Supply chains are the backbone of global trade. While supply chain management has improved immensely over the years, especially with the help of emerging technologies, it still faces challenges that need to be overcome.
Non-fungible tokens (NFTs) promise to help eliminate many of these challenges.
In this article, we look at the seven use cases of NFTs in supply chain management. In particular, you will learn how the technology improves, secures, and adds efficiency to the movement of goods from where they are produced to where they are consumed.
What is the Role of NFTs in Supply Chain Management?
NFTs can provide unique digital solutions to problems in supply chains that have had to be tolerated because there was no way to deal with them.
Some of these problems, such as counterfeiting, had come to be accepted as part of the cost of doing business. This, of course, led to poor user experience, risk of harm to consumers, and the resulting cost being added to the price tags.
That’s where the use of NFTs can help.
How to Use NFTs in Supply Chain Management
At the core, using NFTs in supply chains means giving a product a unique identity that can easily be proven and through which it interacts with the entire stretch of its supply chain, from the extraction of the raw material to the delivery of the finished product to the end consumers.
This identity on the blockchain is supported by other similar and related technologies like decentralized file systems such as InterPlanetary File System (IPFS), which help secure generated product data.
The following are the specific ways that having the identity of a product established as an NFT on the blockchain changes supply chain management.
Product Authentication
Counterfeiting has been a huge problem for global supply chains. As manufacturers and distributors have struggled to provide a simple way to prove the authenticity of their products, the volume of fake items sold globally has exceeded $400 billion annually, according to the OECD reports.
Now, an immutable identity of a product can be established on the blockchain as an NFT, and that can be a simple mechanism for differentiating them from counterfeits. Besides original manufacturer details, more data, such as chain of custody, certifications, and carbon footprint, can be attached to this identity along the chain.
Enhanced Transparency
Traditional supply chains often lack full visibility for all stakeholders, especially because they have scattered data. This makes understanding products to build trust difficult. NFTs can fix this by having all stakeholders have access to all data about a product in real time, bringing full transparency to the supply chain.
Through a link to a unique digital identity, authorized parties (like third-party logistics providers, retailers, and consumers) can see a verifiable history of where the product came from and how it moved. This makes each item traceable if anything goes wrong with it in the supply chain.
Data Integrity & Collaboration
Digital data is generally easy to arbitrarily change, and that problem is made worse in a supply chain when information about an item is fragmented as it is stored on different databases. This fragmentation reduces integrity and limits the capacity for stakeholders to collaborate.
NFTs, with the help of physical identifiers, can fix this.
When producers link and record product data and history to an NFT on the blockchain, it becomes tamper-proof. This makes data accurate and reliable for everyone on the chain. Stakeholders, including consumers, can scan the linked identifier (like a QR or RFID) to view this shared, single source of truth. This builds trust and improves how manufacturers, suppliers, and consumers work together.
Logistics & Inventory Management
Lack of real-time visibility, over-reliance on manual processes, and poor tracking often cause issues in logistics and inventory management.
The product data in NFTs can enable accurate, item-level tracking. This provides a clear overview of inventory, location, and status. NFTs also help ensure more accurate stock management and reduce wastage and pilferage.
Ethical Sourcing
Limited visibility into material origins, labor engagements, and environmental impact makes ethical sourcing a major problem in the global supply networks, even as this becomes an important consideration for many consumers.
NFTs offer the mechanism for keeping and accessing a verifiable, immutable record of a product’s path. It helps provide reliable data on material origins, manufacturing processes, labor certifications, and even environmental compliance. Stakeholders can easily verify marketing claims and ensure ethical standards are met.
Quality Assurance
Keeping the quality of the product consistent and identifying the source of issues in real time is not an easy task without reliable data. Tying information about a product, test results, and certifications to an NFT can make this process seamless for stakeholders.
With this clear, safe quality record, it’s easier to find any problems quickly. It also builds consumer trust in the product and makes checking quality standards less problematic.
Efficient Recall Processes
In supply chains that don’t leverage NFTs, it is often very hard to quickly identify and trace items that need to be recalled for whatever reason. This usually leads to delays, increased costs, and potential safety risks.
The use of an NFT platform allows companies to quickly identify bad batches and instantly trace them through the supply chain. As a result, companies can issue targeted notifications, track the retrieval or destruction of specific items, and make faster recalls at a much lower cost.
Should You Leverage NFTs for Supply Chain Management?
NFTs represent a resourceful instrument for improving supply chain operations. They solve a host of issues that have been haunting the global network for decades.
The technology offers immutability, security, and easy access to data for all stakeholders.
Although incorporating NFTs could mean additional expenses, especially on digital infrastructure and skills, the benefits, especially in the long term, could greatly outweigh the cost. The process of tokenization of supply chains is still in early stages, but the potential for immense improvements is undeniable.
Article and permission to publish here provided by Harry Clark. Originally written for Supply Chain Game Changer and published on May 29, 2025
Cover photo by Bjorn Pierre on Unsplash.