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Making sense of blockchain technology: How will it transform supply chains?

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Abstract

The aim of this research is to explore how the emerging blockchain technology may trasnform supply chains. We do so by exploring the answers to two RQs, i.e. why is blockchain technology important to logistics and supply chain sector and where are disruptions mostly likely to occur. Via a comprehensive literature review and 14 expert interviews, we found that the perceived benefits such as improved tracking and traceability in an end-to-end supply chain and efficiency gains through automation and reduction of complexities are the main motivational factors that help to explain why blockchain matters to supply chain. We further identify areas where blockchain may penetrate in supply chains, namely, supply chain tracing and tracking, supply chain disintermediation, simplification and digitalisation of supply chain process and smart contract. We also reveal challenges to its further diffusion. Finally, we acknowledge our research limitation and highlight a number of avenues for future research. We contribute to the literature by elucidating the reasons why blockchain technology is important to supply chain management and by locating areas where it may bring value to supply chain. Our research thereby offers valuable insights to both practitioners and academics in this field to prepare them to embrace this emerging technological innovation.
Proceedings of the 20th International Working Seminar on Production Economics
Making sense of blockchain technology:
How will it transform supply chains?
Yingli Wang1*, Meita Singgih1, Jingyao Wang1, Mihaela Rit2
*Corresponding author
1 Logistics and Operations Management Section, Cardiff Business School, Cardiff University, UK
*WangY14@cardiff.ac.uk
2 Panalpina Romania SRL, Gen. Dragalina Street, No 27, Ap 20, Timis, Romania
Mihaela.Rit@panalpina.com
Abstract
The aim of this research is to explore how the emerging blockchain technology may transform supply chains.
We do so by exploring the answers to two RQs, i.e. why is blockchain technology important to logistics and
supply chain sector and where are disruptions mostly likely to occur. Via a comprehensive literature review and
14 expert interviews, we found that the perceived benefits such as improved tracking and traceability in an end-
to-end supply chain and efficiency gains through automation and reduction of complexities are the main
motivational factors that help to explain why blockchain matters to supply chain. We further identify areas where
blockchain may penetrate in supply chains, namely, supply chain tracing and tracking, supply chain
disintermediation, simplification and digitalisation of supply chain process and smart contract. We also reveal
challenges to its further diffusion. Finally, we acknowledge our research limitation and highlight a number of
avenues for future research. We contribute to the literature by elucidating the reasons why blockchain
technology is important to supply chain management and by locating areas where it may bring value to supply
chain. Our research thereby offers valuable insights to both practitioners and academics in this field to prepare
them to embrace this emerging technological innovation.
Keywords: blockchain, logistics, supply chain, exploratory study, sensemaking.
1. Introduction
Widely considered as one of the most disruptive technologies, blockchain technology
(essentially a peer-to-peer distributed database) enables the creation of decentralized
currencies such as Bitcoin, self-executing digital contracts (smart contracts) and intelligent
assets that can be controlled over the Internet (smart property) (Wright and De Filippi 2015,
Kosba et al 2016). Firstly proposed by Nakamoto (2008), recent research on blockchain has
been largely in the areas of financial transactions and distributed ledger system (Pilkington
2015). Blockchain technology is the technology architecture underpinning cryptocurrency
such as Bitcoin. It uses a shared database that updates itself in real-time and can process and
settle transactions in minutes using computer algorithms, with no need for third-party
verification (such as banks).
However, its impact is far beyond financial transactions. Because blockchain allows secure
exchange of data in a distributed manner, it is beginning to impact on the way organisations
are governed, supply chain relationships are structured, data is shared, and transactions are
conducted. Integrated with other technologies such as Internet-of-Things (IoT), block chain
could, for instance, create a permanent, shareable, actionable record of every moment of a
product’s trip through its supply chain, creating efficiencies throughout the global economy.
Improved visibility and traceability also affords product traceability, authenticity and
legitimacy which is particularly critical to supply chains such as food and luxury products.
In practice we start to observe a number of piloting schemes across various sectors trying to
exploit the use of blockchain in supply chains. For example, in the shipping sector, South
Korea’s Hyundai Merchant Marine (HMM) has announced on September 4, 2017 that it has
successfully completed its first pilot voyage using blockchain technology. During the voyage
from South Korea’s Busan Port to China’s Qingdao Port on a boxship laden with reefer
containers from August 24 to September 4, 2017, blockchain technology was applied not only
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to shipment booking, but also to cargo delivery. Additionally, HMM tested and reviewed the
combining of blockchain technology with the Internet of Things (IoT) through real-time
monitoring and managing of the reefer containers on the vessel (HMM, 2017). In the food
sector, US hypermarket chain Walmart has said blockchain trials helped it reduce the time it
took to trace the movement of mangoes to 2.2 seconds from about seven days currently. In the
energy sector, a consortium of companies including BP and Royal Dutch Shell plans to
develop a blockchain-based digital platform for energy commodities trading expect to
function by end 2018 (reuters.com 2017). Blockchain has also been seen deployed in diamond
sector to ensure the authenticity of the products (Amber 2017).
