AI and Blockchain in Supply Chain Management

AI and Blockchain in Supply Chain Management



Two technologies: Blockchains and Artificial Intelligence (AI) have the potential to change how we handle business. These technologies promise to revolutionize digital business ecosystems and help businesses stay relevant in the market regardless of size and capital. While the two technologies achieve different functionalities, when used together they enhance most business workplace processes. Such functionalities include transactional recording, tracking of purchase orders, linking physical goods to their data, sharing information about products and predictive analytics. Most modern businesses should, therefore, put up plans that will enable the integration of these two technologies into their supply chain. Doing so would ensure that the businesses create value and improve logistics operations.

FIGURE 01: Blockchain Becomes a Crucial Link in the Supply Chain (Mullaney, 2018).

FIGURE 01: Blockchain Becomes a Crucial Link in the Supply Chain (Mullaney, 2018).

Adopting both technologies can help companies eradicate challenges that have plagued businesses for a long time. Blockchains ensure the secure and anonymous transaction of embedded data while AI uses data to improve the value of work while minimizing human effort. In the figure seem above, the blockchain is being emulated to present a model within the supply chain leaving a trail of high documatation thorughout it’s lifecycle from point origin to point distribution (Mullaney, 2018). Artificial Intelligence could improve blockchains by enhancing immutability useful in creating secure financial systems for higher standards of encryption and transaction (“6 Applications of Artificial Intelligence for your Supply Chain.”, 2018). Blockchains can help decentralize and open up Artificial Intelligence technologies. Blockchain can also help AI break down large amounts of data into manageable chunks it could then analyze more efficiently. This next section discusses the potential gains that supply chains can achieve by combining the abilities of the two technologies.

Principles Behind a Decentralized AI

Decentralized intelligence is the product of a blockchain network powered by Artificial Intelligence algorithms. Using AI techniques such as image recognition, multidimensional data transformation and natural language processing in blockchain links can help streamline the networks. This integration will also help miners (peers in the network) to fragment extensive supply chains that can create a network large enough to satisfy individual client needs. Machine intelligence could also be used as a tool to enhance transactional flexibility. Smart contracts can be initiated for specific events to avail distributed and cost-effective Artificial Intelligence. Blockchain technology will grant AI unlimited access to transactional and product data, ensuring machine efficiency while eradicating concerns of privacy data abuse and fraud among others (Bhandari, 2018). Decentralized intelligence will, therefore, improve Supply Chains by improving encryption standards and trust in financial transactions.

The two technologies combined will also improve supply chains by boosting accessibility. Blockchains and AI simplify payment methods when used together. Difference in currency usually makes international trade quite difficult. Cryptocurrencies provide a solution to this difficulty since they are of equal value all over the world. Smaller industries can adopt AI faster since Blockchains make datasets accessible (Marr, 2018). This accessibility reduces operational costs and improves transactional efficiency. Cryptocurrency transactions protect businesses from unpredictable exchange rates since their value does not depend on local laws. This universality will help enhance business in global supply chains by reducing the legal and financial hassles that come with international trade.

Artificial Intelligence will reduce the cost of running blockchains, while making them scalable and more efficient. The process of transactional validation on blockchains is quite costly. Specialized computer components used in mining are responsible for a significant portion of these costs. Using AIs to power the blockchain network can lower energy consumption, thus reducing operational costs (Dobrovnik, Herold, Fürst & Kummer, 2018). AI datasets can allow the miners to focus on the most high-priority transactions. Thus, firms can perform transactions faster without having to upgrade their IT architecture. Reducing costs along the supply chain can help businesses improve other areas of operation. AI in blockchains also ensures human focus on more productive work, while the machines help crack codes and manage a huge transaction log. Thus, AI and Blockchain reduce supply chain costs, improving efficiency and scalability.


This research has investigated the integration of AI and Blockchain technologies in Supply Chain Management. The two technologies promise to revolutionize how business runs in the digital environment. While the two technologies have helped make great strides in resource management and productivity, together they supplement each other, creating a synergistic effect. AI improves blockchains by enhancing scalability, reducing energy consumption, and improving privacy, security and efficiency. Blockchains improve AI by creating trust in the technology, increasing its effectiveness, reducing costs and enabling decentralized intelligence. Together, the technologies improve the supply chain by improving data models, enabling intelligent predictions, enabling smart contracts, and enabling global verification systems.



Peter W. Ross, Ph.D. CUNY
Philosophy of Mind, Cognitive Science

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