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J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 82
CHALLENGES IN USING BLOCKCHAIN FOR SUPPLY CHAIN
MANAGEMENT INFORMATION SYSTEMS
Muhammad Rizqi Nur1, Luqman Hakim1, Yusuf Amrozi1,2*)
1Program Studi Sistem Informasi, Fakultas Sains dan Teknologi, Universitas Islam Negeri Sunan
Ampel, Jl. Ahmad Yani No.117, Kelurahan Jemur Wonosari, Kecamatan Wonocolo, Surabaya, 60237
2Program Studi Manajemen, Fakultas Ekonomi dan Bisnis, Universitas Airlangga
Jalan Airlangga 4-6, Kelurahan Mojo, Kecamatan Gubeng, Surabaya, 60285
(Received: December 19, 2019/ Accepted: June 1, 2020)
Abstract
Blockchain has been the hype in technology lately and supply chain management is often mentioned as
one of its applications. However, it is unwise to just eat the hype. Blockchain does have weaknesses;
some of its natures considered as strengths might be weaknesses or problems in some cases. There are
many things to be considered and among them are the challenges. This paper presents a systematic
literature review of challenges in using blockchain for supply chain management information systems.
This paper aims to help stakeholders and top management of supply chains when considering on
adopting blockchain. The literatures were gathered from open-access papers found on Google Scholar.
A total of 76 unique papers were found and then 29 were selected. The findings were classified into 12
categories. The top three category of challenges are development and implementation, performance
and efficiency, and sustainability and scalability. Apparently, although blockchain in cryptocurrency is
pretty solid, there are many challenges in its usage for supply chain.
Keywords: blockchain; smart contract; challenge; difficulties; supply chain; information systems
1. Introduction
Lately, cryptocurrency has become a trend,
especially Bitcoin. Until the end of May 2019, 1 bitcoin
can value up to IDR 117 millions (Coinbase, 2019) – a
really huge amount. Aside from trading like stocks or
Forex, many earns from Bitcoin by mining. Mining is
actually what runs Bitcoin (Zheng et al., 2017). The
miners run Bitcoin and they’re getting paid for it, in
Bitcoins (Udokwu et al., 2018; Yaga et al., 2018). The
need for miners is caused by how blockchain on which
Bitcoin runs works. Blockchain is often regarded as a
very secure technology due to its heavy use of
cryptography. How bitcoin runs well despite booming
worldwide while having no central authority proves its
security. Some even say that it has never been hacked
(Trummer, 2019).
Blockchain is a digital ledger technology which
transactions are immutable (can’t be altered), is
distributed in the network without the need for trust,
and keep growing as transactions keep getting
recorded. Just like a real ledger, blockchain keeps a
complete record of every transactions ever happened
there. There is no central server in blockchain; every
node works together to run the system with (ideally)
equal standing. Because there’s no central server, every
node keeps a copy of the ledger. This is part of how
blockchain keeps the system secure despite having it
run by mutually distrusting nodes. (Nakamoto, 2008;
Yaga et al., 2018; Zheng et al., 2017)
Blockchain was meant to be a publicly
distributed ledger, but there are also other types of
blockchain. In private blockchain, there are certain
level of trust on some nodes. This makes the blockchain
kind of centralized, so the key to security is held by
those trusted nodes. Private blockchain is usually used
for internal organization system. In private blockchain,
new participants needs to be accepted by the manager,
the trusted nodes. Private blockchain can also restrict
participants privileges. Consortium blockchain is a
private blockchain with larger scale. Consortium
blockchain is usually used for a system that includes
many organizations, for example, supply chain
management information system. (Zheng et al., 2017)
Supply chain is a sequence of processes and
flows that aim to fulfill end customer requirements and
take place between companies involved. Supply chain
doesn’t only include manufacturers and suppliers but
also logistic entities, retailers, and end customers
themselves. Traditional supply chains suffer from
bullwhip effect, causing overestimations over demand
spikes that grows bigger as it goes uphill the supply
chain. That effect is caused by limited knowledge of the
actual demand and requirements, limited view of the
customer end of the chain. This is the main reason of
*Penulis Korespondensi.