Despite the aforementioned interests and efforts in industries in the exploitation of this
emerging technology, our understanding of the implications of blockchain to supply chain is
fairly limited. Therefore, our primary aim is to explore how this disruptive technology will
change the practice of supply chain. Consequently, our research questions (RQs) are;
RQ1: Why is blockchain technology important to logistics and supply chain sector?
RQ2: Where are disruptions mostly likely to occur?
2. Background literature
2.1 Blockchain technology. In technical term, blockchain is a peer-to-peer distributed network
that is cryptographically secure, append-only, immutable (extremely hard to change), and
updateable only via the consensus or agreement among peers (Bashir 2017). Blockchain can
be perceived as another application layer that run on top of the Internet protocols that enables
economic transactions between relevant parties. It can also be used as a registry and inventory
system for the recording, tracing, monitoring and transacting of all assets (tangible, intangible
or digital). From a business perspective, a blockchain can be defined as a platform whereby
values are exchanged among peers without requiring any trusted third party.
A blockchain is an encoded digital ledger that is stored on multiple computers in a public or
private network. It comprises data records, or “blocks.” As each transaction occurs, it is put
into a block. Each block is connected to the one before and after it. Each block is added to the
next in an irreversible chain and transactions are blocked together hence it is called
‘blockchain’ (Figure 1). Once these blocks are collected in a chain, they cannot be changed or
deleted by a single actor; instead, they are verified and managed using automation and shared
governance protocols (Swan 2015). This is the core innovation of blockchain. The verification
process, along with modern encryption methods, can effectively secure the data on blockchain
ledgers against unauthorized access or manipulation. Because the existing “blocks” in the
chain are hardly possible to be overwritten (doing so would require massive amounts of
computing power to access every instance or at least a 51 percent majority of a certain
blockchain and alter them all at the same time), users always have access to a comprehensive
audit trail of activity (Miles, 2017). As a rule of thumb, the bigger the blockchain network is,
the more tamper-resistant the blockchain will be. The decentralised storage of information
Figure 1. A standard blockchain string (Yli-Huumo, et al. 2016)
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reduces the risk of single point of data access failure that tends to associate with centralised
database. There are three main types blockchain, based on access control mechanism, i.e.
regarding who can read a blockchain, submit transactions to it and participate in the consensus
process.
Public blockchains: Every transaction is public (hence ‘permissionless’) and users can
remain anonymous. The network typically has an incentivizing mechanism to
encourage more participants to join the network. Bitcoin and Ethereum are typical
examples.
Permissioned blockchains: Participants need to obtain an invitation or permission to
join. Access tend to be controlled by a consortium of members (consortium blockchain)
or by a single organisation (private blockchains).
The claimed benefits of blockchain from practice include (Yli-Huumo, et al. 2016; Gupta
2017);
- Fewer intermediaries: As it is a peer to peer network, it reduces reliance on third party.
- Transparency: Information in blockchains is viewable by all participants and cannot be
altered, hence creating trust and reducing fraud.
- Security: The distributed and encrypted nature implies that it will be difficult to hack.
- Automation: A blockchain can be programmed to automatically trigger actions (such
as payment or other events) once conditions are met.
2.2 Sense making. Much of the literature on technology adoption and innovation diffusion has
been focused on the implementation phase of the process, emphasising less on the
exploration/pre-implementation phase (Wisdom et al 2014). Yet pre-adoption/implementation
is an important process itself where organisations become aware of a technological innovation,
sense its potential disruptive effect, make an initial exploration and decide whether to
embrace or ignore it. Technology adoption often implies substantial financial investment,
change of exiting operation and even the business model. Therefore a robust sense-making
process during pre-adoption plays a critical role in aiding the right decision making. Sense
making is particularly important when organisational members face new and unexpected
situations where the tangible benefits of an emerging technology is unclear, the disruptive
effect unpredictable and its technical advance path ambiguous (Weick et al 2005).
Theories such as institutional theory explains why organisations adopt a technology but do not
offer insights about the process of how people diagnose symptoms emitted by the new
technology and develop assumptions, expectations and knowledge of the technology which
then shape subsequent actions towards it. In our research, we use the theory of sensemaking to
understand how supply chain and IT experts from the logistics and supply chain (LSC) sector
perceive the potential impact of blockchain to their sector. Sensemaking theory has its
explanatory power “at the organisational/group and individual/socio-cognitive levels,
focusing on organisational actors’ cognition and situated actions when introduced to a new
technology (Jensen et al 2009)”. Sensemaking is about the ongoing interplay of action and
interpretation. It considers technology as equivoque and actors develop particular assumptions,
expectations, and knowledge of the technology that shapes their actions towards it (Weick
1990). Sensemaking starts with noticing and bracketing where the technology is noticed,
contextualised and adapted to the specific context of use (Weick and Sutcliffe 2005). This is
then followed by the process of enactment, i.e. meaning is created by connecting the cues to
existing frames. Sensemaking is highly corelated to one’s identity as people tend to relate
their interpretation of the technology to the expectations they have of their roles and
responsibilities. Thus, identity forms the sensemaking but sensemaking informs the identity
(Jensen et al 2009).
