Supply chain management (SCM) is fundamental for gaining financial, environmental and social benefits in the supply chain industry. However, traditional SCM mechanisms usually suffer from a wide scope of issues such as lack of information sharing, long delays for data retrieval, and unreliability in product tracing. Recent advances in blockchain technology show great potential to tackle these issues due to its salient features including immutability, transparency, and decentralization. Although there are some proof-of-concept studies and surveys on blockchain-based SCM from the perspective of logistics, the underlying technical challenges are not clearly identified. In this paper, we provide a comprehensive analysis of potential opportunities, new requirements, and principles of designing blockchain-based SCM systems. We summarize and discuss four crucial technical challenges in terms of scalability, throughput, access control, data retrieval and review the promising solutions. Finally, a case study of designing blockchain-based food traceability system is reported to provide more insights on how to tackle these technical challenges in practice.
Purpose There is a lot of interest in blockchain in the supply chain and several papers call it a disruptive technology. Existing research, however, is mostly conceptual and focused on use-case development and early pilots. This paper aims to report the findings from a workshop with managers aimed at empirically exploring what adoption rates and focus areas are for blockchain in the supply chain, what drives blockchain in the supply chain applications and what barriers are to the implementation of blockchain in the supply chain. Design/methodology/approach A workshop with managers was organized to empirically explore blockchain adoption levels and focus areas in the supply chain, as well as drivers and barriers of implementation. Findings Workshop participants reported that adoption of blockchain in the supply chain today is very limited but actively considered by many. Drivers for this consideration include achieving greater transparency and visibility, as well as, improving processes and reducing costs. Participants identify many barriers, including a lack of understanding of costs and benefits of blockchain in the supply chain. Interestingly, participants report less concern about the feasibility of the technology implying managerial consideration if progressing beyond the technology and into the potential adoption of it. As a result, participants may be moving beyond the hype surrounding blockchain and giving consideration to the many remaining questions. A working technology does not yet mean that there is a feasible supply chain adoption. As a result, it may be too early to tell whether blockchain will be a disruptive technology. This paper identifies several fruitful areas for further consideration by management and in research. Originality/value As there is little empirical research on blockchain in the supply chain, this paper moves beyond use-case development and the exploration of pilot cases and studies how companies may consider supply chain adoption beyond the pilot and the early development of blockchain. Although only offering an initial exploration, this paper uncovers progress being reported in industry and many areas where further consideration and research can help advance thinking and practice.
Problem definition: Blockchain is a form of distributed ledger technology. While it has grown in prominence, its full potential and possible downsides are not fully understood yet, especially with respect to operations management (OM). Academic/practical relevance: This article fills this gap. Methodology: After briefly reviewing the technical foundations, we explore multiple business and policy aspects. Results: We identify five key strengths, the corresponding five main weaknesses, and three research themes of applying blockchain technology to OM. The key strengths are (1) visibility, (2) aggregation, (3) validation, (4) automation, and (5) resiliency. The corresponding weaknesses are (1) lack of privacy, (2) lack of standardization, (3) garbage in, garbage out, (4) black box effect, and (5) inefficiency. The three research themes are (1) information, (2) automation, and (3) tokenization. Managerial implications: We illustrate these research themes with multiple promising research problems, ranging from classical inventory management, to new areas of ethical OM, and to questions of industrial organization.
Yeray Mezquita, Alfonso González‐Briones, Roberto Casado‐Vara, Pablo Chamoso · 6 authors
Logistics services involve a wide range of transport operations between distributors and clients. Currently, the large number of intermediaries are a challenge for this sector, as it makes all the processes more complicated. This paper proposes a system that uses smart contracts and blockchain technology to remove intermediaries and speed up logistics activities. Our model combines smart contracts and a multi-agent system to improve the current logistics system by increasing organization, security, transparency and significantly improving distribution times.
ABSTRACT Blockchain technology is based on the idea of a distributed, replicated, and immutable digital ledger that enables parties to conduct business in a trustful and transparent way without the need for a central authority or intermediary. Its most popular application thus far is in payment system applications, e.g., bitcoin. This disruptive technology is expected to contribute significant business value to multiple industry sectors, including supply chain management (SCM), where it can provide greater visibility, accountability and trust in interorganizational business collaboration. In this article, we review some fundamental concepts of Hyperledger Fabric, one of the most mature permissioned blockchain implementations. Further, we use the context of a food supply chain to highlight key design and implementation challenges for blockchain, and provide a strategic assessment of its prospects. Our aim is to dispel misguided notions and myths about blockchain as a silver bullet for all businesses. We believe it is important to penetrate the hype to allow a more realistic understanding of this technology. Blockchain is a high‐cost, high‐overhead storage medium. It is viable only when its higher cost is counterbalanced by the set of benefits that are identified by a careful and thorough analysis of the business. Thus, it will be used mainly for storing important data related to interorganizational transactions among partners where trust is lacking and provenance and visibility are critical. Our paper offers enterprises a systematic way to understand the real costs and risks of blockchain adoption. The insights gained in the SCM context also apply to other areas such as financial services and healthcare that could leverage the full potential of blockchain technology.