E-mail: yusuf.amrozi@uinsby.ac.id
J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 83
why supply chain management is needed. (Van Der
Vorst, 2004)
Van Der Vorst defined supply chain
management (SCM) as “the integrated planning,
coordination, and control of business processes and
activities in the supply chain to deliver superior
consumer value at less cost to the supply chain as a
whole whilst still satisfying requirements of other
stakeholders in the supply chain”. With supply chain
management, supply chains can increase profitability
by reducing costs and providing better delivery
performance and product quality thanks to better
information availability and collaboration. (Van Der
Vorst, 2004)
SCM relies heavily on information, so it also
relies on ICT and information systems. Supply chain
management information system (SCMIS/SCIS) is
important for sustainable SCM because it benefits
organization, suppliers, and customers (de Camargo
Fiorini & Jabbour, 2017). SCMIS’ main purpose is to
provide information and information capability to
support strategy, operations, management, and decision
making in supply chain (Daneshvar Kakhki & Gargeya,
2019). SCMIS is a distributed system; it integrates the
supply chain members’ existing information systems.
The higher the integration, the easier the cooperation
becomes, and consequently, the better the firm
performance will be (Budiarto et al., 2017). However,
SCMIS is hard to implement due to the complexity of
integrating many existing information system from
many firms which have differing objectives (Denolf et
al., 2018).
How blockchain enables secure, immutable,
transparent, and often cheaper transactions makes
many businesses and platforms adopt it, including
supply chain and logistics (Pereira et al., 2019).
Blockchain can help reduce bullwhip effect more
thanks to its information transparency and integrity
(Babich et al., 2019). Mitch, a supply chain researcher
and lecturer, said (in Fleischmann and Ivens, 2019) that
supply chain today is executed by an intermediary
which became the one bonding the trust between
parties. Even with SCMIS, there has to be an entity
managing it (Yuan et al., 2019). This can be solved by
the trust established by blockchain the execution
enforcement of smart contracts, which can be regarded
as blockchain 2.0 (Hasanova et al., 2019). Supply
chains can use smart contracts to automate the steps to
be executed for certain events, such as item shipping,
arrival, etc (Abou Jaoude & George Saade, 2019).
There are many examples of blockchain usage
in supply chains. Maersk, the global shipping company,
and IBM are collaborating the provide end-to-end
supply chain solution with blockchain to track shipping
containers (Johnson, 2018). Provenance use blockchain
to promote trust in supply chain by providing
transparency (Kshetri, 2017). Walmart, which uses
blockchain to track shipping of mangoes from Mexico
to the US and its supply chain in China, said that it
shortened the time needed to track produce from six
days to two seconds (Felin & Wilson, 2018).
FarmaTrust made a blockchain system for
pharmaceutical supply chain (Dasgupta et al., 2019).
There is only one question that forms the base
of this paper: is it wise to use blockchain for a supply
chain? Despite being seen as a technology with high
security, there are weaknesses in blockchain.
Blockchain that keeps growing will be storage
demanding, especially in systems that uses huge
amount of data, such as supply chains (Saad et al.,
2019). Smart contract may seem like a useful feature,
but it is very complex and just like other applications,
there may be bugs (Babich et al., 2019). However,
unlike normal codes, those bugs and problems caused
by them might be way harder to fix due to the
distributed and immutable nature of the blockchain and
the complexity of the smart contract. Lastly,
organizations might not be willing to reveal their data
to the system (Babich et al., 2019). This is a common
issue in supply chain management, but this wastes one
of the strengths and reasons to use blockchain; its
transparency. That transparency itself might even be
the cause of the unwillingness, because organizations
might lose its bargaining power as information are
revealed (Van Der Vorst, 2004).
Zhang et al. (C. Zhang et al., 2019) in his
literature review on blockchain application in food
SCM mentioned the following challenges: scalability,
adaptation (persuasion and regulations), and outside-
of-blockchain issues. Mohan (Mohan, 2018) in his
research to improve food traceability with blockchain
adds availability of experts to the list of challenges.
Saberi et al. (Saberi et al., 2019) in his research on
relationship of blockchain to sustainable SCM presents
many challenges grouped into the following barriers:
intra-organizational barriers, inter-organizational
barriers, system related barriers, and external barriers.
Although Zhang et al. mentioned system integration as
one of blockchain’s benefits, Baruffaldi and Sternberg
(Baruffaldi & Sternberg, 2018) mentioned system
integration as one of the challenges. In addition to that,
privacy issues also need to be addressed (Baruffaldi &
Sternberg, 2018; Rabah, 2017).
