broken link in the network
could lead to disruptions and delays that can affect the customer experience, which, in turn,
can heavily influence the top line and bottom line of a company. A typical data flow in a
manufacturing supply chain and logistics supported by various data collection systems
and blockchain technology is shown in Figure 5.

Figure 5. Blockchain technology in a manufacturing supply chain and logistics.

In a manufacturing supply chain, the information, or data, from the various partici-
pants such as suppliers, manufacturers, logistics providers, distributors, wholesalers, and
retailers are collected through various advanced data collection technologies such as IoT
sensors, GPS, RFID, QR codes, and APIs. At every stage, the real-time data is pushed in
the form of blocks into a blockchain network. As a blockchain system acts as a single data
source that stores all the information in an immutable and digitally distributed ledger, it is
visible to all the participants of the network. However, a permissioned system can be used
to ensure that only the key users have access to add new blocks into the system and the
other participants can only track the status of an order through their view-only access. In
addition, various third-party applications can be used to retrieve end-to-end product trace-
ability data from a blockchain network using an approved token in any required format for
visualization. The product label with a barcode or QR code can be used by the customer to
trace the origin of the product and the various value addition stages it went through at a
granular level, to obtain supply chain provenance. The transparent and immutable data
would lead to increased customer trust and satisfaction. Additionally, the tracking system
also helps the manufacturers in reducing the overhead charges involved during recalls and
validating the authenticity of the product. A few of the supply chain-specific applications
of blockchain technology are elaborated in the following section.

4.1. Building Trust in Supply Chain

As the data in a blockchain is immutable and tamperproof, it increases the trust
and traceability of the underlying product. In particular, in the modern industrial era,
corporations often do business with numerous small-scale supplier and vendor networks,
over which they have limited or no control. The supplier network that is spread throughout
Logistics 2022, 6, 15 11 of 22

the globe further reduces trust. In such a low-trust scenario, the business partners tend
to see the other as a competing entity rather than a partner [40]. Hence, building trust
between them is necessary to ensure the success of the supply chain network. However,
hesitation in sharing trade secrets and IP details, the need to ensure the compliance and
regulatory standards are being followed and verify the quality of raw materials used,
and poor communication, lead to friction between the manufacturer and the supplier.
Digitization of all the physical assets used in a supply chain using IoT and linking the data
collection process to an immutable decentralized network improves the reliability of data
and fool-proof asset tracking [41]. As any data added to a blockchain cannot be altered
and needs to be validated by all the participant nodes, this enhances the trustworthiness of
the data. Additionally, it helps businesses in avoiding losses incurred due to counterfeit
and gray market parts, especially in critical and high-value products such as consumer
electronics, jewelry, pharmaceutical, automotive, defense, and aerospace components. In
a supply chain and logistics system that is integrated with a blockchain network, all the
transactions are non-editable and timestamped, meaning that it provides a very high level
of security, transparency, traceability, and trust among the participants.
Another feature of blockchain that provides trust in a blockchain-backed supply
chain is “smart contracts” that can be executed with suppliers and contractors. A smart
contract is a digital contract that is stored in a blockchain network that is automatically
executed when predefined contractual obligations are satisfied [42]. It is primarily used to
automate the execution of agreement quickly between the participants without involving
an intermediatory. The agreement can also be a workflow that triggers the next action
in the process when certain requirements are fulfilled, or a milestone is achieved. In
simple terms, it can be visualized in the same way as the “condition statement” (if-else or
if-then statements) of a programming language. In a supply chain, a smart contract can
be used to automatically verify and execute contracts, track inventory, process payments
to intermediaries, send notifications, and issue tickets without manual intervention or
cumbersome paperwork.