In the rapidly evolving environment of the international supply chain, the traditional network of manufacturers and suppliers has grown into a vast ecosystem made of various products that move through multiple parties and require cooperation among stakeholders. Additionally, the demand for improved product visibility and source-to-store traceability has never been higher. However, traditional data sharing procedures in today’s supply chain are inefficient, costly, and unadaptable as compared to new and innovative technology. Blockchain technology has shown promising results for improving supply chain networks in recent applications and has already impacted our society and lifestyle by reshaping many business and industry processes. In an effort to understand the integration of blockchain technology in the supply chain, this paper systematically summarizes its current status, key characteristics, potential challenges, and pilot applications.
Willa Ariela Syafruddin, Sajjad Dadkhah, Mario Köppen
In recent years, applications of the Blockchain concept, esp. as ledger for bitcoin transactions, has already resulted in huge amounts of wasted electrical energy for performing the Proof-of-Work tasks (cryptographic puzzles). Here, we consider an alternative concept to have this energy used at least for a useful purpose, the solution of real-world optimization problems. By means of the Traveling Salesperson Problem as model problem, we propose a concept to use optimization algorithms in an iterative manner to provide the Proof-of-Work needed to expand the Blockchain by a new block. The basic idea is to improve the tour cost for the best tour found for block n, extended by adding one more city, as a requirement for the inclusion of a new block in the Blockchain. This allows for the design of limited Blockchains, solving the underlying combinatorial optimization problems at the same time. Independently, it calls in for new efficient optimization algorithms and can serve as a real-world contest. It is discussed that metaheuristic algorithms perform an attractive class of optimization algorithms that can be used for the proposed approach. Numerical experiments also demonstrate the growth in problem complexity being handled by a binary PSO, which is a basic requirement for the full concept to work in practice.
Blockchain innovations are having a profound effect on the global financial industry, yet little is known about how the emerging technology can potentially disrupt other industries. The supply chain industry represents a prominent and very promising application scenario for blockchain to enable transparency among untrusted stakeholders as well as increased efficiency and traceability throughout production and distribution processes, however there is a lack of empirical research available in that field. The primary purpose of this research is to address that research gap by exploring the application of blockchain technologies in supply chains. First, this research examines recent literature to identify current inefficiencies in existing supply chain information technologies. Secondly, key features of blockchain are identified to provide a clear understanding of the technology. Thirdly, current applications are documented and categorized to identify where blockchain applications can have the most impact on the three flows of the supply chain. The analysis shows most of the process areas in supply chain that blockchain is expected to improve are informational, which given the large amount of interdependencies between flows, has a positive impact on the subsequent financial and material flows. Finally, recommendations for future research are given to address further research questions.
Shailesh J. Divey, Mert Hakan Hekimoğlu, T. Ravichandran
The blockchain is a distributed digital ledger technology that is maintained and governed by a consensus mechanism. While the technology took root in the financial services industry, supply chain and logistics industry are considered to be the next promising use case for this fast-evolving technology. This paper recaps, reviews, and discusses key research issues that needs to be explored pertinent to application of blockchains in supply chains and logistics.
Martin Dobler, Mark C. Ballandies, Valentin Holzwarth
Global supply chains represent the backbone of the modern manufacturing industry. Planning of global supply chains still represents a major hurdle, mainly because of the high complexity and unforeseen disruptions that have to be mastered for meeting the different logistics windows in a globally distributed production environment. Trust in supply chains is an additional challenge. A major - albeit sometimes overlooked - part of Supply Chain Management (SCM) is the management and integration of customs processes, clearing of tariffs, (re-)billing of customers, and fulfilling other legal requirements related to crossing borders, ranging from environmental standards over goods inspection to general paper work. With the exception of work offered by the World Customs Organization (WCO) the issue of customs and blockchain is still underrepresented in research and practice. In this paper, we look at innovations that drive the current ICT-enabled SCM research and how these can be combined with smart customs management. After a literature review and introduction to the state-of-the-art, we list potential trust-based innovations for SCM and customs in digital business ecosystems. Based upon the innovations we also describe a requirements analysis of existing distributed ledger technologies (requirements for system layout, system configuration, system governance). A description of the prototype for the Lake Constance region - on which we are currently working - concludes the paper.