This paper will discuss the challenges in using
blockchain for supply chain management information
system. This paper is hoped to be a help when
considering to use blockchain for supply chain
management and a base for further research. This paper
was done with systematic literature review which will
be explained later.
2. Methods
This research was done with systematic
literature review. It is a systematic method to identify,
evaluate, and synthesize completed works produced by
researchers, scholars, and practitioners (Okoli, 2015).
This systematic literature review was done with
simplified steps inspired by (Okoli, 2015; Torres-
Carrion et al., 2018; Xiao & Watson, 2019). Graphic
J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 84
representation of the methodology is shown in Figure
1.
Figure 1. Systematic Literature Review Phases
The methodology used consists of four phases:
planning, searching and filtering, review and analysis,
and reporting. In the planning phase, the research
question and the review protocol were defined. The
review protocol consists of the paper sources, the
search queries, and the inclusion and exclusion criteria.
In the searching and filtering phase, the papers are
searched from the source using the queries and then
filtered with the criteria. In the review and analysis
phase, the review is done for each paper, reading the
paper and taking note of anything relevant to the
research question, and then the results are grouped into
categories and combined. In the reporting phase, the
final results are reported; this paper is written.
The papers were gathered from Google Scholar.
Papers were taken from papers from first three pages of
search or at least 10 first papers from 2019, 2018, and
2015 which fulfills inclusion criteria 1 to 4 and does not
fulfill the exclusion criteria 1 and 2. Papers were further
filtered by the exclusion criteria, mainly the fourth
criterion for the content.
The following research question were
formulated and used: “What are the challenges in using
blockchain for supply chain management information
systems?” There are 3 versions of the search query, but
they’re basically the same. First, a query was derived
from the research question. The original query were
then split into three: one mentioning information
system and SCM, one only mentioning SCM, and one
only mentioning information system. This was done
because papers often don’t mention the “information
system” part of SCMIS and only mention SCM. Those
papers might be excluded if the query includes
“information system”. Below are the final queries:
1. (“blockchain” OR “smart contract”) (“weakness”
OR “difficulties” OR “challenges” OR
“difficult”) (“supply chain” OR “SCM”)
2. (“blockchain” OR “smart contract”) (“weakness”
OR “difficulties” OR “challenges” OR
“difficult”) (“supply chain” OR “SCM”)
(“information system” OR “SCMIS” OR
“SMIS”)
3. (“blockchain” OR “smart contract”) (“weakness”
OR “difficulties” OR “challenges” OR
“difficult”) “information system”
The following inclusion criteria were used:
1. The paper was dated 2015 or later.
2. The paper is written in English or Bahasa
Indonesia.
3. The title is related to blockchain and blockchain
challenges or/and its usage in supply chain or
information systems.
4. The paper’s full text is accessible freely, even if
it’s the author’s version.
In addition to the opposite of inclusion criteria,
the following exclusion criteria were used:
1. The paper was unpublished (author’s version of
published paper doesn’t fall in this criteria).
2. The paper is not a journal paper, a book or book
section, or a conference paper.
3. The paper is a duplicate.
4. The paper doesn’t explain challenges of using
blockchain in general, supply chains, or
information systems (just mentioning doesn’t
count as explaining).
3. Results and Discussions
The search result from each search queries in
each year range is shown in Table 1. The papers were
then merged and duplicates were removed resulting in
74 papers. Those papers were then filtered with the
exclusion criteria by skimming, resulting in 29 papers.
The selection is presented in detail on Table 1.
Table 1. Paper Selection Process.
Query
Since
Inclusion
Merge
Exclusion
1
2015
21
76
29
2018
17
2019
15
2
2015
20
2018
18
2019
19
3
2015
20
2018
19
2019
22
There are 7 papers explaining only blockchain
in general, 18 explaining blockchain in relation to
supply chain, and 4 explaining blockchain in relation to
information systems (Figure 2). There are 18 journal
articles, 8 proceedings, and 3 thesis (Figure 3). There
are 2 papers from 2017, 10 from 2018, 18 from 2019,
and 1 scheduled to be printed in 2020 but is already
accepted and published online (Figure 4).