4.2. Supply Chain Transparency and Traceability

A transparent supply chain refers to the practice that provides easy availability and
visibility of required information always to all the participant stakeholders. Typically, a
supply chain transaction involves the flow of information, inventory, and financials arising
out of orders, shipments, and payments which must synchronize with each other. Although
current ERP systems are capable of tracking the details, they need significant manual
intervention, and the data are not visible to all the participants. However, blockchain
technology can help manufacturing industries to permanently record and track all the
information related to quotations, order details, compliance certificates, manufacturing
cost breakups, dates, completed and pending processes, the current location of the product,
quality details, and other relevant particulars in one place. It helps in achieving end-
to-end product tracking from procurement of raw materials until the product reaches
customers. The availability of reliable and tamperproof information in one place increases
the traceability of products in the supply chain, which, in turn, helps the business and
customers to ensure that their products meet all the required standards. Additionally,
manufacturers can have better control over their suppliers and outsourced contractors.
The precise data on time taken and cost incurred at every value addition stage help to
optimize the process. This can also help B2B businesses to provide a real-time update to
their customers about order status and delivery commitments [43].
Asset tracking refers to tracking products throughout the supply chain using blockchain
technology that can help fight counterfeit products [44]. An asset can be a physical product
(tracked using IoT) or a digital document (using the smart contract) that can be tracked in
real-time and stored in a blockchain network which makes the journey of the asset highly
transparent and agile. It provides up-to-date details about the assets and ensures that all the
relevant data about an asset are transparent, accurate, and reliable. Blockchain technology
Logistics 2022, 6, 15 12 of 22

allows the requestor to track the origin of both tangible and intangible assets which can
eliminate fraudulent transactions [45].

4.3. Supply Chain Flexibility

Flexibility refers to the ability to quickly adapt and meet changing customer require-
ments and retain competitive advantage [46]. While the traditional manufacturing indus-
tries rely on mass production to reduce the overall cost of products, the new-age customers’
preferences for customization and personalization made the industries upgrade themselves
with Industry 4.0 technologies such as Internet of Things (IoT), Artificial Intelligence (AI),
cloud computing, and collaborative robots. The complex and dynamic nature of the busi-
ness requires a supporting technology that is flexible to adapt and simplify the process.
Businesses that quickly respond to the changes in external factors such as fluctuating de-
mand, dynamic market conditions, and changes in customer preferences can quickly react
to the change and maintain the service quality to the customers. For a supply chain to be
flexible, a transparent, trustable, seamless, and real-time flow of information between vari-
ous internal and external stakeholders is necessary. By combining blockchain technology
with IoT and AI, a manufacturing supply chain and logistics can become more flexible and
agile [47]. The technology can integrate all the stakeholders of a supply chain and provide
data that can be used to improve predictions and manage real-time demand. This helps to
make quick decisions and reduce losses incurred from both surplus and low inventory.
In general, improved data quality, data integrity, data-based decision making, demand
forecasting, flexibility to adapt to changes, visibility across the entire supply chain, product
traceability, automated approvals, improved sustainability, reduced risk, superior inventory
management, and higher customer confidence are the few benefits that a firm can earn by
adopting blockchain technology to their supply chain network.

5. Application Scenario in Cutting Tool Manufacturing Industry

In this section, a real-life application scenario of blockchain technology from the aspects
of a metal cutting tool manufacturer is conceptualized. Typically, cutting tool manufacturers
supply tools to crucial industries such as automotive, aerospace, transportation, general
engineering, and defense sectors that have stringent quality and compliance requirements.
These tools are dual-use products that can be used in civil applications such as machining
agricultural pump components [48] but are also capable of manufacturing aerospace,
ballistic, or fighter jet parts [49]. In addition, most countries rely on importing essential
industrial raw materials such as tungsten carbide and cobalt [50] to manufacture the tools.
Hence, to adhere to the export ban on such products to rogue nations, it is critical to
build a supply chain ecosystem using digital technologies such as blockchain and IoT
that is transparent and traceable. The component shown in Figure 6 corresponds to an
automotive cylinder block machining application that requires numerous tools such as
indexable milling cutters, slotting cutters, end mills, drills, reamers, taps, and so on. In this
scenario, the application of blockchain technology to provide provenance and traceability
of an indexable milling cutter is hypothesized, and the logic can also be extended to other
tools and products. The tool has two major assembly parts, a tool body made of steel and
cutting inserts made of tungsten carbide. It is hypothesized that the tool manufacturer
outsources the tool body manufacturing to an external supplier, while the cutting inserts
are manufactured in-house. The clamping screw is neglected, as the process flow discussed
for the tool body is applicable for the screws as well.
Logistics 2022, 6, 15 13 of 22

Figure 6. Application scenario showing various tools used in machining automotive cylinder block.

