Blockchain Smart Contracts for Smarter Supply Chain Management

Posted by MuBlockchain on November 30th, 2020

Blockchain and Bitcoin, while related, are two distinct entities. Blockchain is the underlying infrastructure because Bitcoin is one blockchain program. Bitcoin is a virtual currency built upon a foundation of blockchain.


Blockchain is a decentralized ledger which is distributed yet immutable.

It’s immutable so nobody can undo or overwrite once a transaction has been added to the blockchain, thus, making it almost tamper-proof.

Distributed blockchain. The ledger is not stored in a single location, it is duplicated in the blockchain by parties. Furthermore, blockchain is decentralized; the database does not have a central authority or administrator. It renders blockchain immune to interruptions, as there is no single point of failure.

In the end, blockchain is a ledger, a transaction record. Those transactions can be almost anything that can be recorded digitally, such as ownership names, attributes, transfers, places, conditions and statements, and more.

Such versatility makes blockchain supply chain management perfect where various parties meet, and paperwork is continuously exchanged.

Blockchain Gets Smart

Another useful concept provided by blockchain is the “smart contract.” A smart contract is a digital contract that executes itself when predetermined conditions are met. Such code-based contracts allow agreed actions (such as payments) to take place automatically, immediately, and without intermediaries upon fulfillment of the contract terms. For instance, when the customer confirms delivery of the package a smart contract may be used to release payment to a carrier.

The smart contract is a contractual arrangement between parties that keeps each party responsible for its position in the contractual. Smart contracts specify the rules and punishments for a conventional contract-like agreement, but also make sure the contract is implemented. They specify the rules and punishments for a conventional contract-like agreement, but also make sure the contract is implemented.

Smart contracts can be a complicated area, but we answered your questions so you can determine whether they are right for your supply chain organization.

Smart Supply Chain Contract 

A smart contract at its simplest is a piece of code that exists on the blockchain. This smart contract can be used to describe the relationship that occurs between supply chain parties to almost everything. For example, an operational smart contract between a retailer and a distributor may state, for supply chain purposes:

The cost of the products created as part of a particular order

Timescales for the production of goods between receiving an order and shipping

Bonus and penalty clauses

Payment conditions to clearing invoices

Some of the information that can be written into a traditional operating contract can also be written into a smart contract, making smart contracts suitable for virtual agreements to handle complex supply chain relationships operationally.


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Joined: October 27th, 2020
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