Figure 2. Paper Tags
Planning
Searching and Filtering
Review and Analysis
Reporting
J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 85
Figure 3. Paper Types
Figure 4. Paper Publication Years
Challenges were searched from the paper and
put into categories. The categories used were primarily
selected and combined from several papers (Lu, 2019;
Meng & Qian, 2018; Mohsin et al., 2019; Yadlapalli et
al., 2019). In addition to those selected categories, some
categories were added because some challenges didn’t
quite fit into any of the selected categories or were
judged better to be in a more specific category. The
challenge categories and count of paper explaining
them are shown in Figure 5. The top three most
discussed challenges were development and
implementation, performance and efficiency, and
sustainability and scalability.
3.1. Development and Implementation
The hype around blockchain may make
stakeholders want to apply it blindly, anywhere and
everywhere. Blockchain is at inflated expectations on
Gartner's hype cycle, so cautiousness is advised. Global
supply chains are specially complicated because they
need to follow various laws and regulations in multiple
jurisdictions. (Ahlstrand, 2018)
The blockchain has to align with the supply
chain standards used. The standard would first have to
be mapped into the solution. Next, the data governance
model has to be set up with that standard to ensure data
integrity. It is also important to determine which data to
share, when, and why. The platform also has to be ready
for future applications such as IoT, AI, and big-data
analysis, since the natural adaptability and extensibility
of blockchain is low. Also, it is hard to extend the
platform to third parties such as logistics providers.
Implementing smart contracts and splitting the
blockchain into one that stores data and one that
executes contracts may be a solution. (Fosso Wamba et
al., 2018)
Blockchain is resource demanding, specially
computational resources for blockchains with proof-of-
work validation method. Alternative methods have
been developed to solve this issue, but they often
introduce new problems (Mendling et al., 2018).
Finding the best validation method for the system being
Figure 5. Count of Paper Describing Each Challenge Category
J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 86
built might be hard, but they have to be decided early.
Sometimes organizations even need to develop their
own. There are many problems to be solved concerning
validation method, such as performance, scalability,
security, and privacy (Lu, 2019).
Blockchain as an append-only database keeps
on growing and will be very huge. Therefore,
blockchain should only keep data needed by customers
(those who use the data) and only the needed parts
(Edwards & Chan, 2019). Determining which data to
store and share might be quite difficult.. Deciding how
the data should be structured and validated is also a
challenge. The original blockchain was meant for
cryptocurrencies so checking account balances works
and is enough, but for other uses, it might be more
complex and there might not be enough examples
available (Misic et al., 2019).
Every design decisions such as permissioning,
ownership, privacy, and consensus protocols should be
decided early. Bad design will make it perform worse
than conventional centralized systems. Latency,
availability, and flexibility should also be addressed.
Some informations might also be difficult to include in
the blockchain thus should also be addressed. Some
information might also be considered confidential so its
access should be limited. (Kamilaris et al., 2019)
Blockchain is a new technology, so there is lack
of experts and knowledge (Kumar & Mallick, 2018;
Saberi et al., 2019; Yadlapalli et al., 2019). Both its
developer support (tools) and end-user support
(understanding) are also lacking (Mendling et al.,
2018). There is also no standard method to blockchain
system development (Edwards & Chan, 2019;
Yadlapalli et al., 2019). Most literatures are either
conceptual, framework proposals, or case studies
(Edwards & Chan, 2019), while most blockchain
implementation has very complex structure so it is hard
to take as an example (Yadlapalli et al., 2019). Most of
the proposed frameworks weren't evaluated to design
real systems either (Tribis et al., 2018).
Blockchain is complex and hard to implement,
so there might be poorly developed or maintained code
which will become vulnerabilities for hackers.
Vulnerability in smart contract might be fatal since it
will execute code on every nodes. The DAO "hack" is
a common example for the possible damage caused by
that. The logical error in the smart contract caused
$50m of virtual currency to be stolen. Human
intervention was required to solve the issue, leading to
questions on whether self-executing smart contract is a
good idea. (Behnke & Janssen, 2019)
Blockchain is complex and hard to set up
(Kamilaris et al., 2019; Mahmood et al., 2019), and for
supply chains, it usually integrates many components
such as IoT, RFID, sensors, and even robots. In fact, to
be functional, blockchains must rely on external entities
to obtain information. They might be hardware (e.g.