The automotive OEM creates a quotation to purchase all the tools required to machine
a cylinder block. After the tool manufacturer accepts the quotation, an order is placed. The
preliminary process of raising a quotation and placing a purchase order can be automated
using smart contracts and stored in the blockchain network. The purchase order is automat-
ically executed if pre-defined conditions such as delivery lead time and cost commitments
are satisfied. Once the conditions are met, it triggers the manufacturing order on its own.
Based on the order, the tool manufacturer creates the required CAD drawings for the tool
body and places a manufacturing order with a tier-1 supplier. The blockchain network,
which is extended to all the participants of the supply chain, enables the supplier to add
blocks of information on the sourcing and processing stages of the steel raw material from
the time the ore is mined and formed into a billet, that is obtained from the raw material
supplier (named as the tier-2 supplier for the sake of discussion). This provides provenance
details and ensures that the raw material is sourced from a conflict-free ethical source. The
composition of the steel, mechanical and metallurgical properties such as hardness, tough-
ness, tensile strength, and other relevant details are permanently stored in the network in
the form of blocks by the tier-1 supplier for future requirements. Subsequently, the value
additions performed at various stages such as blank preparation, rough machining, finish
machining, heat treatment, and surface treatment (such as nickel plating, chrome plating,
etc.) are also added to ensure that the tool has undergone all the required processes. If
the supplier further outsources the processes such as heat treatment (to an external party
named as the tier-3 supplier) and surface treatment (to an external party named as the tier-4
supplier), the relevant supplier and process details are also added to the blockchain. The
smart contracts can be implemented to automatically trigger orders to the tier-3 and tier-4
suppliers. In a conventional supply chain, the comprehensive overview of the sourcing
and process details of the multi-layered supplier network has very reduced or no visibility
to the tool manufacturer and the automotive OEM who are at the top of the supply chain.
However, adopting blockchain provides visibility to these data transparently to the entire
supply chain from top to bottom. Additionally, by using smart contracts to automatically
trigger the succeeding processes, the tool manufacturer also obtains additional real-time
visibility to the accurate delivery date of the tool without manual intervention which can
be used to automatically schedule subsequent interdependent activities. The entire flow
of information between the automotive OEM, tool manufacturer, and multi-tier suppliers
is shown in Figure 7. Additionally, the entire flow of order data and the required docu-
Logistics 2022, 6, 15 14 of 22

mentation right from quotation, customer service, purchase, manufacturing, quality, and
shipping can be automated and stored permanently in a blockchain network.

Figure 7. Flow of supply chain information between OEM, tool manufacturer, and suppliers.

Simultaneously, an in-house manufacturing order is also placed to manufacture the

cutting insert. The sourcing and provenance details of tungsten carbide and cobalt raw
materials, the two key materials used in the manufacturing of cutting insert [50] are added
as a block. The subsequent processes such as pressing of blanks, sintering, grinding, and
coating, equipment used, process parameters, date of completion of various activities, and
quality details can be added to the blockchain network for future reference. This can also
help the tool manufacturer to verify the missing processes or validate the process parame-
ters if there is a performance complaint in the future. In addition, tracking the end customer
details, application, service life of the tools, and reverse logistics to support replacements
or recycling can also be automated by marrying blockchain with other supporting digital
technologies such as IoT. In both the tool and cutting insert manufacturing processes, the
documentation requirement such as ISO/ANSI standard guidelines, EHS (Environment,
Health, and Safety) compliance, export and import documents, quality certifications, and
operating guidelines can be linked to the blockchain to have a permanent record of all the
documents that can be verified by the automotive OEM at any time. Thus, by adopting
blockchain technology to all the parts of their products, the automotive OEM can obtain
comprehensive traceability, transparency, and trust in the data and add value to their
supply chain.

