With the emergence and development of blockchain technology, due to its innovation in the underlying technology, many potential innovations have been created in the financial aspects of different industries, and even disruptive changes have occurred. Especially mature applications in supply chain finance are more extensive, and at the same time, the technology also effectively promotes the development of finance-related technology. We proposed a blockchain-based framework and used an accessory technology, namely smart contracts. The credit mechanism can be reformed to promote the flow of credit value and make it highly coupled with financial scenarios to obtain the feasibility of supply chain process design.
Problem definition: For many supply chains, deep-tier suppliers, due to their small size and lack of access to capital, are most vulnerable to disruptions. We study the use of advance payment (AP) as a financing instrument in a multitier supply chain to mitigate the supply disruption risk in a traditional system (with limited visibility) and a blockchain-enabled system (with perfect visibility). The main goal of this paper is to shed light on how blockchain adoption impacts agents’ operational and financial decisions as well as profit levels in a multitier supply chain. Academic/practical relevance: Traditionally, because of the limited visibility in the deep tiers, powerful downstream manufacturers’ financing schemes offered to their immediate upstream suppliers are not effective in instilling capital into the deep tiers. Advancements in blockchain technology improve the supply chain visibility and enable the manufacturer to better devise deep-tier financing to improve supply chain resilience. Methodology: We develop a three-tier supply chain model and take a game-theoretic approach to compare how blockchain-enabled deep-tier financing schemes affect a financially constrained supply chain’s optimal risk-mitigation and financial strategies. Results: We find that although improved visibility via blockchain adoption can help the manufacturer make informed supply chain financing decisions, whether it can benefit all supply chain members depends on the financing schemes in use. Blockchain-enabled delegate financing increases risk-mitigation investments and benefits all three tiers of the supply chain only when the tier 2 supplier is severely capital-constrained with the working capital below a threshold. Because delegate financing endows the intermediary tier 1 supplier with leverage over the manufacturer, the inefficiency inhibits an all-win outcome when the tier 2 supplier is not severely capital-constrained. Blockchain-enabled cross-tier direct financing exhibits a compelling performance as it always leads to win-win-win outcomes (and is thus ubiquitously implementable) regardless of the suppliers’ working capital profile. Managerial implications: Our insights help firms assess opportunities and challenges associated with enhancing supply chain visibility via blockchain adoption.
N. Bora Keskin, Chenghuai Li, Jing-Sheng Jeannette Song
Motivated by blockchain applications in the fresh produce industry, we consider a newsvendor problem in which a retailer faces stochastic and freshness-dependent consumer demand. The retailer can adopt blockchain technology to have more transparent information on the freshness of supply. We quantify the value of blockchain-enabled freshness transparency by deriving closed-form expressions for the retailer’s expected profit growth and food waste reduction brought by blockchain adoption. Using publicly available data, we provide a numerical example illustrating that for Walmart’s strawberry business in the United States (which is about only 4% of Walmart’s fresh produce sales), blockchain can increase annual profit by [Formula: see text] million while eliminating 23 million pounds of food waste annually through operational improvements. Despite this substantial value for the retailer, blockchain adoption can decrease the expected profit of the retailer’s supplier. We design a family of threshold-type smart contracts contingent on a blockchain-based freshness consensus and examine when such contracts offer a win-win proposition to the retailer and the supplier. Moreover, when the retailer offers freshness-based price discounts, we find that less fresh supply leads to less food waste. In contrast, when the supplier adjusts the wholesale price based on freshness, less fresh supply causes more food waste. We also generalize our findings to the cases of (i) dual sourcing, (ii) noisy measurements in the Internet of Things sensors feeding data into blockchain, and (iii) the retailer’s culling processes. This paper was accepted by David Simchi-Levi, operations management. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.02949 .