sensors), software (e.g. other system), or human
(manual input). There are various platforms that
blockchain can use and finding the optimal
combination isn't easy. (Kamilaris et al., 2019; Min,
2019)
3.2. Performance and Efficiency
Blockchain requires huge computing power and
high bandwidth which is neither easy nor cheap. This
forces the blockchain to use cheaper validation method
which might end in centralization thus losing some of
its main benefits and original purpose (Ahlstrand, 2018;
Min, 2019). However, some centralization might not be
much a problem in supply chains. Meanwhile, modern
supply chains often use IoT which has low computation
resource and storage. (Meng & Qian, 2018)
Despite requiring high resource, blockchain has
low throughput (transaction rate) and it can’t compare
to centralized systems (Costa, 2018). In Bitcoin, a
transaction can only be 1MB at maximum. Bitcoin and
Ethereum can only process three to thirty transactions
per second, while Visa can process 50,000-60,000
transactions per second at average (Aliyu et al., 2018;
Kleinman, 2019; Mendling et al., 2018). There are
alternative designs that can increase throughput. Using
permissioned system with optimized consensus model
will improve the rate significantly in exchange for some
degree of open-ness and security (Behnke & Janssen,
2019). Red Belly blockchain has achieved more than
400,000 tps in lab test, but it’s still experimental
(Mendling et al., 2018). However, even though the
information flow of one company might be slower, the
flow between companies, specially new blockchain
members, might be much faster. The decrease in speed
is not all negative; it is traded with more
functionality.(Costa, 2018)
Due to the chain-broadcast structure of the
network, every transaction takes quite some time,
specially for public blockchains and smart contracts
(Mendling et al., 2018; Tribis et al., 2018). This also
give birth to the fork problem which may lead to double
spending and be abused (Aliyu et al., 2018; Tribis et al.,
2018). It takes 10 minutes to create a block and an hour
for a transaction to be considered as commited in
Bitcoin, Ethereum transaction takes 3 to 10 minutes,
while VISA transactions take just a moment (Aliyu et
al., 2018; Mendling et al., 2018; Mohsin et al., 2019;
Wang et al., 2017). The validation method used and
number of participants play big roles here (Guo &
Liang, 2016).Techniques have been developed to solve
this, but it's still unlikely to achieve latencies as low as
centralized systems. Among blockchain types,
consortium blockchains performs better than private
and public blockchains for healthcare systems (Kombe
et al., 2018). However, such efficiency won't meet
requirements of supply chains with high transaction
rate. (JieYu, 2019).
3.3. Sustainability and Scalability
Blockchain transactions are immutable, so the
blockchain is append-only and it will keep growing and
J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 87
become too large and not be sustainable because every
node has to keep a copy of it (Behnke & Janssen, 2019;
Costa, 2018; Kumar & Mallick, 2018; Meng & Qian,
2018; Mohsin et al., 2019; Saberi et al., 2019; A. Zhang
et al., 2020). In 16 December 2016, Bitcoin took
100GB of disk space. The increase in size also impacts
performance negatively (Mohsin et al., 2019).
However, the size and the problem it causes depends on
the data stored, transaction frequency, and number of
participants (Behnke & Janssen, 2019; Costa, 2018).
Although using lightweight nodes can solve this to
some extent, better solutions still need to be researched
(Lu, 2019). Bitcoin-NG tries to solve this by
decoupling the ledger into two parts: microblock to
store transaction and key block for leader election
(Meng & Qian, 2018).
Changes in blockchain may make the previous
version invalid (hard fork) (Mendling et al., 2018).
Most participants have to agree and implement the
changes in order for it to work. Although controversial
for public chains, hard fork isn't really an issue for
private and consortium blockchains. Organizations
should also embed sustainability at all organizational
levels if they wish for sustainabilit (Saberi et al., 2019).
It is also hard to extend the platform to third
parties such as logistics providers. Implementing smart
contracts and splitting the blockchain into one that
stores data and one that executes contracts may be a
solution. (Fosso Wamba et al., 2018)
Blockchain is still immature, specially for
supply chains. Most proposed blockchain frameworks
were only tested on limited scale. Most blockchain
implementation in the real world are also practically
small. New challenges may arise when the system is
scaled highly in the real world. (Tribis et al., 2018)
3.4. Adoption
It's difficult to have participants collaborate to
invest time and effort to deploy blockchain systems.