5.1. Successful Industrial Use Cases

An exhaustive list of successful industrial use cases, from almost all the sectors, is
currently available, which demonstrate the extent to which blockchain has transformed
their businesses. However, only a few of the examples that are in line with the scope of the
article are discussed in this section.
The eXtended Compliance End-to-End Distributed (XCEED) blockchain project de-
veloped by IBM using IBM Blockchain and Hyperledger Fabric has helped Renault, an
automotive manufacturer, to share and overlook compliance standards transparently, accu-
rately, and automatically to the entire supplier network. As an average automotive supply
chain deals with hundreds of suppliers all around the world to produce tens and thousands
of spare parts that go into various vehicle models, sharing millions of documents related
to standards and compliance is cumbersome. The automaker has ascertained that the
traditional way of exchanging these files through mails, trading files, and phone calls to
the hundreds of suppliers with whom they make business is time-consuming. However,
the distributed ledger characteristics of blockchain have enabled them to distribute and
Logistics 2022, 6, 15 15 of 22

track data across the entire network with ease, while maintaining the confidentiality of the
information using a permissioned network [51].
German automaker BMW worked together with DHL, a leader in the logistics industry,
to develop a blockchain-based proof-of-concept to improve the visibility of parts shipped.
To avoid the long manual process, a private blockchain network that can show the supply
chain-related data to the participants was created. The various access level ensured that
the participants could access only the data that are of interest to them. Additionally, the
system’s capability to provide real-time shipment data to their dealers from the time an
order is placed until it is delivered has helped them in reducing manual reports and gave
better visibility to real-time data [52].
The miles clocked by the automobile odometer is a critical assessment used for the
valuation of vehicles and approving warranty claims. However, the cost of illegal tampering
with data is a common threat in the used-car market, the value of which is estimated to
be around USD 7.5 billion every year, in Germany alone. To solve the issue, Bosch, an
engineering technology company, and TÜV Rheinland, a German certification agency
collaborated to develop a blockchain-based system to prevent data manipulation in the
odometer of automobiles. The system collects the distance clocked by the odometer in
real-time using IoT sensors, timestamped, and automatically transfers it to a tamperproof
blockchain network which ensures the authenticity of the data. The technique can be
extended to logistics providers to maintain records of their fleets and assist used-vehicle
dealers [53].
Maersk, a global shipping company, has collaborated with IBM and developed a
blockchain-based trade platform to digitize the supply chain that can track end-to-end
details of shipments. The details related to the progress of goods in the supply chain,
the current location of the container, custom clearance documents, bills of lading, and all
other relevant data are made visible to all the participants of the network in a tamperproof
database. The platform provides greater visibility to goods-in-transit, eliminates cumber-
some paperwork, and improves transparency and trust among the participants. In addition,
it has the potential in avoiding delays and offer enormous cost benefits [54].
RCS Global, a leader in delivering responsible sourcing of raw materials, has partnered
with IBM and developed the Responsible Sourcing Blockchain Network. Originally devel-
oped to trace the origin of Li-ion metal used in manufacturing batteries, the technology
can support end-to-end tracking of all raw materials from mine to customer. The granular
details of the process flow from the time the metal is mined and moved to various stages,
such as smelter, cathode unit, battery unit, manufacturing plants, until it reaches an electric
vehicle or a consumer electronic can be traced. This ensures customers that the minerals
used in the product were sourced from a responsible sourcing site that is free from conflicts
and unethical practices [55].

5.2. Other Applications

Due to the various unique characteristics (that are discussed in Section 2), blockchain
technology has quickly gained popularity beyond cryptocurrencies. Apart from supply
chain management, some of the sectors that have the potential to embrace the benefits of
blockchain technology are briefly discussed in this section.

5.2.1. Banking and Finance

Blockchain is fundamentally a distributed ledger and as ledger maintenance is the
core business of banking and finance, it is the first sector to embrace the technology. As
for the traditional banking system, all the transactions were originally stored in physical
format. Later, the physical ledgers were replaced by managing the details of transactions
in a digital database. However, due to the ever-increasing online threats, a traditional
centralized database is still susceptible to manipulation and the entire system is vulnerable
to hacking. As the banking and financial sector is considered a key pillar for the economic
development of a country, any disruption to the sectors would be catastrophic. However,
Logistics 2022, 6, 15 16 of 22

the unique characteristics of blockchain that were discussed throughout the paper can help
the sector to manage its processes efficiently. Auditing financial results, which usually
takes days and weeks, can be considerably reduced to hours due to the availability of
trustworthy data. Automated clearance, payments and settlements, tokenizing securities
such as shares and bonds, elimination of third parties for quicker and efficient processing
of loans and credits, fool-proof asset management, decentralized database to maintain
customer records, secure and cost-effective international money transfers, and immutable
nature of transactions are a few of the benefits which a traditional banking system can gain
by adopting blockchain [56].

