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Blockchain Technology Implementation In Supply Chain Industry


Task: Write a research report of about 3000 words focusing on one of the following topics
1. How use of Blockchain can provide benefits to Supply Chain industry?
2. How catastrophic risk such as CONVID-19 could impact Supply Chain industry?
The report should be well researched and written in accordance with APA referencing style.


Supply Chain (SC) in regards to the blockchain technology implementation relates to the management of the inventory functions of the business with the coordination of the suppliers and buyers. The SC industry specifically focused on the third-party logistics organization that assists businesses in their SC functions (Chod, Trichakis, Tsoukalas, Aspegren & Weber, 2019). It is the role of the logistics companies to facilitate the delivery of the raw materials from suppliers to the organizations and deliver final products from companies to the distributors, retailers and buyers. Blockchain (Bc) is an emerging technology that is continuously changing the aspects of SCM in organizations as well as in the functioning of the logistics companies. The present study focuses on the concept or basics of Blockchain Technology (BcT) along with the blockchain technology implementation in the SC industry. The benefits, as well as challenges of blockchain technology implementation in SC functions, are highlighted.

The concept of BcT
Hackius and Petersen (2017) have defined BlockChain Technology (BcT) as a distributed and decentralized ledger, which can record the source of a digital asset. For this reason, technology is also often referred to as the distributed ledger technology (DLT). The utilization of the BcT prevents alternation in the history of any digital asset and therefore enhances transparency in the use of cryptographic hashing and decentralizations. For instance, Google doc can be explained as an example of blockchain technology implementation. In Google doc, a document can be created and shared among others without copying and transferring which makes a sense of a decentralized distribution chain which promotes accessibility to the document to everyone. Moreover, the modifications in the document are also recorded by the technology in real-time that makes the changes transparent to all. In the opinion of Saberi, Kouhizadeh, Sarkis & Shen (2019), blockchain technology implementation is a revolutionary and promising technology in the digital era as it assists in reducing fraudulent activities and risks. Moreover, the increased transparency of systems wherein Bc is implemented can also be regarded as a scalable way for a range of issues.

It has been identified that blockchain technology implementation possesses three significant elements or concepts that are the blocks, nodes and miners. In the blockchain, technology blocks are composed of digital information and these include three major parts. For example, in transactions, firstly blocks possess information regarding the date, time and amounts for any transactions. Secondly, blocks incorporate data such as the participants in a specific transaction. Thirdly, blocks include data that help in distinguishing one block from another. The unique code involved in a block is termed as a hash. According to Blossey, Eisenhardt & Hahn (2019), inside a block, a transaction is placed by the miners that are special nodes. The computer systems in the network that holds the Bc are termed as nodes. For the purpose of business, Bc is being used for different internet-based and computerized applications. Furthermore, it has been identified that by implementing BcT organizations are becoming independent as they do not have to rely on third-parties for the verification of different attributes. Bc is being implemented for different purposes such as government operations, cloud storage, charity, intellectual property maintenance, voting, SCM and product history, transaction support. However, the usage of blockchain technology implementation has created a revolutionary movement in the SC industry.

Bc adoption in SC functions
Concerning the benefits of BcT, it is being implemented in the SC industry at an alarming rate. According to Batwa and Norrman (2020), Bc is an important method to manage the SC functions as it utilizes a distributed public general ledger. For integrating the technology in the SC in a successful way, organizations have to interpret the possible advantages as well as disadvantages. Therefore, for implementing Bc in the first step the organizations are required to identify and evaluate the possible risks. In the second step, mapping of the weak points can be done so that application of the Bc solutions can be done. However, in relation to the blockchain technology implementation in the SC, Tian (2016) has stated that the SC organizations must ensure the application of the solutions to few weak points in the first attempt and analyze the results before fully attempting to apply the technology on the overall SC. The organizations are also needed to get accustomed to the new technology and train the employees on operating the technology.

