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Role of Web3 in Supply Chains and Logistics

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Regulating and managing today’s supply chains and the interlinked organizations, suppliers and goods distributors involved in the sale of products has become extremely complex. Supply chains can get stretched over innumerable stages based on the kind of products. These stages comprise different geographical locations, multiple invoices and payments, several distributors and an extended span of months and years. Since its advent, supply chain management has functioned as a complicated space consisting of multitudes of channels.

Even before the onset of Covid-19, global supply chain management was affected by the shortcomings of web2. As per a report by WIRED, the supply chain is too complex, interconnected and fragile to be made vulnerable to global pandemics. Their report could 80% predict what would happen, and 20% predict unforeseen circumstances as a margin of error.

Web2-based supply chain management lacks the traceability and predictive monitoring required to check what is done at different stages of production. It caused stakeholders like regulators and advocates in the management committee to pay high prices. Web2 has done restrictive and unsecured innovations for the global shipping and supply chain and logistics industries that do not drive any reasonable economic value to them.

To understand clearly, the global industries heavily rely upon paper in context to the ‘bill of lading.’ According to a Forbes article, the bill of lading’s digital version, introduced more than two decades ago, accounts for hardly 0.5% of global trade. This is because of the highly segmented and complex flow of global trade.

Supply chains consist of disparate and competing groups of people that exchange data to coordinate with each other on supply chains. Therefore, the need to share data often leads to delays in information processing in supply chains, inconsistency in the chain flow and distrust among the supply chain participants. This results in the incompetency of supply chains, which becomes a major barrier to digital transformation.

When it comes to innovating supply chain management and logistics, web3 acts as a boon. It offers a decentralized infrastructure for highly secured data sharing that functions as an alternative paradigm to function with robust blockchain protocols. This article will help you explore how web3 has innovated supply chain management and logistics.

What is web3 in supply chains and logistics?

The growth of the global economy constantly places a lot of emphasis on logistics and supply chain management. This happens specifically based on the present day’s shipping backlog at all global key ports and the diminishing availability of goods in shops. Web3, when integrated with supply chains and logistics, offers a multitude of benefits like decentralized data management, aggregation and control of supply chain components.

The automation of supply chain management and logistics using web3 is not just about blockchain; it is an amalgamation of technologies like artificial intelligence, smart contracts written in web3-specific programming languages, and distributed ledgers. All these make up the fundamental stack of web3 integrated supply chain and logistics.

Supply chain and logistics using web3 facilitate an open record keeping of all the linking documents of the supply chain flow. It demonstrates seamless data coordination from all the supply chain participants, like different organizers, suppliers, etc.

Web3 integrated supply chain provides increased transparency and reduced cost and risk throughout the supply chain management and logistics regulation. It relatively increases the material supply chain’s traceability to ensure that all the corporate standards are truly fulfilled.

Along with minimum paperwork and reduced administrative costs, web3, when integrated into the supply chain management, improves visibility and compliance in regard to outsourced contract manufacturing.

Web3 in supply chain management also reduces the losses from counterfeit or gray market trading. It also manages supply chain components and improves accuracy with high-level end-to-end tracking.

Using web3, it is possible to digitally transform physical assets and build a decentralized, distributed ledger and distributed record of transactions. This, in turn, makes it possible to seamlessly track the flow of assets from their production to their delivery. Web3 integrated supply chain also provides detailed product history and improved transparency. This offers benefits like increased visibility to consumers and businesses.

Another important aspect of web3 supply chain management is identity verification. It plays a huge role in web3 supply chain management and logistics. It provides clear information on when and who is responsible for the flow of goods and merchandise in the supply chain regulation.

Let us now look at the attributes of the web3 supply chain in the next section.

What are the features of a web3 supply chain?

Web3 integrated supply chain and logistics are highly secure in nature and have the following distinctive attributes:

Seamless tracking

Supply chain and logistics using web3 have distributed ledger, which ensures that the supply chain participants seamlessly track and monitor the end-to-end history of all the activities beginning from orders, manufacturing workflow, and payments to packaging and good transportation on a real-time basis.

Automated record keeping

All the supply chain and logistics transactions taking place between the participants and all relevant information from the linked systems, like ERPs, IoT data management base, etc., are validated automatically. They are then safely stored in the distributed web3 ledgers.

Verified supplier data

Web3’s fundamental technology is blockchain which offers suppliers with identity management and verification features. It enables supplier data validation by trusted validators and provides an immutable audit trail for all the suppliers on-chain.