Ilhaam A. Omar, Raja Jayaraman, Mazin Debe, Khaled Salah · 6 authors
Effectively managing the healthcare supply chain (HCSC) process is crucial for healthcare providers not only during pandemics such as COVID-19 but also in their normal operations. Despite significant advances in new technologies and treatment options providers still suffer from poor procurement, ordering, forecasting, and distribution practices. Group Purchasing Organizations (GPOs) are an important stakeholder in HCSC and benefit providers with cost savings, volume discounts, and vendor selection. However, the current GPO contract process is time-consuming and lacks efficiency. Hence, our proposed solution integrates blockchain technology and decentralized storage to promote transparency, streamlines communication with stakeholders, and minimize the procurement timeline while avoiding pricing discrepancies and inaccuracies. Our solution connects all the stakeholders such as manufacturer, GPO, distributor, and provider using Ethereum network. In this paper, we propose a blockchain solution using smart contracts to automate the GPO contract process. We propose a generic framework for contracting process in the HCSC with detailed algorithms depicting various interactions among HCSC stakeholders. The smart contract code was developed and tested using Remix IDE and the code is publicly shared via Github. We discuss various security risks and present detailed cost analysis of various transactions incurred by the stakeholders. Our analysis demonstrates that the proposed blockchain-based solution is economically feasible as only a minimal transaction fee is expended by the stakeholders in the distributed network.
Ahmad Musamih, Khaled Salah, Raja Jayaraman, Junaid Arshad · 7 authors
Healthcare supply chains are complex structures spanning across multiple organizational and geographical boundaries, providing critical backbone to services vital for everyday life. The inherent complexity of such systems can introduce impurities including inaccurate information, lack of transparency and limited data provenance. Counterfeit drugs is one consequence of such limitations within existing supply chains which not only has serious adverse impact on human health but also causes severe economic loss to the healthcare industry. Consequently, existing studies have emphasized the need for a robust, end-to-end track and trace system for pharmaceutical supply chains. Therein, an end-to-end product tracking system across the pharmaceutical supply chain is paramount to ensuring product safety and eliminating counterfeits. Most existing track and trace systems are centralized leading to data privacy, transparency and authenticity issues in healthcare supply chains. In this article, we present an Ethereum blockchain-based approach leveraging smart contracts and decentralized off-chain storage for efficient product traceability in the healthcare supply chain. The smart contract guarantees data provenance, eliminates the need for intermediaries and provides a secure, immutable history of transactions to all stakeholders. We present the system architecture and detailed algorithms that govern the working principles of our proposed solution. We perform testing and validation, and present cost and security analysis of the system to evaluate its effectiveness to enhance traceability within pharmaceutical supply chains.
Roberta Pellegrino, Nicola Costantino, Danilo Tauro
The purpose of this paper is to study how advanced information about customer needs obtained through an Advance Purchase Discount (APD) contract can be exploited to coordinate the capital flow and enhance the efficiency of a two-stage supply chain (SC) under decentralized control in cases of stochastic customer demand. We developed an APD model in the form of an option contract, where the model and evaluation include the flexibility for the upstream firm to decide whether to provide a discount for an advance purchase at its own discretion. Applying the model to a Fortune 100 company, a leader in the Fast Mover Consumer Goods (FMCG) industry, showed that under certain conditions, and with suitably chosen contract parameters, management of decentralized control via APD contracts can lead to system-wide efficiency, and the individual decision makers pursue their own best interests, ensuring a win-win condition.
We propose blockchains and smart contracts as enabling technologies for an innovative type of supply chain management, with the goal of achieving higher levels of collaboration between the companies participating in the chain, which in turn pays in the form of higher levels of profitability and economic health for the participating enterprises. Our proposal goes far beyond simply using blockchains as decentralized systems to track the origin and delivery of goods, which is what most of the current blockchain projects on supply chains are focused on. In fact, we introduce a type of smart contract aimed to solve two of the main problems that hinder the efficiency and effectiveness of supply chains, namely trust and coordination . Solving the problem of trust amounts to the capability of establishing quickly and cheaply contractual relationships based on convergent business needs among parties that may not know each other, and therefore need to protect themselves from opportunistic or incorrect behavior. Solving the problem of coordination consists in creating, at convenient management costs, a control system capable of directing the objectives of the supply chain as a whole, so as to achieve a greater common good in the medium term, as an alternative to the state of affairs in which each participant pursues, on its own behalf, lower but immediate returns. Our smart contracts for innovative supply chain management replace human coordinators in tackling the problems above, thus eliminating one major obstacle to their effective solution, namely the need to trust the coordinator itself. Furthermore, in this way, by automating the process of coordination, they unburden the supply chain of a considerable management cost. Contracts of this kind not only automate contract execution as in standard smart contracts, but also adjust costs and compensations of the members of a supply chain, effectively taking up the role that was of human coordinators. Thus, we refer to them as “intelligent smart contracts.” In the course of the paper, we will illustrate an innovative supply chain architecture based on intelligent smart contracts running on blockchain, we will detail the algorithmic methodologies underlying the decision-making process of these contracts and we will outline the wider socio-economic perspectives opened by our approach.