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3. Research Methodology
We adopt an exploratory research approach incorporating both primary and secondary data
collection. The former consists of 14 interviews (Table 1) conducted with experts from the
LSC industry while the latter includes a comprehensive literature review on blockchain in
supply chains, which further complemented by secondary case examples identified from the
literature.
3.1 Comprehensive literature review
Since blockchain is a relatively new topic, our review of publications from academic and
practical databases such as ABI Inform Global, Science Direct, Google scholar and Lloyd's
List Intelligence identified that the majority of papers and articles related to blockchain and
supply chain are in recent five years (2012-2017). Within this frame, 65 papers were
identified. Of which 24 papers were excluded due to lack of sufficient discussions on
blockchain use in supply chain. After a full reading of the 41 papers, 15 papers remained as
critically relevant to our research objective. These papers were then grouped into four
categories based on the potential benefits to supply chain management, namely transparency,
security, efficiency and less cost/waste (See Appendix 1 for a list of articles).
3.2 Expert interviews. The interviewees were selected from the research network the authors
have built throughout the last decade. A semi-structured interview protocol was developed
which consists of 15 questions centring on how interviewees make sense of this emerging
technology, their perception about its potential impact (both negative and positive) and areas
of its possible application in supply chain. Interviews took place between July and August
2017 and typically lasted 45 minutes to one hour and were voiced recorded and transcribed
afterwards. In total we conducted 14 interviews with both IT and supply chain experts from
the field of logistics and supply chain (Table 1).
Table 1. Summary of interviewees
ID #
Organisational Role/Responsibility
Location
A
Global Head of Logistics Strategy & Innovation
UK
B
Logistics Controller
Switzerland
C
Head of Customer Systems
Switzerland
D
Supply chain manager
UK
E
Process, Innovation, and Technology Improvement Senior Manager
Indonesia
F
Regional Operational Account Manager
Germany
G
Logistics expert
UK
H
Global Optimization and Analytics Manager
Romania
I
Corporate IT Customer Systems
Switzerland
J
CEO (Logistics service provider)
Indonesia
K
Logistics Consultant
Indonesia
L
IT consultant
UK
M
Productivity Systems & Solution
Portugal
N
CEO IT service provider
UK
4. Research Findings
4.1 Summary of findings from literature review
Our literature review identified the following factors which explain why the Blockchain is
important to logistics and supply chain sector.
Transparency, authenticity, trust and security
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Blockchain enabled transactions (a series of transactions required to get a product from place
to place) offer transparency to participating companies a block could be created for each
transaction from the manufacture of a product to its distribution and sale. This level of
transparency and visibility is essential to improve the traceability of the products and ensure
products authenticity and legitimacy. For tracking the products, digital footprint could be used,
such as information tag, GPS and RFID (Abeyreatne and Monfared 2016). As all data
recorded within the blockchain is distributed among all network members, records of
transactions and activities are transparent and open for every member to access, compared to
the traditional method of utilising a central third party governance. Each participant can check
the progress and the location of the products and share the same information in the system
(Kim and Laskowski 2016).
There seems to be a consensus in the literature that this improved visibility provides an
auditable trace of the footprint of a product particularly attractive to industries where
provenance of product is of critical importance such as diamonds, fine arts, luxury goods and
pharmaceutical ingredients. This could boost the consumers’ confidence and trust of the
vendor (Loop 2017). The transparency achieved in a blockchain is also considered to be
pivotal to build much needed trust into the supply chain and may revolutionise how we
understand and research ‘trust’ in the supply chain. The nature of blockchain plays an
important role in stolen merchandise recovery and avoiding fraudulent transactions.
Improved security is another motivational factor why blockchain may be adopted in supply
chain, as it protects against tampering, fraud, and cybercrime (Lohade 2017). To achieve
security, reliability and authenticity has to be established. This is translated as data integrity,
one of the key attributes of Blockchain-based ledgers (Yli-Huumo, et al. 2016). Once formed
into the linear chain, the information stored within a blockchain is immutable. This is due to
the technology’s distributed consensus characteristics, where only one true, verified version of
the data is stored in all members of the network. Gupta (2017) points out that permissioned
blockchain is of particular value to businesses as it offers enhanced privacy (Access to
transactions can be determined by the roles/responsibilities of users), auditability (A shared
ledger that serves as a single source of truth improves the ability to monitor and audit
transactions) and increased operational efficiency (transactions can be conducted at a speed
more in line with the pace of doing business).
Efficiency and cost/waste reduction
Implementing blockchain would improve efficiency in logistics and supply chain since the
technology accelerates the spread of data stream between parties, thus reducing the time
products spend in the transit process, improve inventory management and ultimately reduce
waste and cost (Kharif 2016). Smart contract is another area of potential blockchain
application (Barnard 2017, Overby 2016). Smart contracts are entirely digital and written
using programming code languages. The rules and consequences in a smart contract are
defined in the same way that a traditional legal document would, stating the obligations,
benefits and penalties. It can be automatically executed by a blockchain system, hence leading
to high level of automation and streamlined supply chain processes. Smart contract can be
deployed by sectors such as construction industry where supply chains are typically
temporary, fragmented and contain multiple tiers with many suppliers and subcontractors.