Automation using smart contract

Smart contracts have pre-set instructions and clauses to regulate supply chain and logistic transactions automatically. These clauses are pre-decided and agreed upon by all the relevant parties involved in the web3 supply chain. Automation takes place when all the clauses and pre-set conditions are met, for instance, monitoring all the goods and logistical metrics, checking transportation compliance at pre-set regular intervals, and processing a payment to the relevant supplier on timely product delivery.

Timestamping and hashing 

Web3 supply chain and logistics generally work by generating a hash value on the blockchain. This ensures that all the data blocks in the blockchain network have their distinctive cryptographic identifier value. In case the supply chain data in one of the blocks is altered or changed, then the hash value of all the continuing blocks will be altered. This timestamping and hashing makes the web3 supply chain and logistics data secure and tamper-free.


Web3, when integrated with supply chain and logistics management, achieves high security and offers data encryption, multi-factor authentication, permission-less chain access & control, fraud detection algorithms, etc.

Digital transaction signing

Participants of the web3 supply chain have their respective digital signatures to seamlessly e-sign the supply chain transaction and get their ownership validated.

Audit trail for documents

Web3 supply chain is fundamentally based on blockchain technology and, thus, keeps track of all changes made to contracts, sales and purchase orders, bills of lading, product certificates, manufacturing configurations, quality assurance reports, and other crucial supply chain reports. It also records information about report generation, formatting, viewing and sharing.

Registered supply chain & logistics components

Blockchain in the web3 supply chain enables users to separate and batch the onboarding of all products, documents and locations in relation to supply chain transactions and events. Also, the codes of the supply chain components are in accordance with the GS1(Global Traceability Standards) to keep the supply chain, and logistics regulation tallied and upright by maintaining a unified data record and seamless product tracking.

Data validation

Web3 supply chain and logistic transactions are validated by authorized supply chain participants with special validating rights. These transaction validators achieve transaction consensus and storage order using selective endorsement on-chain.

How is web3 beneficial for supply chain and logistics??

Web3, with its underlying blockchain technology, can improve supply chain and logistics management in the following three fundamental ways:


Web3 improves traceability and high operational efficiency of supply chain and logistics management via secure monitoring and mapping of the enterprise supply chain and logistics. With increased digitization, consumers these days ask for sourcing information about the commodities they order and buy. Thus, web3 with blockchain helps various enterprises comprehend their supply chain and logistics metrics and interact with the customers with verifiable, real and immutable products and transaction information.


Web3 builds trust and security within the supply chain and logistics management process by creating independent and distinctive hash values for all transactions and data, such as claims & certifications. It then provides permissionless and open access for the public to go through the supply chain and logistics management process. Once an enterprise supply chain is registered on a blockchain like Solana or Ethereum, its authenticity is checked by the network validators. Keeping in mind the factor of transparency, information on the web3 supply chain can be seamlessly updated and validated on a real-time basis.


Tradability is one of the most important features that web3 offers to the supply chain and logistics industry. The quality of readability redefines the old-school concept of the marketplace. With the help of web3 and blockchain, supply chain participants can easily tokenize an asset. They can do it by dividing commodities into equal parts that have approved and legit digital ownership of participants who are tokenizing the assets. It is quite similar to the concept of fractional ownership shares in a stock exchange. These tokens are then easily tradeable, and the token owners can also transfer the ownership digitally in real-time.

How does web3 streamline product recall in the supply chain?

Everything, from consumer packaged products to product recalls, is supported by global supply networks. Recalling consumer goods or raw materials may occasionally be necessary to stop injuries or illnesses. Recalls of consumer goods have a detrimental effect on millions of people worldwide due to lost sales, replacement expenses, and legal fees. By lowering counterfeiting and expediting product recall, web3 can improve product traceability.
When manufacturers can rapidly and readily find compromised items, recalls become less expensive and more effective. Web3 allows a supply chain that is more visible and traceable, permitting quicker and more effective recalls.

How does web3 improve regulatory compliance and reporting in the supply chain and logistics space?

Many patients depend on prescription medications, so pharmaceutical corporations have serious regulatory and compliance reporting concerns. While preventing under- or overstocking of drugs, the supply chain must continue to operate efficiently.

Web3-based automation of compliance and reporting will prevent mistakes brought on by manual processes and cut reporting expenses. Web3 compliance can significantly enhance compliance and reporting for pharmaceuticals, manufacturers, medical devices, and other consumer items by delivering real-time information and seamlessly disseminating data to the appropriate stakeholders.