Self-executing smart contract is believed to revolutionize global procurement by eliminating payment delay and enhancing transaction efficiency. This paper studies the value of smart contract in global procurement, and how the tariff regulations (specific tariff and ad valorem tariff) would affect the retailer’s preference of adopting smart contract.
Compared to traditional contract, the adoption of smart contract alleviates the supplier’s cost pressure while induces the retailer’s cash opportunity cost. Therefore, whether to adopt smart contract in global procurement becomes the retailer’s strategic and practice-relevant decision. The investigation of import tariffs also appears new in the literature.
We develop a game-theoretical model consisting of a retailer and an overseas supplier, where the retailer resells the supplier’s products and also sells self-brand products under the regulation of either a specific or an ad valorem tariff. Under both the tariffs, the retailer adopts either the traditional contract or smart contract to procure from the supplier.
We identify interesting interactions among tariff regulations, the supplier’s pricing decisions, and the value of cash opportunity cost (information update) under smart contract (traditional contract). We find that an increased specific tariff reduces the retailer’s incentives to adopt smart contract, while an increased ad valorem tariff could strengthen the retailer’s incentives to adopt smart contract. Interestingly, we find that, if the retailer faces high demand uncertainty, smart contract could be more profitable given the retailer’s low cash opportunity cost and a moderate ad valorem tariff rate.
Our results can be insightful for the retailers who plan to adopt smart contract but worry about the cash opportunity cost issues. We uncover the rationales of import tariffs promoting or hindering the FinTech (Financial Technology) adoption in global procurement.
This paper presents the value proposition of blockchain for Port Community Systems (PCS) by dissecting the business processes in port logistics and unfolding functionalities of blockchain in lowering the transaction cost. This paper contributes to the research by a detailed technical assessment of the plethora of currently available blockchain platforms and consensus mechanisms, against the identified requirements in this specific use case. The results of this technical assessment highlight the central value proposition of blockchain for landlord ports, which is independency from a central authority as the controlling agent. Bridging between two research domains of Information Technology and Logistics, this paper proposes the preferred architectural design requirements of a blockchain-based PCS, including provisioning private sidechains, modular design with inter-chain interoperability, and encrypted off-chain data storage. Availability—the readiness for correct service, and reliability—the continuity of correct service, are heavily reliant on the right choice being made for blockchain design for such a complex use case. A preliminary comparative analysis among different decentralisation levels in this paper suggests that a permissioned public blockchain offers the best trade-off in performance measures for this use case. This technical review identifies six research agenda from a design perspective.
Abstract Managing the integrity of products and processes in a multi-stakeholder supply chain environment is a significant challenge. Many current solutions suffer from data fragmentation, lack of reliable provenance, and diverse protocol regulations across multiple distributions and processes. Amongst other solutions, Blockchain has emerged as a leading technology, since it provides secure traceability and control, immutability, and trust creation among stakeholders in a low cost IT solution. Although Blockchain is making a significant impact in many areas, there are many impediments to its widespread adoption in supply chains. This article is the first survey of its kind, with detailed analysis of the challenges and future directions in Blockchain-enabled supply chains. We review the existing digitalization of the supply chain including the role of GS1 standards and technologies. Current use cases and startups in the field of Blockchain-enabled supply chains are reviewed and presented in tabulated form. Technical and non-technical challenges in the adoption of Blockchain for supply chain applications are critically analyzed, along with the suitability of various consensus algorithms for applications in the supply chain. The tools and technologies in the Blockchain ecosystem are depicted and analyzed. Some key areas as future research directions are also identified which must be addressed to realize mass adoption of Blockchain-based in supply chain traceability. Finally, we propose MOHBSChain, a novel framework for Blockchain-enabled supply chains.