In order to help track and disclose environmental performance across the textile and apparel supply chain, DLT is proposed as an ideal tool for information storage and communication in a highly transparent network. Every participant in the network can get access to the information for supply chain process, and eventually build a high level of trust on suppliers' environmental governance. This paper aims to bring out the potential of DLT technology on the textile and apparel supply chain. We discuss how to utilize the unique characteristics of DLT for achieving low carbon emissions during textile and apparel manufacturing through better supply chain transparency. In details, an overview of DLT technology is provided in this paper by showing the design, business implications and opportunities in the textile and apparel supply chain. In addition, a case study is illustrated on DLT technology in the textile and apparel supply chain transparency for World Wide Fund for Nature (WWF)'s Low Carbon Manufacturing Programme (LCMP).
Darcy W E Allen, Chris Berg, Sinclair Davidson, Mikayla Novak · 5 authors
Abstract From the adoption of the shipping container to coordinated trade liberalization, reductions in trade costs have propelled modern globalization. In this paper, we analyse the application of blockchain to reduce the trade costs of producing and coordinating trusted information along supply chains. Consumers, producers, and governments increasingly demand information about the quality, characteristics, and provenance of traded goods. Partially due to the risks of error and fraud, this information is costly to produce and to maintain between dispersed parties. Recent efforts have sought to overcome these costs—such as paperless trade agendas—through the application of new technologies. Our focus is on how blockchain technology can form a new decentralized economic infrastructure for supply chains by governing decentralized dynamic ledgers of information about goods as they move. We outline the potential economic consequences of blockchain supply chains before examining policy. Effective adoption faces a range of policy challenges including regulatory recognition and interoperability across jurisdictions. We propose a high‐level policy forum in the Asia‐Pacific region to coordinate issues such as open standards and regulatory compatibility.
Smart operation and maintenance (O&M) service is the major industrial service in Industry 4.0, but it's not easy for manufacturers to achieve high returns. Regularly manufacturers can't set a higher service price due to customer's perception of the service value; a new revenue model is urgently needed. In this study, we develop a value-based contract for smart O&M service based on equitable entropy. Firstly, we summarise the characteristics of smart O&M service's value creation and acquisition. And the service value is measured under the PaaS model by calculating the maximum revenue gap of the customer in the two cases of customer self-O&M and manufacturer's smart O&M service. Then a revenue-sharing model is built based on equitable entropy which the criterion is the valid data provided by each party. The results show that by signing a value-based contract, the smart O&M service can not only significantly improve the customer's revenue by downtime losses reduction and productivity improvement, but also create higher returns for the manufacturer. In addition, the fairest revenue sharing coefficient and relatively fair interval for revenue sharing decision can be accurately calculated by equitable entropy. These conclusions provide a theoretical basis for the manufacturer to better implement smart O&M service.
Purpose This paper aims to encourage the study of blockchain technology from an operations and supply chain management (OSCM) perspective, identifying potential areas of application, and to provide an agenda for future research. Design/methodology/approach An explanation and analysis of blockchain technology is provided to identify implications for the field of OSCM. Findings The hype around the opportunities that digital ledger technologies offer is high. For OSCM, a myriad of ways in which blockchain could transform practice are identified, including enhancing product safety and security; improving quality management; reducing illegal counterfeiting; improving sustainable supply chain management; advancing inventory management and replenishment; reducing the need for intermediaries; impacting new product design and development; and reducing the cost of supply chain transactions. The immature state of practice and research surrounding blockchain means there is an opportunity for OSCM researchers to study the technology in its early stages and shape its adoption. Research limitations/implications The paper provides a platform for new research that addresses gaps in knowledge and advances the field of OSCM. A research agenda is developed around six key themes. Practical implications There are many opportunities for organisations to obtain an advantage by making use of blockchain technology ahead of the competition, enabling them to enhance their market position. But it is important that managers examine the characteristics of their products, services and supply chains to determine whether they need or would benefit sufficiently from the adoption of blockchain. Moreover, it is important that organisations build human capital expertise that allows them to develop, implement and exploit applications of this technology to maximum reward. Originality/value This is one of the first papers in a leading international OSCM journal to analyse blockchain technology, thereby complementing a recent article on digital supply chains that omitted blockchain.
Ηλίας Κουτσουπιάς, Philip Lazos, Foluso Ogunlana, Paolo Serafino
We study the strategic implications that arise from adding one extra option to the miners participating in the bitcoin protocol. We propose that when adding a block, miners also have the ability to pay forward an amount to be collected by the first miner who successfully extends their branch, giving them the power to influence the incentives for mining. We formulate a stochastic game for the study of such incentives and show that with this added option, smaller miners can guarantee that the best response of even substantially more powerful miners is to follow the expected behavior intended by the protocol designer.