In recent research Gammelgaard, Welling & Nielsen, (2019) have explained that the emerging blockchain technology implementation has a breakthrough potential but to achieve a return on investment from its application in SCM, organizations are needed to conduct a careful evaluation of the suitability of the technology for their SC network. To implement BcT, organizations need to identify the requirement for traceability in their SC network, the characteristics of the materials and profile of the production, environment of technology, layers of SC and the business partners, and the regulation for the technology.

Bc adoption for SC transparency
Transparency has become one of the important demands of the customers especially in the case of the food products. Based on the transparency of the SC information in businesses the customer purchase behaviour is likely to change. In recent research conducted by Chen, Yan, Tan, Liu & Li (2019), the researchers have argued that blockchain technology implementation has the potential or capability to enhance the transparency of the SCs in a more effective way than the traditional SC monitoring processes. In a recent report of Deloitte, it has been explained that Bc can be utilized for making improvements of the traceability as well as transparency of each and every material across the SC.

Moreover, the report emphasized that blockchain technology implementation would be valuable in specific situations, such as when the different parties involved in the SC do not want to share information; organizations can verify activities without the involvement of a central agency of trust. According to Di Vaio and Varriale (2020), the maintenance of transparency is important in the SC industry as the suppliers, as well as the organizations, demand more transparency from the logistics companies. Moreover, in recent years, the complexity of the SC has increased. The SC industry required inexpensive and effective ways through which they can trace different materials involved in the SC.

It has been identified that blockchain technology implementation can enhance the visibility of the materials such as raw materials, final products, intermediate products throughout the SC process in which the companies can effectively decrease the administration costs. Furthermore, Francisco and Swanson, (2018) stated that blockchain technology implementation allows SC companies to authenticate materials against products that do not fit the expectations of the customers. One of the major benefits that is offered by the technology to the SC industry along with increased transparency is the lowered risk of fraudulent activities such as the grey-market trading.

Based on the records of Organisation for Economic Co-operation and Development, in one trade year, counterfeit goods account for more than $450billion. The increased transparency in the SC can help companies to control the outsourced contracts in a better way. However, there are some other technological solutions open for the SC industry that can allow benefits like transparency such as cloud-based solutions, current ERP systems, and RFID (Wang, Han & Beynon-Davies, 2019). With BcT, the organizations that provide logistics services to other organizations such as manufacturing companies or the retailing companies can improve the management of their logistics functions with increased transparency as well as accurate end-to-end tracking of the products.

According to Gurtu and Johny (2019), with blockchain technology implementation it has become possible to digitize the different physical assets and develop an immutable and decentralized record of various transactions across the SC based on which it becomes easy to trace the assets starting from collection of raw materials to final delivery of products to the customers. As per the explanation of Çolak, Kaya, Özkan, Budak & Kara?an (2020), the visibility of the products and materials are not only increased toward the businesses but also the customers. The corporate reputation of the organizations in the SC industry can also be increased with enhanced transparency with BcT. More customers and business partners would be able to trust the SC companies such as the logistics service providers. The reduced SC malpractice can further contribute to a reduced level of potential public relations risks.

How blockchain technology implementation transforms Digital SC?
Digital SCM and its integration have become increasingly dynamic in the SC industry. Digital SCs are offering organizations to encounter a greater competitive advantage (Mann, Potdar, Gajavilli & Chandan, 2018). It has been identified that in transactions within the digital SCs, organizations are currently executing data and process integration with the help of trusted third parties that generally occurs through the finance services of banks. BcT, in this context, offers organizations implementing digital SC transformation to change the perspective of data integration through third parties. The major benefit that is offered by the blockchain technology implementation in the digital SC is the public ledger of transactions and the utilization of public key infrastructure for notifying counterparties regarding transactions that can be executed. In recent research conducted by Korpela, Hallikas & Dahlberg (2017), it has been emphasized that the smart contract platforms, security, ledger and the software connectors allow the organizations with tools that can help in building flexible and cost-effective digital SC networks. In similar research, Apte and Petrovsky (2016), has explained that the transactions in the digital SCs can often need financing services that must be integrated into its network. In such cases application of the BcT in the digital SC can offer greater benefits to the organizations in the SC industry.