Blockchain can help to address the issue of fragmentation and low productivity in
construction via: increasing the speed and scale of decision making and procurement process;
providing consistent reporting for subcontractors, contractors and owners; and providing
objective data on the best people for a task (Kinnaird and Geipel 2017). Improved data
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visibility further allows the supply chain actors to plan more accurate demand forecasts and
make better decisions (Loop 2017).
Efficiency can be gain through digitalisation of documents transfer and acceleration of the
flow of data, particularly in the context of cross border activities (Barnard 2017). For example
in shipping, Maersk found in 2014 that just a simple shipment of refrigerated goods from East
Africa to Europe can go through nearly 30 people and organizations, including more than 200
different interactions and communications among them a lengthy process vulnerable to
errors, delays and duplication of information submission and record (IBM news 2017). In an
attempt to address this problem Maersk and IBM has collaboratively developed a cross-border
supply chain solution based on blockchain that aims to improve the workflow and real-time
visibility on the status of each shipment and facilitate the highly secure sharing of information
among trading partners. For shippers, the planned solution can help reduce trade
documentation and processing costs and help eliminate delays associated with errors in the
physical movement of paperwork. It will also provide visibility of the container as it advances
through the supply chain. For customs authorities, the solution is intended to give real time
visibility, significantly improving the information available for risk analysis and targeting,
which may eventually lead to increased safety and security as well as greater efficiency in
border inspection clearance procedures. However this type of solution may reduce (or in the
most extreme scenario, eliminate) the necessity of using freight forwarding services the
effect of disintermediation.
4.2 Summary of findings from experts interview
Overall the perceived benefits by implementing blockchain in supply chain largely resonate
with the literature findings (see Table 2). Insights obtained from IT and supply chain experts
suggest that achieving supply chain visibility is where blockchain starts to penetrate the
supply chain. This will then have a ripple effect bringing other benefits such as process
optimisation and automation. Visibility enables transparency which is critical for
orchestrating the whole supply chain. Most believe that enhanced security brought by
blockchain protects product, trade and logistics information in the flow of data transfer, and is
of strategic benefits to supply chain, "The data quality normally is very very good. That would
as well lead to optimization, so you can do a lot of things with the right data, and you can
spot issues where exactly you have. For customers especially, the entire supply chain would
be done faster. You should be able to cut points that do not add value to the business. So the
entire supply chain should get faster and less costly normally (Interviewee B)."
In line with the literature, permissioned blockchain is perceived to be a more viable option for
supply chain to deal with concerns of data leakage and information privacy, “Ultimately, what
we want is something that is quick, flexible, instantaneous, rather than waiting forever for
your transactions to clear. ... We don’t want anyone else at random plugging in into the
blockchain. We don’t want anyone to be a node just because they feel like it. Someone was
telling me just a few minutes ago that if you have a situation where anyone can just jump into
your blockchain, they can easily overpower the network, use a Raspberry Pi and overpower
the nodes. That’s the whole network down. That’s the last thing we want. Enterprises great,
but individuals, maybe not. It is ironic, as what we want is to trust them (Interviewee I)”.
Findings suggest that the use of blockchain in supply chain may lead to supply chain
disintermediation and reintermediation. This means This means some traditional
intermediaries could be phased out from the market, making room for other new
intermediaries providing blockchain related services such as data analytics or integration; “We
find often for example in the distribution chain of pharmaceuticals in our country. There are
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intermediating distributors that dominate the entire country’s distribution channels. This
gives them too much power and money, often resulting in unethical behaviours. As they
possess such qualities, they are capable in manipulating distribution volumes and essentially
prices in different areas. If blockchain is established within the entirety of such industry’s
supply chain, producers will have clear visibility of where their medicines end up, and pricing
and quality information would be crystal clear to the general public (Interviewee J).
Interviewees also argue that integrating blockchain and Internet of Things will push the
boundary of supply chain integration.
Table 2. Perceived benefits of blockchain to supply chain
Explanation
Reduces the need for double-checking and guesswork
Allows the automation of data analysis activities (e.g. demand forecasting,
asset monitoring, optimisation and lean improvements)
Allows the development of services such as track-and-trace
Crucial for implementation in cold chain, luxury items supply chain, to
provide provenance and proof checking
Information visibility improves internal business processes whilst adds
value to the service/product for end customers
Increased volume and accuracy of data helps organisations monitor and
evaluate their performances better
Opportunities to spot issues before they occur
Speeds up the end-to-end supply chain execution
One central data pool and system which is available to all stakeholders,
and does not vary from one version to another
Improvement of transparency as all data are accessible by network
members
The utilisation of one system optimises operations in the entire chain as
there are no data conversions needed.
