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Introduction

Modern supply chains have recently witnessed tremendous changes, extending a formerly

operational function to an independent supply chain management (SCM) function [ ]. Supply

chain processes contain numerous logistics operations, including planning, implementing, and

controlling the effective flow and storage of goods, services, and related information from the

source to the point of consumption to satisfy customer requirements [ ]. Integrating and

streamlining these activities bring a competitive advantage in visibility, revenue optimization,

inventory turnover, supply chain speed, and efficient customer service delivery [ ]. However,

achieving these objectives has become challenging for Smith Company due to the complexities

of its supply chain management resulting from the organization’s operation in multiple

geographically dispersed locations in the United States. As a result, the organization has

experienced multiple cases of product quality issues and product delays over the last few years.

Our customer are also increasingly demanding genuine transparency on how and where

the products they consume are made. Regulators and consumer watchdogs are also on the

organization’s neck demanding us to publish more information about our supply chain systems

or face punishment. Furthermore, the organization’s supply chain management also face

numerous uncertainties and risks, such as data privacy leakage [ ], fraud and cybercrime [ ], and

counterfeit product identification. To overcome these issues, Smith Company needs to improve

its SCM through adoption of blockchain in its supply chain processes.  

Blockchain
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Blockchain can be defined as a digital, decentralized, and distributed ledger in which

transactions are logged and added in chronological order with the goal of creating permanent and

tamperproof records ( ). The decentralized ledger contains a chain of time-stamped blocks that

are linked by hashes using cryptography [ ]. Each block comprises a set of entries (e.g., data,

transactions, records) to be included in the network, and each new block is chained to the

preceding block. Once blocks are added to blockchain, they are immutable and have been

verified through sophisticated automation and governance protocols [ ]. Blockchain is built

using peer-to-peer (P2P) networks, and it necessitates agreement between all parties to validate

transactions. This eliminates inaccurate or potentially fraudulent transactions from the database.

Unlike conventional information technology (IT) platforms, blockchain alleviates the reliance on

a single centralized authority and facilitates secure and pseudo-anonymous transactions and

agreement among transacting partners [ ]. A specific blockchain solution, according to Rejeb et

al. [ ], is seen as a combination of various methods, technologies, and tools that addresses a

particular problem or business use case.

Case Studies

This technology was adopted by IBM Food Trust and Walmart. The IBM Food Trust

leverages the blockchain technology to create transparency among all supply chain partners from

farmer to the customer. The software as a solution (SAAS) provides the customer with a detailed

history and current location of the food product ( ). The technology allows the participants to

share the information securely. IBM Food Trust participants can trace the food item’s location in

real-time just by using the name of the food item and filtering the data. It integrated the

blockchain technology and the supply chain platform successfully ( ). Food trust provides a

superior level of security and tamperproof protection of the transactional data of food item
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products. Walmart, an American retail corporation has also adopted Hyperledger Fabric

technology to provide customers and employees visibility of the food item trace back to the

manufacturer with all detailed information

Additionally, the adoption of blockchain technology for streaming oil supply chain was

implemented by Abu Dhabi National Oil Company (ADNOC), a United Arab Emirates oil

company. ADNOC collaborated with IBM and launched a blockchain technology platform pilot

program to improvise supply chain management in the oil company. ADNOC introduced the

pilot program intending to improvise supply chain operations and improve business decision

making ( ). This integration resulted in increased delivery of reservoir rock, accelerated

decisions on a billion-dollar reservoir, and an increase in hydrocarbon recovery ( ).

Applicability

Implementations of blockchain have rapidly evolved over the past year. When the

technology emerged in 2008 only a handful of companies were doing pilots and early

implementations in supply chains ( ). Generally, the piloting and implementation occurred

primarily in the food industry. Now we see an explosion of both startups and established food

and technology companies taking on blockchain as the logical next step in the progression of

database technologies. Smith Company being one of the major distributors of seafood in the

United States, the company acknowledges that seafood is one of the most difficult food

commodities to track and trace due to its vast availability globally.

Additionally, tracing seafood back to its source can help ascertain whether it was caught

legally and authenticate product in the supply chain while also addressing food safety

contingencies. Because consumers are demanding more accountability from seafood suppliers
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(especially whether the product has been sustainably sourced and legally caught), the

organization should adopt blockchain technology in its SCM to enable consumers easily look up

the journey of the products they are consuming ( ). Leveraging on this technology will also show

the company’s sustainability practices and transparency in its SCM, thus, complying with the

regulators and consumer watchdogs’ demands and regulations.