Temporary fork is a fundamental phenomenon in many blockchains with proof of work, and the analysis of temporary fork has recently drawn great attention. Different from existing efforts that focus on the blockchain system factors such as block size, network propagation delay or block generation speed, in this paper we explore a new key dimension of computing power from the miners' perspective. Specifically, we first propose a detailed mathematical model to characterize the impact of computing power competition of the mining pools on the temporary fork. We also derive closed-form formula of the probability of temporary fork and the expected mining reward of a mining pool. To reveal the long-term trends on the computing power distributions over the competing mining pools, we then develop an evolutionary game framework based on the temporary fork modeling and accordingly characterize the set of stable evolution equilibriums. Both extensive numerical simulations and realistic blockchain data based evaluation provide evidence to support our theoretical models and discoveries.
Ilhaam A. Omar, Mazin Debe, Raja Jayaraman, Khaled Salah · 6 authors
The COVID-19 pandemic has severely impacted many industries, in particular the healthcare sector exposing systemic vulnerabilities in emergency preparedness, risk mitigation, and supply chain management. A major challenge during the pandemic was related to the increased demand of Personal Protective Equipment (PPE) resulting in critical shortages for healthcare and frontline workers. The lack of information visibility combined with the inability to precisely track product movement within the supply chain requires an robust traceability solution. Blockchain technology is a distributed ledger that ensures a transparent, safe, and secure exchange of data among supply chain stakeholders. The advantages of adopting blockchain technology to manage and track PPE products in the supply chain include decentralized control, security, traceability, and auditable time-stamped transactions. In this paper, we present a blockchain-based approach using smart contracts to transform PPE supply chain operations. We propose a generic framework using Ethereum smart contracts and decentralized storage systems to automate the processes and information exchange and present detailed algorithms that capture the interactions among supply chain stakeholders. The smart contract code was developed and tested in Remix environment, and the code is made publicly available on Github. We present detailed cost and security analysis incurred by the stakeholders in the supply chain. Adopting a blockchain-based solution for PPE supply chains is economically viable and provides a streamlined, secure, trusted, and transparent mode of communication among various stakeholders.
The growing attention to emerging technologies has raised several doubts regarding the sustainability aspects. Among the new technologies, blockchain has laid the foundations for a revolution in the financial field but also in the energy, tourism, medical, industrial and supply chains sectors. Through a systematic literature review, 37 documents were analyzed to describe the sustainable aspects generated using blockchain in supply chains. Therefore, the results achieved provide two levels of analysis. The former highlights the impact of the adoption of blockchain in supply chains based on the three dimensions of sustainability: environmental, economic and social. The latter shows the positive and negative impacts of each form of sustainability. The purpose of the work is to summarize the current state of the art in order to propose a future development agenda based on the need to simulate and define a measurability for each dimension of sustainability. Finally, the study provides a broad overview of practical and managerial implications for entrepreneurs and researchers. On the one hand, the work shows how the use of blockchain improves the profits and reputation of companies. On the other hand, it highlights several research gaps to be investigated and considered by researchers.
La blockchain est une technologie « peer-to-peer » qui enregistre de manière sécurisée et immuable les transactions entre les parties dans des blocs. La blockchain est supposée fournir un environnement fiable et transparent où les intermédiaires qui étaient historiquement nécessaires pour valider et enregistrer les transactions ne sont plus nécessaires dans un monde de plus digitalisé. La blockchain a divers domaines d’application en supply chain. Récemment, de nombreux projets de blockchain ont vu le jour dans le monde notamment en Europe et en Amérique du Nord. Dans cet article, nous présentons l’état de l’art sur potentiel de la blockchain à disrupter les modèles logistiques actuels. Nous illustrons son application actuelle dans le secteur de l’industrie et le commerce de détail. Nous proposons une approche originale basée sur un modèle de jeu en ligne en cours de développement et proposant un scénario de simulation pour tester et apprendre comment la technologie blockchain peut affecter l’efficacité de la supply chain.