Blockchain technology implementation facilitating origin tracking
The SC functions in the food industry, as well as the retail industry, have encountered problems regarding the outbreaks of the food borne diseases. However, with the traditional SCM attributes it is becoming harder for these organizations to track the origin of food contaminations or bad ingredients. As opined by Sternberg and Baruffaldi (2018), for mitigating such issues, it is important to trace from which organizations or suppliers have contaminated materials or the bad ingredients been delivered. On the other hand, tracking the source of contamination has become essential for restoring the confidence levels of the consumer and addressing the food safety legislation.

BcT allows the logistics companies as well as the organizations and suppliers to digitize every element they deliver to their partners with a unique code based on which the origin of the products or the materials can be easily traced. Therefore, the SC functions in the manufacturing, food and retail industry have become a measure to ensure the safety of their products (Leng, Bi, Jing, Fu, & Van Nieuwenhuyse, 2018). For example, the renowned retail organization Walmart has utilized BcT by partnering with IBM in the year 2016 to track the origins of the food items. In this case, Bc is used for augmenting the existing IT systems of the SC partners through a super ordinate and transparent ledger that is able to trace the movements of the food items across the SC network. Therefore, with the blockchain technology implementation, tracing the contaminated food items has become a matter of seconds for Walmart. In recent research, Rejeb, Keogh & Treiblmaier (2019), have described that blockchain technology implementation can be also used for the reduction of the food waste along the course of the SC network by utilizing the available information on the shelf life of the food items as a parameter for the optimization of the SCs.

Benefits of BcT in sustainable SC
Concerning BcT, Dubey, Gunasekaran, Bryde, Dwivedi, & Papadopoulos, (2020) has mentioned that these are transparent, immutable distributed and trustworthy databases that are shared by a community and can influence the sustainable SC networks. The major focus of the BcT in the sustainable SC is to track potential social and environmental conditions that may create health and safety as well as environmental concerns in organizations. For instance, in China, blockchain technology implementation is initiated in the carbon asset market and this technology helps organizations to create carbon assets in a more effective way aligning with the Agreement of the country regarding carbon emission. As per the opinion of Chod et al. (2019), a SC based on Bc enables SC companies with a better assurance of fair work practices and human rights. For example, a transparent record of the history of the product provided by the BcT can assure the consumers that the products are purchased by the company, from sources that conserve human rights and are, therefore, ethically sound.

In recent research, Hackius and Petersen (2017) have stated that blockchain technology implementation can help to support the collection of data, storage and management of the data and maintaining significant information regarding the products and SC. Other attributes of the technology such as the openness, neutrality security and reliability for all the agents within the SC network and the stakeholders also contribute toward making the SCs sustainable. Moreover, it has been identified that Bc is able to aid the SCs for the easier detection of counterfeit products and unethical suppliers as only authorized actors can record the information.

Bc to enhance the economic efficiency of the SC industry
In the context of economic efficiency, blockchain technology implementation is beneficial for the organizations as well as its SC concerning various business dimensions that impact on their economic performance. As per the statement of Saberi et al. (2019), Bc result in disintermediation in SCs wherein fewer tiers result in time reduction and transaction costs that eventually reduces the waste in SC functions. The researcher has further emphasized that with the help of the BcT, every modification in the data can be instantly shared that allows potential rapid deployment of goods and processes and reduces the human errors in transactions as well as time. Blockchain technology implementation is identified to contribute to making the SC sustainable by transforming the information immutable and stable. Another important benefit of Bc is that it can prevent government organizations and corrupt individuals from seizing people’s assets in an unfair way. Companies within the SC industry such as the logistics service providers can block nefarious agents as well as accuse corrupt individuals responsible for the individual and social misdeeds within the SC functions.