5.2.2. Insurance
Insurance is another key sector that involves numerous contracts in the form of
physical paperwork between multiple parties that results in delayed processing and a
lengthy settlement cycle [57]. The contracts involve cumbersome record-keeping of various
details such as customers’ personal details, nominations, premiums, renewals, claims,
investigations, and settlements. However, all the transaction details can be easily and
efficiently stored in a blockchain network which can be used to support quick claims,
automate the claim settlement, and prevent fraudulent claims. This can lead to increased
customer satisfaction and reduce the administrative cost to the insurance provider.

5.2.3. Healthcare
Currently, the health records of individuals are stored in a physical format and most
of them are lost over a period. However, blockchain can act as an interoperable and
comprehensive system to record and manage the details of individuals by automatically
pulling patient details from physicians and hospital records and storing them in a secure
network in the form of electronic medical records or health records (EMR/EHR). It also
assists physicians in understanding a patient’s medical history, which can lead to improved
diagnosis and can be used to prevent future illness. The records can also be used to buy or
renew insurance policies and initiate claims or settlements automatically. In addition, the
technology can also support maintaining a larger public health management initiative and
eliminate the circulation of counterfeit drugs and pharma products [58].

5.2.4. Intellectual Property (IP) and Copyright Management

Blockchain technology can act as a digital repository to maintain IP ownership and
copyright certificates of individuals and corporates. Through smart contracts, the IP rights
can be licensed to interested parties automatically and royalty details can be tracked
easily. The other potential use cases include maintaining the different versions of an IP
in one decentralized secure location, digital rights management, proof of ownership and
provenance authentication, distribution, tracking and automatic approval of IP rights, and
implementing IP contracts [59].

5.2.5. Education
The education institutes can make use of the immutable nature of the blockchain tech-
nology to store and track the entire transcripts digitally, such as student and staff records,
frame syllabus, and issue certificates [60]. The certificates would become a tamperproof
permanent record in the university’s blockchain network that can be easily viewed or veri-
fied by the other participating agencies such as higher education universities, employment
firms, and immigration agencies.

5.2.6. Real Estate

All the property records, the history of previous ownership details, details of taxes
paid to the government, property approval documents, rental and mortgage details can be
efficiently tracked by maintaining all the records in a blockchain network. The technology
can help all property-related transactions to become transparent and trustable, as they can
Logistics 2022, 6, 15 17 of 22

otherwise be influenced by shady practices. In addition, it can also help governments to

eliminate undervaluation issues in the property transactions that lead to revenue loss and
reduce the cost involved in record keeping. Removing middlemen, improved transparency,
liquidity, fractional ownership, fraudulent transactions, use of unaccounted money, and
other illegal activities that are common in the real estate sector, can be eliminated through
blockchain [61].
The potential application of blockchain technology is exhaustive, and in general, can
be used in all the sectors where transparency and trust in data are required. In line with
that context, the few other sectors that can realize the benefits of blockchain technology
include retail, eCommerce, media, stock market, transportation, food, pharma, fashion,
jewelry, and governance.