Purpose The purpose of this paper is to understand the enabling and constraining roles of blockchain technology (BCT) in managerial work practices and conceptualise the technology–performance relationship in supply chain management (SCM). Design/methodology/approach A structured literature review and a theory-driven approach are used. A set of propositions are developed, suggesting how the use of BCT in supply chains can be understood to simultaneously enable and constrain SCM and performance. Findings The analysis identifies four enabling and three constraining blockchain identities to explain how the technology either “facilitates” or “impedes” SCM and supply chain performance. Traceability, which emanates from its ability to provide data immutability, ranks highly as a core innovation of the technology. The blockchain is mainly seen as an opportunity to exploit existing supply chain resources and competencies. Research limitations/implications One limitation of the research is its conceptual nature. Future research should test the developed propositions empirically. Further research should focus on BCT as an opportunity to explore and as a relationship-building technology. More research is also needed focussing on the complex and simultaneous enabling and constraining effects of BCT in supply chains. Originality/value The paper shows the important and complex Janus-faced implications of embedding BCT in supply chains and demonstrates how organisational theory can be applied to explore the relationship between blockchain and SCM.
Trusted collaboration satisfying the requirements of (a) adequate transparency and (b) preservation of privacy of business sensitive information is a key factor to ensure the success and adoption of online business-to-business (B2B) collaboration platforms. Our work proposes novel ways of stringing together game theoretic modeling, blockchain technology, and cryptographic techniques to build such a platform for B2B collaboration involving enterprise buyers and sellers who may be strategic. The B2B platform builds upon three ideas. The first is to use a permissioned blockchain with smart contracts as the technical infrastructure for building the platform. Second, the above smart contracts implement deep business logic which is derived using a rigorous analysis of a repeated game model of the strategic interactions between buyers and sellers to devise strategies to induce honest behavior from buyers and sellers. Third, we present a formal framework that captures the essential requirements for secure and private B2B collaboration, and, in this direction, we develop cryptographic regulation protocols that, in conjunction with the blockchain, help implement such a framework. We believe our work is an important first step in the direction of building a platform that enables B2B collaboration among strategic and competitive agents while maximizing social welfare and addressing the privacy concerns of the agents.
This paper mainly studies the retailer's reorder quantity and the profits of retailer, supplier and entire supply chain with inventory financing under incomplete information based on entropy. First we establish a inventory financing model to derive the reorder quantity of retailer under centralized supply chain and decentralized supply chain respectively. Then introduce the maximum entropy method to predict the market demand distribution. Fianlly, the results of our experiment indicate that information value can be higher when the market demand fluctuates severely and the best reorder quantity decision for retailer should be considered from entire supply chain except the fluncation of demand is big under incomplete information, while the retailer's decentralized decision under incomplete infromation will lead the entire supply chian to the worst profit.
Vendor-managed inventory (VMI) is a widely used collaborative inventory management policy in which manufacturers/vendors manage the inventory of retailers and take responsibility for making decisions related to the timing and extent of inventory replenishment. There exist several prerequisites for a successful VMI strategy implementation like information sharing, trust, systems integration and long-term collaboration. However, in nowadays logistics flows, complex processes, high number of participants and complex distribution channels impede the successful adoption of VMI strategies. In this paper, we propose a new interaction framework based on smart contracts and blockchain for governing the relationship between the vendor and the buyer. A use-case VMI scenario is presented along with a functional smart contract. Tests performed using a local private blockchain illustrate the applicability of the proposed architecture along with the significant benefits for each participant.
Integrating the Industrial Internet of Things (IIoT) into supply chain management enables flexible and efficient on-demand exchange of goods between merchants and suppliers. However, realizing a fair and transparent supply chain system remains a very challenging issue due to the lack of mutual trust among the suppliers and merchants. Furthermore, the current system often lacks the ability to transmit trade information to all participants in a timely manner, which is the most important element in supply chain management for the effective supply of goods between suppliers and the merchants. This paper presents a blockchain-based supply chain management system in the IIoT. The proposed system takes advantage of blockchain technology in terms of its transparency and tamper-proof nature to support fair goods exchange between merchants and suppliers. Additionally, the decentralization and pseudonymity property will play a significant role in preserving the privacy of participants in the blockchain. In particular, fairness in the IIoT is first defined. Then, a design for a smart contract for fair goods exchange is presented to prevent malicious behavior through imposing penalties. The proposed system was prototyped on Ethereum and experiments were conducted to demonstrate its feasibility.