2019 Sixth International Conference on Internet of Things: Systems, Management and Security (IOTSMS)

Blockchain Technology in Supply Chain

Management: Preliminary Study
Soha Yousuf, Davor Svetinovic
Center for Cyber-Physical Systems
Khalifa University
Abu Dhabi, UAE
Email: davor.svetinovic@ku.ac.ae

Abstract—Despite significant research, the supply chain man-
agement challenges still have a long way to go with respect
to solving the issues such as management of product supply
information, product lifecycle, transport history, etc. Given the
recent rise of blockchain technology in various industrial sectors,
our work explores the issues prevalent in each stage of the supply
chain and checks their candidacy for the implementation using
blockchain technology. The analysis is performed in terms of
the characteristics of trust and decentralization with respect to
forming a generalized framework. The main contribution of this
work is to create a conceptual overview of the areas where
blockchain integrates with supply chain management in order
to benefit further research and development.
Index Terms—blockchain, trust, decentralization, supply chain
management
I. I NTRODUCTION
Supply chain management (SCM) is a pivotal sector of an
organization and is described as the supervision and control
of all relationships (both upstream and downstream) between
manufacturers, suppliers and customers to deliver greater
customer value at an economical rate to the supply chain as a
whole [10].
SCM operational efficiency is measured through its perfor-
mance against the greater demand ambiguity, higher supply
risk, and increasing competitive intensity. Therefore, increased
transparency through better information exchange is impera-
tive [13]. This consistent need for transparent traceability of
goods due to inconsistent or unavailable data, lack of inter-
operability, and limited information on the product’s lifecycle
or transport history will continue to present a significant goal
for future supply chains [21]. These particular problems in
SCM have actually been addressed through the proposition
of applying blockchain technology that has shown to counter
transparency and security inefficiencies.
Blockchain technology is a distributed, decentralized ledger
allowing transparent direct peer-to-peer transactions between
participants without the presence of a third party mediator. The
use of this technology is currently setting a new foundation
for transparent and trustworthy vendor-supplier relationships
[19]. This is achieved through the use of immutable data
documentation, distributed storage, and authorized user admit-
tance. Another advantage of using a blockchain system is the
elimination of single points of failure due to the blockchain
system’s decentralized nature [1].
Blockchain has already demonstrated proof of its appli-
cability alongside RFID (Radio-Frequency IDentification) in
constructing an agri-food SC traceability system targeting
China’s food market safety issue [20]. Real-life applications
have also been implemented with the likes of Capgemini and
IBM collaborating to develop a model for managing containers
intelligently with blockchain technology [9].
A framework consisting of a set of constructs has been
developed that determines the character of blockchain in
achieving supply chain goals via a discussion of some use
case scenarios [11]. Despite the proposition of blockchain
implementation in supply chain literature, none have evaluated
its suitability and feasibility specifically, for the main stages
of the entire supply chain, given its many complex levels of
interactions. Therefore, the aim of this paper is to form a
generalized framework evaluating the suitability of blockchain
technology based on the blockchain’s innate characteristics
against the addressed issues for each supply chain stage.
II. P RELIMINARY F INDINGS
The research methodology is based on systematic paper
reviews to achieve the following: define the stages of a supply
chain; and define the blockchain characteristics “trust” and
“decentralization” as well as their definition within the scope
of a SC. A generalized frame of reference is formed addressing
the suitability of applying blockchain to the SCM stages via
extracting the necessary publications that link the blockchain
characteristics mentioned above to SCM issues. Finally, evalu-
ating the conducted study against literature that have proposed
solutions to “trust” and “decentralization” issues in SCM.
Based on the discussion above of the various strategies
proposed to solve SCM issues related to distrust, commitment,
transparency, information exchange, and efforts to mitigate the
BWE, most of the propositions still require an established
trust base, collaboration and consolidation of the information
technology and shared information, being cost-ineffective in
implementation, and addressing the information confidentiality
issue. On the other hand, blockchain technology serves to
address all of the above supply chain issues as well as the
shortcomings of the proposed solutions.
Lo et al. [12] demonstrated a similar study to this work by
proposing a generalized suitability evaluation framework to an-
alyze the fitness of blockchain implementation based on a list

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 2019 Sixth International Conference on Internet of Things: Systems, Management and Security (IOTSMS)
of criteria. Based on the traits of multi-party, trusted authority,
centralized operation, data transparency versus confidentiality,
data integrity, data immutability, and high performance, supply
chain was regarded as one of the use cases which qualify for
blockchain implementation. The study conducted here differs
from the mentioned work in that it assesses the applicability
of blockchain on each supply chain stage, specifically against
the characteristics of trust and decentralization as opposed to
assessing its suitability on the entire supply chain as a whole.
Despite the encouragement for the greater information shar-
ing for an improved supply chain performance, the resistance
towards this goal has been reiterated throughout the text
is linked with privacy issues. Blockchain can also ensure
increased privacy protection while still offering a trustworthy
platform via the use of digital identity to manage authenticated
individuals to access the data through the use of “smart
contracts” (a computerized transaction protocol that executes
the terms of a contract [8]). Furthermore, using a variant of
blockchain technology known as “permissioned blockchain”
can also help circumvent the privacy issues. Implementing
the supply chain stages on a permissioned ledger would
overcome the identified limitations of blockchain — low
throughput, price instability, and lack of authority, the eco-
nomic constituent (by limiting who amends the ledger) while
still benefiting from the advantages of the technology [14].
As for the weaknesses, for example, it is not convincing that
the relationship between blockchain trust and SCM trust is as
direct as assumed in the paper. It is evident that it is critical
to preserve the trust in SCM systems and the blockchain
technology is a good candidate but the implementation is
critical. However, we believe we first have to resolve the
critical lack of the connection between blockchain trust and
SCM requirements at the architecture and framework-levels as
we have done in our security-related work [5], [15], [16], [22].
Furthermore, the overall analysis of the systems must be done
in a comprehensive modeling or (semi-)automated fashion to
ensure full coverage of all the cases, e.g., [6], [17], [18].
III. C ONCLUSION AND F UTURE W ORK
Our work explored a preliminary framework to evaluate
the suitability of blockchain based on its characteristics of
providing increased trust and decentralization in the following
supply chain stages: order fulfillment, supplier relationship
management, manufacturing flow management and demand
management. The focus of the paper was on the main four
of the eight SCM stages since these processes were the
most researched in literature in terms of the problems faced
towards achieving effective supply chain performance. Each
supply chain stage was researched in literature in terms of the
problems which would cater towards the need for trust and
decentralization constructs in order to qualify for blockhain
implementation resulting in the proposed framework.
As part of the future work, we will conduct a formal system-
atic review covering the rest of the SCM stages to formulate a
complete framework that would serve as an effective reference
for academics to build upon as well as for industry to assess
whether implementing blockchain technology would suit their
supply chains. We will also construct a formal model, evaluate
it by applying it to Ethereum platform, and incorporate the
results within the context of our current work on blockchain
systems [2]–[4], [7].
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