Standard can be set, increasing the overall quality of data in the entire
chain
Highly secure system behind blockchain as demonstrated in bitcoin
Due to the infancy nature of blockchain, there is a high degree of scepticism among our
interviewees regarding the adoption of blockchain in supply chain (Table 3). A lack of
understanding of its technicalities contributes to this scepticism and low level of confidence:
In our organisation there are very few people who understand it. I don’t, I have heard about
its application. The fact that I don’t understand it entirely, of course means that I don’t
really trust it (Interviewee B)”. As it is still not clear where blockchain brings value to the
LSC sector, some interviewees question how necessary blockchain is to the industry
Sometimes, people spend the huge amount of money, time, thinking (to deploy the
technology), and when it gets down to it, we realise we don't really need it(Interviewee A).
Supply chains tend to involve multiple stakeholders and it is challenging to convince them to
share data and participate in a blockchain - which further compound the complexities of its
adoption. Some supply chain experts claim that the transparency of public distributed ledgers
clashes with the supply chain objective of information privacy-based competitive edge, hence
they see information sharing is a big hurdle. Others see the compatibility with other IT
systems and interoperability between different blockchain as challenging: Putting blockchain
in the country, not only for our company but the whole supply chain, you can imagine that the
our WMS would be on board, SAP systems would be on board, Oracle would be on board, the
banking system would be on blockchain as well, electronic payment will be active in real time,
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so you can imagine the additional bandwidth that is required to be added to existing IT
capacity and I can guarantee that would be the most challenging part of blockchain.
(Interviewee E)
Cost of implementing blockchain is perceived as another barrier “The small companies would
be weeded out due to lack of sufficient funds while bigger companies may have ability to
develop and maintain the technology but gaining profits from it will be in the long term, hence
a low ROI (Interviewee L).” However, some disagrees and argues that small companies such
as small 3PLs are more agile thus could be more adaptable to the technology; The small ones,
the start-up companies, they see it as an advantage and they could be the one to adopt quickly.
We see new comers such as XX and other, they are the innovators. They could adopt a
Blockchain as a service model (Interviewee H). As there is no central authority in a
distributed system, concerns were also raised about issues such as how to resolve a dispute.
Security concern was also identified, given the cases observed in practise such as the
NiceHash case (Nearly $64m in bitcoin has been stolen by hackers who broke into Slovenian-
based bitcoin mining marketplace NiceHash in 2017). Some IT experts suggest that during
initial implementation attempts, organisations should deploy a permissioned, private version
of the blockchain. They further point out that there is a need to solve the data input problem as
information contained within the blockchain would only be as accurate as the incoming raw
data.
Table 3. Perceived drawback of blockchain chain to supply chain
Drawbacks of Blockchain
to supply chain
Explanation
Confidence and the
necessity issues
Many organisations are still unsure of blockchain’s technicalities, functions,
or benefits.
Technology is still at its infancy.
The concept of the technology is complex and difficult to grasp.
Many problems could simply be solved by normal databases and
information systems.
The need to manage
people, process and
technology issues
Blockchain is a business issue, not just an IT matter.
Changing people’ mind-sets and operational protocols is a big challenge.
Large amounts of stakeholders will be involved or affected.
Clashing objectives between various stakeholders
Ethical issues on the removal of intermediating actors
Cultural issue
Regulatory uncertainties regarding the technology
Data collection issues
Ensuring that input data integrity is very difficult.
Convincing partners and customers to give out their data will be
challenging.
Large amounts of data will be collected, sifting through them would also
pose a challenge
Network interoperability
issues
The question on how one blockchain will be able to be used alongside other
blockchains or other available systems should be addressed.
Otherwise, introducing a new system such as blockchain will only over-
complicate the work environment, and not help simplify processes.
Cost and the dark side of
blockchain: privacy, legal
and security concerns
High implementation cost
Some customers may not want to share information
Commercially sensitive information and privacy needs to be protected
Unethical behaviour (e.g. data manipulation) may still occur if data is
entered manually
Regulatory uncertainties and illegal use of blockchain such as the case of
Silkroad
The potential damage to supply chains if the system was hacked
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Our interviewees acknowledge that despite the hype, the technology’s implementation into
supply chain is becoming a reality. Its progress may be slow and uncertain at the current
period, due to low levels of confidence and lack of demonstrable financial benefits Will
Blockchains have the same impact on logistics providers? My answer would be, not yet and
probably not for a very long time because if blockchains do become popular with logistics
providers, their own propriety systems will simply feed the blockchain systems with data.
Blockchains will not replace a logistics providers own systems in the way they can replace a
financial company’s system. There is just too much going on in a logistics providers internal
system for them to be replaced by a Blockchain (Interviewee N)”.
The value of blockchain to supply chain management as perceived by participants lies in the
areas of: a) extended visibility and traceability, b) simplification, digitalisation and
optimisation of supply chain operations, and c) smart contract. Blockchain is seen of
particular value to crucial supply chains as well. Smart contract receives the most attention
from our interviewees than from the literature, We have a lot of very big segregated
customers. Basically the contracts are all sorts of KPIs and all that which we have to fulfil
and they define when we get paid based on that sort of stuff. So I can imagine that linking that
up would be having a system where we can commit to this and we both press the agree button,
then it would execute automatically … So if you ship 3000boxes of trainers for whoever, then
you get paid for it immediately rather than having to go around the loops of “is that done?”. I
think smart contract is a big area. (Interviewee I). This stream of findings are summarised in
Table 4.