Although it might provide great future competitiveness
and opportunities, the cost is high and it is risky
(Kesharwani, 2019). Most blockchain technology is
untested and experimental (Rabah, 2017). Adopting
blockchain would require new IT tools. This might be
a challenge for some supply chain members (Saberi et
al., 2019). Aside from that, blockchain as a potentially
disruptive technology may require legacy system
changes or even replacement (Saberi et al., 2019).
Even just convincing parties to share data using
blockchain can be hard (Fosso Wamba et al., 2018;
Wang et al., 2017). Supply chain actors don't really
understand blockchain’s benefits, how it works, and its
ease of use, but they have to, specially the top
management and stakeholders (Edwards & Chan, 2019;
Tribis et al., 2018; Yadlapalli et al., 2019). This
understanding will affect their decision on whether to
adopt blockchain or not. It is also believed that
blockchain is costly and requires expensive hardware
to be successful (Yadlapalli et al., 2019). Blockchain is
also slower than centralized system, so parties have to
understand the benefit gained from trading the speed.
(Ahlstrand, 2018)
Blockchain is a disruptive technology which
might make and require transformation in
organizations. Organizations may find it hard to
manage those changes. Their existing systems was
already costly and took time to build. Developing
blockchain system is expensive so the cost of change
will be really big. Many supply chain still use
traditional methods for many things so the change
might be hard to manage. (Kleinman, 2019; Wang et
al., 2017)
3.5. Law and Standards
Blockchain as a distributed ledger with high
privacy can bypass government's interference, so the
government might press blockchain users through
various regulations and legal restrictions and they
might reduce its usefulness. For example, the Korean
government was reported to be trying to cooperate with
China and japan to regulate or ban cryptocurrencies
powered by blockchain. However, the high privacy and
lack of regulation isn't a good thing either. It makes
blockchains vulnerable to potential scammers and little
can be done about it. (Guo & Liang, 2016; Min, 2019)
Currently, there is little to no regulation
regarding blockchain (Kumar & Mallick, 2018).
Regulation and policies related to blockchain are
important barriers for its wider adoption. Without them,
the technology can't be considered trustful to be used in
supply chains.(Kamilaris et al., 2019). Lack of
regulation is a challenge also because it is unclear on
how the system should be built and new regulation
might appear anytime and the already-built system
might need to be adjusted.(Saberi et al., 2019). The lack
of regulation also means lack of standard, making
blockchain implementations so diverse with low
interoperability. (Kesharwani, 2019; Tribis et al., 2018)
There might not be many specific regulations
concerning blockchain, but there are many concerning
accountability, data ownership, and privacy (Kleinman,
2019). Some legal issues had arisen; they're about
accountability for the documents, implications of
compromised data integrity, security, and accuracy,
and privacy and jurisdiction (Lu, 2019; Mohsin et al.,
2019).
3.6. Privacy
In the original blockchain, the data is
transparent. Everyone can access the data and it was
designed to be like that. However, some data might be
confidential for supply chains, so access has to be
controlled. Blockchain doesn’t support this by default
and it is not easy to implement. Some blockchain have
recognized this and enable access control, such as
Hyperledger. (Behnke & Janssen, 2019; Rabah, 2017)
Anonymity still doesn’t mean privacy even
when the information stored isn’t sensitive. People
might still be able to infer information with the
anonymous data, which might be unwanted. Those
J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 88
information are transparent in public blockchains.
Aside from that, if someone gets to know someone
else's public key, then he can know all of his
transactions. (Du et al., 2019; JieYu, 2019; Meng &
Qian, 2018; Mohsin et al., 2019)
Aside from confidentiality, there are also issues
with privacy and data ownership; healthcare systems
can be taken as an example for this. In healthcare, the
health records are considered as the patients' property
and it is protected by law. The records should be
available for the patients at any time with some legal
exceptions. Access to the records should be limited
with the patients' authorization. The access can also be
limited to just some information, such as diagnoses
only or prescriptions only. The patients should also be
able to revoke access to their data, but it's hard to do
with blockchain. The system can't force someone to
"forget" the key used to access the data and the data
can't be erased or edited. (Misic et al., 2019)
Companies also value their privacy and security
of their information, so they might not want to share too
much information (Costa, 2018). Moreover,
organizations and even countries may have different
privacy policies related to information. Supply chain
systems should address this early, specially blockchain
which adaptability is low. Lack of solid rules will affect
collaboration negatively. Lack of collaboration will
disturb sustainability. (Saberi et al., 2019)
3.7. Requirements
Systems are diverse, but they all have to be
powerful enough to run the heavy computation of
blockchain (Kumar & Mallick, 2018). This is also the
case with storage, because every node stores a copy of
the blockchain. Since the data needed to be stored is
big, it's also bandwidth demanding. (Mendling et al.,
2018). Supply chains might span accross countries and
the technology gap between countries, specially
developed and developing ones, might be a challenge.