6. Challenges in Adopting Blockchain Technology

Although blockchain technology provides numerous benefits to the users, the technol-
ogy has not yet received widespread adaptation due to various challenges and limitations.
Scalability, high energy and computational power, throughput, latency, high setup cost, and
lack of standardization are some of the major challenges [62]. For instance, the consensus
protocols used to maintain the integrity of the blockchain must be executed every time
to add new blocks. However, with the new blocks added to the chain continuously, it
grows larger, which consumes more energy and requires enormous computational power.
It renders integrating the technology with smaller and low-powered IoT devices extremely
difficult, and firms could face challenges in attaining sustainability targets. As the required
computational power increases it can also lead to longer processing time which makes the
system inefficient. To maintain the core characteristics of decentralization, many participant
nodes are required, which leads to scalability problems, especially in a public blockchain.
In the blockchain, throughput refers to the rate at which the transactions are pro-
cessed. In other words, it can be termed as the number of transactions per second [63].
According to a stress test conducted in 2014, the VISA network has the capability to handle
56,582 transactions per second at its peak (although on average it only handles around
2000 transactions per second), while bitcoin takes around 10 min to confirm a transaction
and can only handle three to seven transactions per second, which exposes the network’s
scalability and throughput issue [64]. Although blockchain technology is considered highly
secure, exploiting the technology by gaining a majority consensus (also known as a 51%
attack or majority attack) is possible in a network with a small number of participants [65].
In the blockchain, “latency”, which is also denoted as “block time” refers to the time
taken to generate the next block of transaction in the chain, and the current latency is
roughly around 10 min, which is much higher than the traditional systems [66]. Addition-
ally, having many confirmation blocks in the network compounds the issue. In particular,
the presence of a large number of nodes, each spread across the world with different
networking and computational capabilities in a public blockchain, increases the latency
as each node requires access to the blockchain to reach consensus. As a full node has an
entire copy of the blockchain, it takes a huge toll on the hardware, software, and network
infrastructure. Low transaction processing throughput and high latency are commonly
reported issues in the deployment of IoT devices to blockchain [67]. Additionally, as each
node in the blockchain basically performs the same task, the lack of sharding makes it
impossible to execute parallel tasks. Blockchain trilemma is another common notion used
to denote the challenges associated with all decentralized networks. According to the
consistency, availability, and partition (CAP) tolerance theorem, a decentralized network
can achieve only two of the benefits between decentralization, security, and scalability at
a given time, while compromising the other. Hence, achieving scalability without com-
promising decentralization or security is highly difficult. Similarly, achieving security and
scalability together is a challenge, as they oppose each other. As security and decentral-
ization cannot be compromised, scalability is often seen as the highest risk for the growth
Logistics 2022, 6, 15 18 of 22

of blockchain technology. However, some scholars believe that all three can be achieved
without a compromise in the future [68].
However, most of the discussed challenges were related to having a public blockchain,
and they can be tackled by adopting a private blockchain which is suitable for industrial
applications such as supply chain and logistics. However, few studies that have tested
the performance of private Ethereum blockchains have also highlighted block frequency,
block size, node configuration, computational power, and consensus costs that limit the
scalability [69,70]. In addition, the cost involved in setting up a private blockchain network
for the entire supply chain would be high, complex, and unknown in many cases. To
address the challenge, a few service providers such as IBM have developed a cloud-based
blockchain network as a service for easy deployment, which can ease the setup cost
to a certain extent. With every service provider developing their blockchain protocols
and architecture, the lack of standardization could lead to blockchain applications facing
interoperability issues. The other common challenges include lack of budget, unfamiliar
technology architecture, lack of enough successful use cases, regulatory and compliance
issues, lack of awareness, and some companies seeing no significant value addition to their
current practices.

7. Key Takeaways and Future Directions

Unlike other sectors, the challenges of a supply chain are unique, due to the compli-
cated and multi-tiered network, which involves several parties who operate from different
parts of the world with various compliance and ethical standards. Hence, the unique chal-
lenge of bringing the entire supply chain under one roof requires a unique technology such
as blockchain that can provide a very high level of traceability, transparency, immutability,
and security to data. However, when it comes to businesses adopting any new technology,
the first and foremost question that is asked is, “Can the technology add value to their
supply chain and improve profitability?” The answer is, “yes”, and the three potential areas
where it can add value are summarized below:
• Improve the speed and reduce manual processes in the current practices, especially
among suppliers and vendors that are at the bottom-most tier of the supply chain who
often go unnoticed or are difficult to track.
• Improve traceability and provenance of the entire supply chain to mitigate costs arising
out of using inferior quality, counterfeit, or grey market parts, facilitate easy reverse
logistics, support circular economy, and adhere to reputation, compliance, and ethics.
• Provide transparent, trustable, and secure information to all the participants of the sup-
ply chain in real-time by eliminating errors in inventory records, missing shipments,
and duplicate payments.
The study clearly shows that blockchain is not just another technology that would
fade out once the buzz around digital technology settles, but its tremendous benefits clearly
show that it is a technology that is here to stay. At the InFinity forum 2021 organized by
the International Financial Services Centres Authority (IFSCA), Mukesh Ambani, one of
the richest men in the world and chairman of Reliance Industries Ltd., has asserted his
faith in blockchain technology and highlighted the unique features of the technology such
as security, trust, automation, and efficiency that can modernize the supply chain, which
is the lifeline of a country’s economy. Although there is no doubt that the technology
would be a real game-changer, it could take time to evolve to address various real-world
challenges and show significant value propositions before receiving universal acceptance.
What follows is the summary of challenges and future directions of blockchain technology:
• Currently, not all the trading partners are participants in the blockchain. Extending
the network across all the supply chain partners would be expensive, consume more
energy, and require enormous networking and computational power.
• As interoperability between two different networks is a challenge, selecting a specific
blockchain technology ties the users to it. For instance, blockchain interoperability
currently works for the different blockchains of the same network, but between dif-
Logistics 2022, 6, 15 19 of 22

ferent networks (also called cross-chain or cross-blockchain interoperability) such as