Table 4. Supply chain areas where blockchain might penetrate
Supply chain areas where
blockchain might
penetrate
Explanation
Providing extended visibility
and traceability to
stakeholders
The improvement of visibility for end customers will raise service level
standard and its value
This is an added feature that is achieved from implementing blockchain
within a community of stakeholders, and therefore is achievable as the
scale of implementation is gradually increased
Simplification, digitalisation
and optimisation of supply
chain operations (especially
in a global context)
To help process the current heavy workload on information transfer and
processing
To help manage transactions among multiple organisations for cross border
activities
Implementation should be specific on core supply chain operations such as
information transfer between processes
This will take the shortest time to develop, and potentially the most
controllable area to pilot-test
Smart contracts
Potential applications: automatic validation of shipments, automated track-
and-trace, multi-agent validation for information checking
This is more of a medium- to long term- application as they may involve
wider sets of stakeholders and a greater scale, and should be developed by
3PL organisations once they are comfortable with blockchain’ s application
in smaller scales.
Crucial supply chains/
industries
Initial implementation should be prioritised in crucial supply chains such
as for luxury goods (e.g. diamonds) and key commodities (e.g. oil), or fast-
moving supply chains (e.g. perishable items requiring the cold chain).
These supply chains carry greater purpose and sense of urgency in needing
a reliable, automatable network of information transfer.
If successful, implementation in these supply chains will be able to raise
positive examples of how blockchain can benefit the supply chain industry.
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5. Conclusion
This research set out to explore how blockchain technology may transform supply chains. We
did so by exploring the answers to two RQs, i.e. why is blockchain technology important to
logistics and supply chain sector (RQ1) and where are disruptions mostly likely to occur
(RQ2). Via a comprehensive literature review and 14 expert interviews, we found that the
perceived benefits such as improved tracking and traceability in an end-to-end supply chain
and efficiency gains through automation and reduction of complexities are the main
motivational factors that help to explain why blockchain matters to supply chain. We further
identify areas where blockchain may penetrate in supply chains, namely, supply chain tracing
and tracking, supply chain disintermediation, simplification and digitalisation of supply chain
process and smart contract. We also reveal challenges to its further diffusion. We contribute
to the literature by articulating the reasons why blockchain technology is important to supply
chain management and by locating areas where it may bring value to supply chain. Our
research thereby offers valuable insights to both practitioners and academics in this field to
prepare them to embrace this emerging technological innovation.
Our research has a few limitations. First, the literature review only covers the five-year time
window. Though we are confident of the scope and quality of our review process, given the
fast development of blockchain, it is likely that we may have omitted some publications that
are relevant to the subject. Our second limitation is the limited number of expert interviewees.
Though appropriate for an explorative study, a more diverse range of participants will result
in more robust findings and more in-depth understanding of the subject. Given the infancy
nature of blockchain, there are plenty of research opportunities for future. For example, one
interesting avenue for research is to examine whether blockchain will revolutionise the
concept of trust in supply chain. Traditionally to build trust, companies need to establish long-
term relationship with their supply chain partners or via mutual investment in the supply chain.
Yet with blockchain, companies perhaps do not have to ‘trust’ their partners to the same
degree as you do with traditional supply chain partners, given that trust is pre-built in a
blockchain system. Studies could also explore how digital currency/cryptocurrency could
affect the cash flow and supply chain structure. It is not impossible if supply chain partners
start to trade and settle their payment using cryptocurrency. For instance one company may
wish to pay the other in accessing to massive amount of data generated by Internet of Things
devices. Research looking into how blockchain may disintegrate or reintegrate supply chains
(i.e. by removing intermediaries) is also worthwhile. Different theoretical lenses and multi-
methodological approaches should be deployed to understand the phenomenon and
disruptions blockchain may further contribute to our understanding of blockchain and its
further diffusion in supply chain. Currently acclaimed benefits from blockchain are mostly
speculative and lack of empirical evidences, a longitudinal study following its pre-adoption,
implementation and routinisation into supply chains will help to demystify and justify the
value of blockchain to real practices. Finally, the dark side of blockchain (legal, ethical and
security issues) needs to be explored, particularly in areas such as supply chain governance.
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Appendix 1: List of papers identified from literature review
... BT is a distributed database of records or shared public/private ledgers of all digital events that have been executed and shared among blockchain participating agents [4,5]. In recent years, as decentralized cryptocurrency, such as Bitcoin [6], Ethereum [7], Zcash [8], has become hot, BT as the underlying cryptocurrency has attracted a lot of attention [9]. Focusing on private blockchains, Dinh et al. [10] present BLOCKBENCH, a benchmarking framework for understanding performance of private blockchains against data processing workloads, and conduct a comprehensive evaluation of 3 major blockchain systems based on BLOCKBENCH. ...