Blockchain technology is a disruptive technology that changes business and supply chain models. Using distributed software architecture and advanced computing, blockchain can change the way information is exchanged between actors in the chain. Blockchain technology provides a platform for solving the problem of tracking product information in supply chain management. Accordingly, the present study aims to provide a model for evaluating the maturity of blockchain technology in the agricultural supply chain. The present research is applied that has been done in three stages. In the first phase, the dimensions of the blockchain are ranked by agricultural experts using the SWARA method. The research experts are 13 faculty members of the department of agriculture active in the field of technology application. In the second phase, a model is designed to evaluate blockchain maturity using each dimension of blockchain technology and maturity dimensions. In the third phase, the proposed model is tested using data collected by a questionnaire in the supply chain of a company active in the agriculture sector. The research findings show that smart contracts, Internet of Things (IoT), and transaction records are of the highest importance among the blockchain dimensions. Also, the supply chain under study is in a good condition in digital documents. Theoretically, the originality aspect of the research is that it determines the importance of blockchain dimensions in the field of agriculture and from an applied point of view, it introduces the maturity model of blockchain in supply chain management.
Purpose The purpose of this study is to identify and prioritize the factors that can positively influence the implementation of a blockchain-based supply chain via an integrated framework. To the best of the authors' knowledge, no previous study has focused on prioritizing these factors. Design/methodology/approach First, this study conducts a multivocal literature review, and a total of 48 success factors (SFs) are identified and mapped into 11 categories. Second, the identified success factors and their categories are further validated by industry practitioners using a questionnaire survey approach. Finally, this study applies an analytical hierarchy process to prioritize the identified SFs and their categories and to assess their importance for successful blockchain implementation in the supply chain management process. Findings The “Accessibility” category has the highest importance, and the “Overall efficiency” category has the second highest rank. As far as the success factors are concerned, “Trackability” and “Traceability” are considered to be the prime success factors of a blockchain-based supply chain. The taxonomy of the categories and their success factors provide an outline for supply chain organizations to establish a strategy to implement blockchain technology. Practical implications This technology can be practically applied in a sustainable supply chain. Another vital application of this blockchain technology is in banking and finance because of the blockchain's immutable data recording property. Originality/value To the best of the authors' knowledge, there is no previous study focused on building a taxonomic model that allows supply chain organizations to compare this paper's model with existing models and outline the necessary actions to improve supply chain activities. The questionnaire-based survey developed to validate the success factors in real-world practices and the factors' prioritization can help academic researchers and industrial practitioners to set their strategic goals accordingly.
Clara Walsh, Philip O’Reilly, Rob Gleasure, John McAvoy · 5 authors
Blockchain technology has received much attention in the media and there is an increasing interest amongst organizations within financial services due to the potential benefits. As blockchain-based systems are a nascent technology, the requirements of the technology need to be understood, to allow blockchain systems to be successfully integrated within financial service organizations. There are gaps in academic research in understanding how managers evaluate the value of a blockchain-based system. This study develops a model to explain manager resistance to implementing blockchain-based systems in financial services organizations. This research advances the theoretical understanding of managers’ perspectives on blockchain-based systems and models their resistance to blockchain technology.
Various perishable agricultural products are recalled due to harmful health risks. Blockchain has been used to reduce the amount of such products wasted and disposed. Specifically, a supply chain with a wholesaler, a retailer, and customers is considered where the retailer decides when to switch from a conventional supply chain information management system (SCIMS) to a blockchain-based SCIMS. This article models the uncertain customers' demand as a geometric Brownian motion process and shows how to obtain the optimal demand threshold above which the switch occurs and the corresponding expected time. Next, the model is extended by incorporating two types of government subsidies (i.e., a fixed subsidy on the switching cost and a variable subsidy per unit demand). Through sensitivity analysis and numerical studies, the impacts of key parameters on the optimal demand threshold and expected time of switching are presented. Finally, managerial insights and policy implications are derived.