Ethereum and Ripple is difficult.
• Reducing the size of the blockchain without losing information, block size optimiza-
tion, a lightweight blockchain to reduce transaction latency and computing power, a
new standard to represent transactions in a block, and new governing rules to suit
industrial needs, are a few potential future studies.
• The integration of IoT-enabled devices with private blockchain could open the doors
of new possibilities if scalability and cost issues are addressed as each IoT device
generates gigabytes of data in a short time.
• Blockchain-enabled automatically executable digital contracts also called “smart con-
tracts” have the potential to become the future of all digital transactions by providing
secure and transparent transactions.
• Many participant nodes increase challenges such as scalability, latency, throughput,
networking, data privacy, cost, and high energy consumption. Hence, a private
blockchain is suitable for multi-organizational businesses such as supply chain and
logistics. However, hybrid blockchain, an amalgamation of a public and private
blockchain that provides flexibility on data visibility without compromising security
also shows immense potential.

8. Conclusions
For a consumer, as the supply chain is the face of a business, organizations across
various sectors race to build an efficient and reliable management technique to protect
their business. Despite the advancement in integrating information technologies with the
traditional supply chain, challenges such as time, trust, transparency, traceability, and
security of data are unaddressed. Although most organizations have “digitalized” their
supply chain and logistics, there is currently a need for “data-driven” practices. So, the
supply chain of the future must be connected, collaborative, secure, intelligent, and scalable.
Hence, the use of modern Industry 4.0 technologies that are often called “smart factory
technologies” such as automation, artificial intelligence, blockchain, IoT, cloud computing,
and big data analytics are the compelling necessities for a smart supply chain network.
Together, the technologies can assist industries to develop a transparent and trustable
supply chain ecosystem that can ease operational challenges and improve financials.
However, despite having a rosy outlook and abundant capabilities, even after a decade,
blockchain technology is still in a very nascent stage, and firms are wary of upgrading their
traditional database with blockchain. Perhaps, a novel technology does not always mean
it guarantees superior performance and successful widespread acceptance. Nevertheless,
supply chain management is the one area in which the technology would become a real
game-changer due to the involvement of multiple stakeholders, and a complex process
that demands the availability of transparent, trustable, and real-time data. However, to
achieve a mainstream adaptation, the technology must suitably address critical challenges
such as scalability, interoperability, high energy and computational power, throughput,
and high cost. Further research on the technology to overcome the challenges would
completely revolutionize the way information flow is managed in a supply chain and
logistics network. However, the success of the technology would highly depend on various
stakeholders coming together to transform their legacy practices into data-oriented digital
technology such as blockchain. Hence, based on the literature survey, it can be concluded
that blockchain technology can provide significant benefits to the supply chain and logistics
network of manufacturing companies in terms of trust, transparency, traceability, security,
and flexibility.

Author Contributions: Conceptualization, A.R.S.; methodology, P.M.; formal analysis, A.R.S.; inves-
tigation, A.R.S.; resources, A.R.S.; data curation, A.R.S. and P.M.; writing—original draft preparation,
A.R.S. and P.M.; writing—review and editing, A.R.S. and P.M.; visualization, A.R.S. and P.M. All
authors have read and agreed to the published version of the manuscript.
Logistics 2022, 6, 15 20 of 22

Funding: This research received no external funding.

Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: The data presented in this study are available within the article.
Conflicts of Interest: The authors declare no conflict of interest.
Disclaimer: This disclaimer informs readers that the views, thoughts, and opinions expressed in the
article belong solely to the authors, and they do not purport to reflect the opinions, views, policies, or
positions of authors’ employer, affiliates, organization, committee, or other group or individual.

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