... eir study implies that the supply chain practitioners perceive BT adoption free of efforts and would help them derive maximum benefits for improving the supply chain effectiveness. Wang et al. [9] explore how BT may transform supply chains. ey identify areas where blockchain may penetrate in supply chains, namely, supply chain tracing and tracking, supply chain disintermediation, simplification, and digitalization of supply chain process and smart contract. ...
... ey use smart contracts to extent the idea, which are code and data residing at a specific address in a blockchain. Wang et al. [9] propose potential applications of BT-based smart contracts in automatic validation of shipments, automated track-and-trace, and multiagent validation for information checking in supply chain management. Based on the Hyperledger fabric blockchain platform, Chen et al. [26] explore the smart contract and provide the taxation-scenario design of the smart contract, as well as its implementation model and description of the Go language contract. ...
Full-text available
Article
Purpose . This paper aims to design the contract and present the profit distribution mechanism for CL platform, so as to realize the intelligent and automatic operation of the artificial intelligent- (AI-) based CL platform. Design/Methodology . A smart contract based on BT is designed for the AI-based CL platform. Profit distribution mechanism based on the Nash bargaining model for the CL platform is also put forward to coordinate different participators’ benefit relationship in CL. Findings . The AI-based CL platform and the proposed smart contract based on BT map the scenario which may be influenced by human factors and involve trust issues onto execution of codes. Practical Implications . The study will help CL practitioners in establishing effective profit mechanism and designing contracts on the platform, thus facilitating its sustainable operation. Originality/Value . The AI-based CL platform with BT smart contract can be totally free of human intervention, and hence, the problems of trust during CL platform’s operation are solved.
Full-text available
Article
Industry 4.0 has been provided for the last 10 years to benefit the industry and the shortcomings; finally, the time for industry 5.0 has arrived. Smart factories are increasing the business productivity; therefore, industry 4.0 has limitations. In this paper, there is a discussion of the industry 5.0 opportunities as well as limitations and the future research prospects. Industry 5.0 is changing paradigm and brings the resolution since it will decrease emphasis on the technology and assume that the potential for progress is based on collaboration among the humans and machines. The industrial revolution is improving customer satisfaction by utilizing personalized products. In modern business with the paid technological developments, industry 5.0 is required for gaining competitive advantages as well as economic growth for the factory. The paper is aimed to analyze the potential applications of industry 5.0. At first, there is a discussion of the definitions of industry 5.0 and advanced technologies required in this industry revolution. There is also discussion of the applications enabled in industry 5.0 like healthcare, supply chain, production in manufacturing, cloud manufacturing, etc. The technologies discussed in this paper are big data analytics, Internet of Things, collaborative robots, Blockchain, digital twins and future 6G systems. The study also included difficulties and issues examined in this paper head to comprehend the issues caused by organizations among the robots and people in the assembly line.
Purpose – Logistics companies are compelled to improve their efficiency and the environmental performance by introducing the green concept in their operations. The main purpose of the paper is to have continuous monitoring and tracking of logistics operations to enhance the green performance. Design/methodology/approach – This research uses a case study approach. It illustrates a monitoring system to digitize the logistics activities by sending real-time GPS data to the server and capture the surrounding pictures with the help of the Internet of things (IoTs) based camera. Data generated through digitization is mathematically analyzed for ensuring a green logistic system. The alerts due to the halts, help in keeping a check on fuel consumption, carbon emissions, and security of logistics. Performance indicators such as carbon emissions and the value of travel time saving (VTTS) are selected for the study. Findings -The findings of the study show that the actual travel time and distances are higher than the estimated travel time and distances. It also reveals that actual travel routes with diversions involve a considerably higher amount of carbon emissions during all sample travels. The results indicate a considerable saving in terms of carbon emissions, time and cost savings by effective practices of Green Logistics in Monitoring system (MSGL). These findings can help the top management of logistics companies in formulating effective strategies for technology applications in logistic operations to ensure green performance. Research limitations/implications –The study has been carried out under certain set of conditions, which may vary depending upon the organizations. Also certain more environmental dimensions for performance monitoring can be used as a future scope of study. Further studies also need to be carried out to widen the scope of the MSGL model at a global level rather than only at local level. Originality/value – Any organization which deploys transportation as part of their activity can use this MSGL model and then do the mathematical analysis to reduce the CO2 emissions, reduce the time and extra cost. The value of this study lies in the fact that Govt is trying different methods and models to reduce pollution. This MSGL should be made compulsory by the govt. as a part of their policies for environment of the country.
Full-text available
Article
Blockchain is a decentralized transaction and data management technology developed first for Bitcoin cryptocurrency. The interest in Blockchain technology has been increasing since the idea was coined in 2008. The reason for the interest in Blockchain is its central attributes that provide security, anonymity and data integrity without any third party organization in control of the transactions, and therefore it creates interesting research areas, especially from the perspective of technical challenges and limitations. In this research, we have conducted a systematic mapping study with the goal of collecting all relevant research on Blockchain technology. Our objective is to understand the current research topics, challenges and future directions regarding Blockchain technology from the technical perspective. We have extracted 41 primary papers from scientific databases. The results show that focus in over 80% of the papers is on Bitcoin system and less than 20% deals with other Blockchain applications including e.g. smart contracts and licensing. The majority of research is focusing on revealing and improving limitations of Blockchain from privacy and security perspectives, but many of the proposed solutions lack concrete evaluation on their effectiveness. Many other Blockchain scalability related challenges including throughput and latency have been left unstudied. On the basis of this study, recommendations on future research directions are provided for researchers.