How do supply chains and logistics using web3 function?

supply chains and logistics using web3 function

Web3 supply chains are regulated by their authorized participants or can also be automated based on smart contracts containing pre-defined events. Supply chains and logistics using web3 rely majorly on permissioned blockchain networks to limit and mitigate risk factors. This ensures that all the supply chain transactions and events can only be validated and approved by the authorized members of the web3 supply chain.

Specific user groups, like end-user consumers, have permission to access and view the products and transaction data stored on-chain. Data related to the supply chain is kept in timestamped blocks that are connected chronologically after being verified and encrypted with a hash algorithm.

To track supply chain operations and confirm the source of assets and inventories, the blocks come together to form a distributed ledger that functions as a single source of truth. Each authorized network participant keeps a copy of the shared ledger that is automatically updated when new information is added. Using role-specific online and mobile applications, the supply chain participants communicate with the underlying blockchain technology of web3 to transact and trace data (e.g., for suppliers, manufacturers, regulators, and distributors).


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How does web3 automate commercial processes in logistics?

web3 automate commercial processes in logistics

Web3 offers great potential to boost productivity across the logistics and supply chain planning phase, including trade finance, and to assist in resolving conflicts in the logistics sector. Smart contracts can be enabled using digital agreements and real-time shipping data that are integrated into web3-based platforms. As soon as predetermined circumstances are satisfied, these contracts can automate business activities.

Because of smart contracts, retailers no longer use brokers, attorneys, or other intermediaries to execute tasks. Retailers and logistics firms can engage in legally enforceable agreements with smart contracts that will end promptly if all predetermined conditions are not satisfied. These ledger-based contracts reduce delivery times and expensive mistakes while increasing transparency and revenues.

What is Bill-of-Lading in a web3 supply chain?

A bill of lading is a record that a carrier issues, which acts as a receipt for the shipment of merchandise. It includes important commodities’ kind, amount, and location details. A bill of lading, which is used in international trade, is a document that formally recognizes the agreement between the shipper and the carrier about the movement and delivery of commodities in a web3 supply chain.

Utility of a bill of lading

The bill of lading is a crucial document that serves as proof that an agreement to provide transportation services for a certain quantity of goods has been formed. For many firms, losing this receipt might mean trouble because it can delay the delivery of the goods to the recipient.

The paperwork also acts as evidence to show that the items are what they claim to be and that they were in perfect condition prior to shipping.

This paperwork can be utilized to determine who is in control of or liable for moving the items from the sender to the recipient and who paid the freight and customs costs.

How does web3 address supply chain fragmentation?

Global trade is fragmented and complicated, and supply chains involve numerous, sometimes conflicting, organizations that must cooperate and exchange information. Information that is inconsistent, lacking, and frequently delayed results from people’s innate mistrust of data exchange. This has grown to be a serious roadblock to the maritime industry’s digital transition. The end result is ineffective and fragile global supply lines, represented by the current shipping problem on a global scale.

To overcome these issues, web3 provides an alternative paradigm for developing trustworthy protocols and infrastructure. Shippers can offer their approval to exchange their information with third parties while maintaining control via an autonomous platform, smart contracts, asset tokenization, digital marketplace, etc. Verifying transactions through audits is a common method of improving supply chain fragmentation. To ensure contract performance, on-chain auditing is essential.


The goal of web3 for the supply chain is to increase the transparency of the supply chain and logistics, enhance the traceability of activities involving multiple parties in the supply chain, remove manual labor from triggering and recording supply chain transactions, and improve the security of sensitive supply chain data.
The rising need for supply chain accountability and traceability, the reliability of supply chain and logistics transactions, and the robust automation of supply chain finance operations without middlemen are the primary factors driving the adoption of web3-based solutions.

Are you looking for a robust web3 supply chain and logistics solution? Connect with our web3 experts for your project!

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What is Chainlink VRF

Author’s Bio


Akash Takyar

Akash Takyar LinkedIn
CEO LeewayHertz
Akash Takyar is the founder and CEO of LeewayHertz. With a proven track record of conceptualizing and architecting 100+ user-centric and scalable solutions for startups and enterprises, he brings a deep understanding of both technical and user experience aspects.
Akash's ability to build enterprise-grade technology solutions has garnered the trust of over 30 Fortune 500 companies, including Siemens, 3M, P&G, and Hershey's. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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