For example, in food supply chain, the farmers might
not have the technology required or they do but it's just
not feasible with their current technology (Kamilaris et
al., 2019; Tribis et al., 2018).
Blockchain is costly, so only big corporations
might be able to afford it, and even when they do, it
may still be hard to decide on whether to adopt it or not
(Kleinman, 2019). The cost to integrate all the parties
which might already have their own systems is likely
high too. The cost of the system might even be higher
than the product. For example, the cost for food
traceability is higher than the value of the food itself.
(Chen_et_al_Poster, n.d.)
3.8. Data Integrity
Data integrity is blockchain's strong point, but it
doesn’t cover errors before it gets into blockchain,
specially if the data is inputted by human. The data
might have also been tampered with. The problem here
is the immutability of blockchain transactions. This
results in immutable bad data. Due to the immutability,
errors might be irreversible, and even if it can be fixed,
the old, garbage data will still be there and waste
storage. The data quality in supply chains is generally
poor, but sensors and IoT can help. Verification of
transactions in cryptocurrency is supported fully, but it
is hard to fully support verification of complex data
from supply chain. (Blossey et al., 2019;
Chen_et_al_Poster, n.d.; Du et al., 2019; Guo & Liang,
2016; A. Zhang et al., 2020)
The data in the blockchain might be digital
representation of a physical thing. This means that it
has to be consistent with reality. Errors and unforeseen
changes happen in the real world, but the blockchain is
append-only. The blockchain has to support this issue,
but that might mean wasting its immutability and
storage space. (Kleinman, 2019)
3.9. Security
Although considered as highly secure
technology, blockchain does have some vulnerabilities.
The 51% attack, although may not be feasible in most
cases, can control the whole blockchain. It is when a
party acquires 51% of power in the pool and use it to
control the blockchain. The kind of power may differ
depending on the validation method. For proof-of-
work, it would be 51% computing power. (Aliyu et al.,
2018; Mohsin et al., 2019)
There are also some design flaws in blockchain.
Private key is too important yet light so that when you
"lose" it, there's no "getting it back". Double spending
is also a problem due to how blockchain nodes
communicate, leading to users waiting for some period
of time before being sure that transaction is actually
commited. (JieYu, 2019; Mohsin et al., 2019)
Lastly, there are risk that the cryptography
functions used at the moment might be broken in some
years. In centralized functions, they can just roll an
update. However, this kind of change is hard to do in
blockchain and would require hard fork. It’s not even
certain that the replacement will be available on time.
(Costa, 2018; JieYu, 2019)
3.10. Interoperability
Interoperability can be explained as the ability
to convert Bitcoin into Ethereum without need for
intermediary. In supply chain, a supplier might not only
be connected to one supply chain. Those supply chains
might also have their own systems. The supplier likely
wouldn't want to be challenged with different
blockchain architectures from different supply chains.
This would lead to fragmentation and higher
complexity because the blockchain systems would need
to interface with each other. Standardization might be
required, but interoperability standards in both SCM
and blockchain is lacking. (Behnke & Janssen, 2019;
Costa, 2018)
Interoperability is harder for blockchain because
of the "fork" problem. When sharing information, that
information is orphaned from the chain and might lose
validity while it is being used by the other system. The
J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 89
resulting behaviour will not be valid anymore if the
base information isn't valid anymore. To actually solve
this, standardization is a must. (Kleinman, 2019)
3.11. Operational
In conventional SCM, every member has to
participate, or it won't be as effective as hoped, because
there will be missing data (Chen_et_al_Poster, n.d.;
Kleinman, 2019). However, organizations may see
information as competitive advantage which makes
them less willing to share them (Saberi et al., 2019).
This is also the case with blockchain systems for SCM.
Usage of traditional tools and manual works are
still too common in supply chains. Emails are written
and sent manually; documents are printed and mailed.