Full-text available
Article
The blockchain technology as a foundation for distributed ledgers offers an innovative platform for a new decentralized and transparent transaction mechanism in industries and businesses. The inherited characteristics of this technology enhance trust through transparency and traceability within any transaction of data, goods, and financial resources. Despite initial doubts about this technology, recently governments and large corporations have investigated to adopt and improve this technology in various domains of applications, from finance, social and legal industries to design, manufacturing and supply chain networks. In this article, the authors review the current status of this technology and some of its applications. The potential benefit of such technology in manufacturing supply chain is then discussed in this article and a vision for the future blockchain ready manufacturing supply chain is proposed. Manufacturing of cardboard boxes are used as an example to demonstrate how such technology can be used in a global supply chain network. Finally, the requirements and challenges to adopt this technology in the future manufacturing systems are discussed. Full text available at http://esatjournals.net/ijret/2016v05/i09/IJRET20160509001.pdf
Full-text available
Conference Paper
An interesting research problem in our age of Big Data is that of determining provenance. Granular evaluation of provenance of physical goods-e.g. tracking ingredients of a pharmaceutical or demonstrating authenticity of luxury goods-has often not been possible with today's items that are produced and transported in complex, inter-organizational, often internationally-spanning supply chains. Recent adoption of Internet of Things and Blockchain technologies give promise at better supply chain provenance. We are particularly interested in the blockchain as many favoured use cases of blockchain are for provenance tracking. We are also interested in applying ontologies as there has been some work done on knowledge provenance, traceability, and food provenance using ontologies. In this paper, we make a case for why ontologies can contribute to blockchain design. To support this case, we analyze a traceability ontology and translate some of its representations to smart contracts that execute a provenance trace and enforce traceability constraints on the Ethereum blockchain platform.
Full-text available
Article
Institutional theory has proven to be a central analytical perspective for investigating the role of social and historical structures of information systems (IS) implementation. However, it does not explicitly account for how organisational actors make sense of and enact technologies in their local context. We address this limitation by exploring the potential of using institutional theory with sensemaking theory to study IS implementation in organisations. We argue that each theoretical perspective has its own explanatory power and that a combination of the two facilitates a much richer interpretation of IS implementation by linking macro- and micro-levels of analysis. To illustrate this, we report from an empirical study of the implementation of an Electronic Patient Record (EPR) system in a clinical setting. Using key constructs from the two theories, our findings address the phenomenon of implementing EPRs at three levels: the organisational field, the organisational/group, and the individual/socio-cognitive level. The study shows how a rationalised myth of an efficient EPR system has travelled from the organisational field to the hospital ward and on to individual doctors. The findings also provide evidence of a strong human agency by showing how doctors enact their work practices and shape the use of the EPR system. The study contributes to IS research by showing the need to address macro-level structures, as well as individual interpretations and practical use situations, in order to identify how and why information systems are adopted by users.
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Article
Many theoretical frameworks seek to describe the dynamic process of the implementation of innovations. Little is known, however, about factors related to decisions to adopt innovations and how the likelihood of adoption of innovations can be increased. Using a narrative synthesis approach, this paper compared constructs theorized to be related to adoption of innovations proposed in existing theoretical frameworks in order to identify characteristics likely to increase adoption of innovations. The overall goal was to identify elements across adoption frameworks that are potentially modifiable and, thus, might be employed to improve the adoption of evidence-based practices. The review identified 20 theoretical frameworks that could be grouped into two broad categories: theories that mainly address the adoption process (N = 10) and theories that address adoption within the context of implementation, diffusion, dissemination, and/or sustainability (N = 10). Constructs of leadership, operational size and structure, innovation fit with norms and values, and attitudes/motivation toward innovations each are mentioned in at least half of the theories, though there were no consistent definitions of measures for these constructs. A lack of precise definitions and measurement of constructs suggests further work is needed to increase our understanding of adoption of innovations.
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Master the theoretical and technical foundations of blockchain technology Fully comprehend the concept of decentralization, its impact and relationship with blockchain technology Experience how cryptography is used to secure data with practical examples Grasp the inner workings of blockchain and relevant mechanisms behind Bitcoin and alternative cryptocurrencies Understand theoretical foundations of smart contracts Identify and examine applications of blockchain technology outside of currencies Investigate alternate blockchain solutions including Hyperledger, Corda, and many more Explore research topics and future scope of blockchain technology
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examine prevailing thought about technology, after which we will discuss properties of new technologies and then four conceptual shifts that help us understand the organizational implications of these properties definitions of technology stochastic events / continuous events / abstract events from structure to structuration / from analysis to affect / from static to dynamic interactive complexity / from behavior and output control to premise control (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Article
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.