Tao Li, Yuling Chen, Yanli Wang, Yilei Wang · 9 authors
Blockchain has been an emerging technology, which comprises lots of fields such as distributed systems and Internet of Things (IoT). As is well known, blockchain is the underlying technology of bitcoin, whose initial motivation is derived from economic incentives. Therefore, lots of components of blockchain (e.g., consensus mechanism) can be constructed toward the view of game theory. In this paper, we highlight the combination of game theory and blockchain, including rational smart contracts, game theoretic attacks, and rational mining strategies. When put differently, the rational parties, who manage to maximize their utilities, involved in blockchain chose their strategies according to the economic incentives. Consequently, we focus on the influence of rational parties with respect to building blocks. More specifically, we investigate the research progress from the aspects of smart contract, rational attacks, and consensus mechanism, respectively. Finally, we present some future directions based on the brief survey with respect to game theory and blockchain.
Purpose The purpose of this study is to develop a framework for a freight consolidation company to adopt blockchain for the shipping community. Our research critically examine the challenges faced by a global shipping company that offer freight consolidation businesses and explore the use of Blockchain technology to enhance the competitiveness and sustainability of freight booking operations. Design/methodology/approach This paper is a case study, ECU Worldwide, with focus on transforming their operations using blockchain technology for the freight booking industry. As the case is explorative in nature, the research aim to unearth the complex blockchain adoption phenomenon in the industry as the technology is very nascent at present. The research is primarily grounded on Technology Acceptance Model (TAM) theory. Findings The research finds that blockchain technology supports solving many issues and inefficiencies of global shipping operations but there are some barriers that they need to overcome. The research provides a framework and recommendations for global company to consider when considering Blockchain technology for implementation. Our research finding shows that smart contracts can be set up at critical points along with the shipment route namely the storage, customs, carrier, transporters and consignee stage to ensure greater security and transparency. Research limitations/implications The research provides recommendations to key stakeholders involved in freight forwarding segment of logistics industry while adopting blockchain technology. Apart from the methodological limitation of the research, the research is limited to Singapore in terms of geographical coverage. Practical implications The drivers and barriers identified in the study can give practitioners insight of using blockchain for the industry. The proposed framework can assist companies in the shipping industry to prepare themselves to adopt blockchain for the community. Originality/value This case study is the first of its kind to examine the use of blockchain to explore the adoption in logistics Industry in Singapore and perhaps worldwide.
SUMMARY As companies begin to explore and develop technology solutions based on blockchain and smart contracts, there is a need to understand the impact of blockchain and smart contracts on the assessment of internal controls and enterprise risk. Especially since the distributed ledger and smart contracts blur the system boundaries between trading partners, there is a need to understand whether internal control assessments based on a single company approach is adequate in an integrated and collaborative environment. This paper provides an overview of smart contracts for practitioners and describes the associated risks of engaging in a blockchain consortium. We also list potential questions related to internal controls that may be considered when either engaging in a consortium or executing a smart contract. We then discuss whether current frameworks, specifically the Committee of Sponsoring Organizations' (COSO) integrated and COSO's Enterprise Risk Management (ERM) frameworks, adequately address a collaborative supply chain ecosystem.
Mubbashar Altaf Khan, Mohsin M. Jamali, Taras Maksymyuk, Juraj Gazda
Cognitive radio (CR) technology offers the possibility of an increase in spectrum utilization efficiency to resolve the prevalent spectrum scarcity problem. The economic survival of secondary spectrum markets (SSMs) is heavily dependent on the sharing of both the licensed spectrum and spectrum infrastructure by primary licensed operators (PLOs). In this research, an automated pricing model using a blockchain token called the spectrum dollar has been implemented for secondary radio spectrum trade. The use of spectrum dollars enables noncash-based secondary spectrum trade among PLOs based on a floor-and-trade rule. The pricing of spectrum dollars and the associated revenue shares are based on the underlying secondary spectrum trading behaviours of PLOs. PLOs that do not contribute enough secondary spectra to the SSM (to satisfy demand) suffer a loss proportional to the difference between their earned revenues and the specified floor value in the SSM. The secondary spectrum trade is assumed to be centrally managed by a spectrum broker, which announces the floor value for each bidding period while ensuring nonnegative revenue for the market itself. The use of the spectrum dollar along with the floor-and-trade methodology eliminates the possibilities for economic malpractice by PLOs that could increase spectrum reuse costs. In addition, the floor value provides automatic regulatory control to ensure the economic viability and prevent the technological hijacking of future SSMs.