Based on BcT, along the SCs organizations can ensure better assurance of human rights as well as safe work practices. In relation to sustainable SCM, Blossey et al., (2019) have explained that processing of data relating to green products has become very difficult due to the unavailability of information to verify. In this context, the blockchain technology implementation can be done for ensuring that the green products delivered by an organization are friendly to the environment. For this purpose, it is important to implement Bc in the manufacturing process along with the SC network so that the verification of the product as a green product can be done. In relation to this context, Batwa and Norrman (2020) have mentioned that sustainability in SCs can be further promoted by BcT as it can trace the carbon footprint for each and every activity in the SC functions. Moreover, the technology also assists the organization within this industry to determine the carbon tax amount that the organization is needed to pay to the government effectively.

Current limitations and potential risks to implement Bc in SC
Although BcT is identified to have multiple beneficial solutions to the problems in the SC industry, it is still a nascent technology. According to Tian (2016), the improvements that are needed in the BcT concerning its limitations are still being discovered and developed. The major limitations of blockchain technology implementation in the SC include a range of integration concerns and concerns regarding its control privacy and security. In the opinion of Gammelgaard et al. (2019), for implementing the Bc solutions in the SCM, organizations are required to make significant changes to or to completely replace their existing systems. In order to mitigate this particular limitation, organizations are required to develop a long term plan that can easily recognize the transition requirements for systems, for supporting the adoption of BcT in SCM. Blockchain technology implementation in the SCM can be negatively impacted by cyber security breaches that can hamper the control over the SC data and increase risks regarding the privacy and security of data (Chen et al., 2019). Concerning this particular limitation, organizations in the SC industry are recommended to select a Bc solution partner in a careful way and work elaborately for ensuring the fulfillment of the privacy and security needs.

From the above study it can be concluded that the blockchain technology implementation in the SC industry offers multiple solutions to different problems. The blockchain technology implementation not only helps in recording date, price, quality, location and certification-related information regarding each element involved in a SC but also enhances the ability to prevent fraudulent practices and minimizes the overall operating costs of the businesses. Moreover, benefits like transformation in the digital SC and development of a sustainable SC are some other benefits that are proposed by BcT for the organizations in the SC industry. Moreover, the findings of the study indicate that blockchain technology implementation can enhance the position of the logistics service providing companies as a leader in responsible logistics services.

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Batwa, A., & Norrman, A. (2020). A Framework for Exploring BcT in SCM. Operations and SCM: An International Journal, 13(3), 294-306.

Blossey, G., Eisenhardt, J., & Hahn, G. (2019, January). BcT in SCM: An application perspective. In Proceedings of the 52nd Hawaii International Conference on System Sciences.

Chen, S., Yan, J., Tan, B., Liu, X., & Li, Y. (2019). Processes and challenges for the adoption of BcT in food SCs: A thematic analysis. iConference 2019 Proceedings.

Chod, J., Trichakis, N., Tsoukalas, G., Aspegren, H., & Weber, M. (2019). On the financing benefits of SC transparency and Bc adoption. Management Science, Forthcoming.

Çolak, M., Kaya, ?., Özkan, B., Budak, A., & Kara?an, A. (2020). A multi-criteria evaluation model based on hesitant fuzzy sets for BcT in SCM. Journal of Intelligent & Fuzzy Systems, 38(1), 935-946.

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Mann, S., Potdar, V., Gajavilli, R. S., & Chandan, A. (2018, December). BcT for SC traceability, transparency and data provenance. In Proceedings of the 2018 International Conference on BcT and Application (pp. 22-26).

Rejeb, A., Keogh, J. G., & Treiblmaier, H. (2019). Leveraging the Internet of Things and BcT in SCM. Future Internet, 11(7), 161.

Saberi, S., Kouhizadeh, M., Sarkis, J., & Shen, L. (2019). BcT and its relationships to sustainable SCM. blockchain technology implementation International Journal of Production Research, 57(7), 2117-2135.

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Tian, F. (2016, June). An agri-food SC traceability system for China based on RFID & BcT. In 2016 13th international conference on service systems and service management (ICSSSM) (pp. 1-6). IEEE.

Wang, Y., Han, J. H., & Beynon-Davies, P. (2019). Understanding BcT for future SCs: a systematic literature review and research agenda. SCM: An International Journal.


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