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Advantages And Disadvantages Of Blockchain
While blockchain technology has the potential to bring significant benefits to supply networks, there are also potential drawbacks, indicating that any blockchain solution must be well-tailored to the intended supply chain.
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CIO Applications | Tuesday, November 30, 2021

Fremont, CA: Blockchain got hailed as a cutting-edge technology that will increase supply chain trust, efficiency, and transparency. However, as exciting as blockchain technology is, it is not a cure-all for supply chain problems. There are several benefits and drawbacks of adopting blockchain in the supply chain:
Advantages of Blockchain
- Trust.
Members of the supply chain could trust the data they see on the blockchain because it is decentralized and unchangeable. A standard supply chain data storage system, on the other hand, generally requires all members of the supply chain to retain their records, which leads to conflicts when such records do not match.
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- Transparency.
Because every data on the blockchain automatically gets stored with a timestamp, even data that would not typically get captured in a traditional supply chain system, blockchain promotes transparency. In addition, blockchain technology also promotes transparency by providing end-to-end tracking, which all supply chain members may enjoy on the blockchain.
- Efficiency.
Because all data gets recorded at every stage in the supply chain and every member of the supply chain can view the data, it is straightforward to immediately determine where in the supply chain a nonconformance has happened. Using blockchain technology saves time spent sending emails and making phone calls to determine the source of the nonconformance. Furthermore, because papers get maintained on a shared ledger, physical documentation is essentially superfluous.
Disadvantages of Blockchain
- Upfront Costs.
The initial expenses of deploying a blockchain system may be prohibitively expensive. Likewise, employing blockchain developers has costs, which tend to be more than hiring regular developers due to their particular knowledge field. In addition, planning fees, licensing fees, and maintenance fees may all add up to a heavy price tag.
- Permissioned Blockchains.
Because supply chain information might be sensitive, a permissioned blockchain (not accessible to the general public) generally gets recommended. A permissioned system, on the other hand, is less secure since the blockchain comprises fewer nodes, and those nodes are usually known to each other, making it simpler to collude to modify a block.
- Scaling.
Because transactions must get verified on many computers or servers, blockchain systems execute trades far more slowly than traditional databases. Furthermore, because of the massive amount of transactions in the supply chain, having a permissionless element of a blockchain solution might be costly since transaction fees would be required to pay the labor performed by the miner nodes to produce the blocks. Given that certain supply chains process millions of transactions each day, implementing blockchain technology must get completed with caution and a focus on scalability.
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