The human resources might not be ready to use this new
technology. (Costa, 2018)
3.12. Management
Top management support is a key factor to
success of supply chain practices. However managers
may fail to have long term commitment to support
adoption of new technology and stick to sustainability.
Lack of awareness and commitment will challenge
resource allocations and financial decisions, while
blockchain is costly. Lack of the needed organizational
policies would make blockchain adoption hard, since
blockchain might transform organizational cultures.
(Saberi et al., 2019)
Aside from that, blockchain might make
changes to how the organizations work and collaborate
(Edwards & Chan, 2019). Automation and elimination
of intermediaries from blockchain will significantly
reduce human intervention, consequently reducing
jobs. However, adopting blockchain also means
requiring new roles, responsibilities, and expertise. All
of this will have to be managed. (Kamilaris et al., 2019;
Saberi et al., 2019)
4. Conclusion
This paper presented a systematic literature
review of open-access papers explaining blockchain
challenges with focus on its usage in supply chains
information systems. The papers were published in
2016 to November 2019 with addition of one scheduled
to be printed in 2020 but was already available online
by November 2019; most of the papers were published
in 2018 or 2019. The papers consist of mostly journal
articles, some proceedings, and few theses.
The challenges were classified into 12
categories: development and implementation,
performance and efficiency, sustainability and
scalability, adoption, law and standards, privacy,
requirements, data integrity, security, interoperability,
operational, and management. Among those, the top
three most discussed categories were development and
implementation, performance and efficiency, and
sustainability and scalability.
In development and implementation, the most
discussed challenge is how blockchain is immature so
there aren’t enough experts, knowledge, nor tools. How
complex both blockchain and the supply chain are is
also a big challenge, because everything has to be
considered and determined early. In performance and
efficiency, the main issue is how blockchain is very
resource demanding yet have low performance that
can’t compare to centralized systems. This high
resource demand is also the main source of issues in
sustainability and scalability; it’s unrealistic because
supply chains might be very wide and diverse. Aside
from that, the adaptability and extensibility of the
blockchain are issues too. In adoption, top management
and stakeholders might be too optimistic because of the
hype or, the opposite, too pessimistic because of
blockchain’s inefficiency, transparency, or disruption.
Either way, they need to have more understanding of
blockchain if they are considering it. In law and
standards, the main issue is that there is little to no
regulation for blockchain, which is both good and bad.
Despite having no specific regulation, legal issues still
arise regarding the data in the blockchain, including
privacy issues. Originally, data in blockchain were
meant to be transparent and that was fine because they
were just balances of anonym account, while in more
complex implementations, sensitive or confidential
data might need to be stored in the blockchain. Also,
anonymity does not mean privacy. Next, the high
requirements of blockchain is a challenge in itself and
might demotivate and restrict the adoption of
blockchain. Although data integrity is blockchain’s
strong point, the data might’ve been erroneous before it
gets into the blockchain and currently there is little to
be done for it except using automation to reduce human
errors. Blockchain is also considered a highly secure
system, but it also has vulnerability. Some attacks are
possible and there are some design flaws like the fork
issue. Quantum computing is also a risk to the
cryptography that forms the base of blockchain.
Interoperability is a challenge specially in supply
chains where it is needed but supply chains are so
diverse and there is lack of standards for blockchain and
supply chain interoperability. There is also operational
challenge where participants might not want to fully
participate or they’re unable to due to lack of skill.
Lastly, management is a challenge because of the
complexity and the changes that blockchain requires or
makes and the top management has to keep their
commitment or it will fail.
This research is primarily meant to be a warning
for those who want to jump into the blockchain hype in
SCM context, but it is also hoped to help this
technology mature by making those challenges be
known so, hopefully, researchers will try to solve them.
Therefore, it is hoped that there will be future
researches to solve those challenges. However, this
research didn’t determine the significance of the
challenges. Some of them might be insignificant while
researches should focus on significant challenges.
Therefore, research can also be done to determine the
significance of the challenges. Lastly, future researches
J@ti Undip: Jurnal Teknik Industri, Vol. 15, No. 2, Mei 2020 90
can further strengthen this topic by doing similar
research with more or better papers, such as ones from
reputable international journals, because the papers
used in this literature review were very limited. There
may be many challenges not covered here or more
details to add to the challenges already covered here.
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