Implementation strategy

As with anything new, employees should be trained on the best practices for the

technology and basic functionality. They should be knowledgeable enough about the critical

parts of the technology to get started in their work. An in-depth training program should be

designed prior to the launch of the new technology, with the training team getting a hands-on

experience with the technology before training other employees. This program should focus on

navigating the interface, saving work, and the core work functions. Hands on practice for

everyone during the training is important since it exposes the team to the new technology,

making it feel more familiar.

There will also be a learning curve when incorporating the technology into critical

workflows. Businesses should keep this in mind to allow employees time to get used to the new

workflow before focusing on productivity improvements. Allow the employees to initially use

the old systems in tandem with the new systems to keep business moving, then slowly phase out

the old system. Training sessions should encourage peer support to reduce feelings of

intimidation or fear that accompany change which decrease new technology user adoption.

During the learning process, the team can work together to help each other out when they get
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stuck and foster an environment where workers won’t be afraid to learn new features of the

technology on their own.

Training will continuously be required after the launch as the technology is better adapted

to the changing business landscape. Allowing employees to show their colleagues new features

and communicate with the planning team will lead to innovation and improved workflows.

Actions like automating tasks or creating universal templates across departments can reduce the

time needed to complete critical tasks and develop a professional look to customers.

Benefits of Implementation

As mentioned previously, blockchain creates a permanent record of all transactions that

occur in it, this enables products to be tracked from their point of origin, until the moment they

reach the end user, which gives an accurate idea about product life cycles, and gives real time

tracking of products along the supply chain []. Another benefit is how it improves food quality

management in many different ways, such as reducing food safety risks as each vendor in the

supply chain is recorded in the blockchain itself, as problematic foods will be identified and

rooted out immediately in the case of an outbreak, additionally, only the infected food would be

removed instead of the entire product [ ].

Another benefit is improving supply chain efficiency. By digitizing the supply chain in

blockchain projects, IBM consultants were able to reduce trade document workflow by 97

percent Enterprise-level smart contracts protect business privacy by preserving and managing

food data, and data standardization aids in the efficient management of supply chain data across

a complex network of linked stakeholders [ ]. Furthermore, blockchain can provide secure data

sharing among supply chain actors and improve data management [ ]. In the medium and long
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term, blockchain technology can assist distributors reduce the bullwhip effect and enhance

forecasting. In the event of an unforeseen issue, automatic quick measures in the supply chain

shorten lead times.

Furthermore, blockchain technology enhances inbound operations and encourages correct

inventory determination by facilitating visibility across the whole supply chain. [ ]. Blockchain

can either provide all its participants with open access to the records on the distributed ledger, or

only give access to a limited amount. Blockchain technology entails the creation of a digital

”token” that is linked to actual goods as they are generated. The item’s eventual recipient can

then authenticate the token, which can track the item’s history back to its place of origin [ ]. This

open sharing of information in the supply chain can result in advantages such as faster

paperwork processing, fewer direct communications, and more information for the final

customer and/or consumer. The credit of core businesses can be moved to the supply chain’s

end. The blockchain platform may be used to digitize and record bills including warehouse

receipts, receivables, and acceptance bills, as well as facilitate online pledges and transfers. Tier

1 suppliers or retailers split and transfer a bill given by the core firms to their suppliers or

retailers [ ].

Blockchain technology also provides substantial transparency in the supply chain. Based

on its coordination and integration skills, demand management is a critical component of supply

chain management. Demand management encompasses not only a collaborative approach to

demand planning in the supply chain, but also instruments for influencing demand and supply,

through which demand and supply in the supply chain are adjusted to maximize overall profits

[ ]. Certain information regarding independent demand will be accessible exclusively to supply

chain members with permission or to any supply chain member (and no one else can delete or
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edit records without the consent of others), depending on the type of blockchain. It comes down

to using the same database without having to rely on personal trust, because everyone can watch

and inspect the chain for themselves. By putting the trust issue aside, there is now a clear path for

boosting information exchange and commerce in supply networks ( ).

Blockchain could also be useful to manufacturers in reducing the number of stops that

their products make while on their transit to the final consumer. Supplying the final product to

the consumers consists of a complex process that requires a seamless and active collaboration of

manufacturers, suppliers, retailers, and consumers. The numerous intermediaries that the final

product goes through before reaching the end-user transform. This cumbersome process

fundamentally transforms a simple transaction into a lengthy process that consequentially limits

efficiency and increases the cost of the product (Zheng, 2017). Blockchain technology, however,

has the potential to eliminate the middlemen from the supply chain, thus making the process

more transparent. As a result, product prices are significantly reduced, and efficiency increased.

This is possible because blockchain-based eCommerce platform that involves cryptocurrency

leverage group consensus through distributed ledger networks that not only confirm payment,

but also track goods in transport, confirm delivery status, and track warehousing.

Additionally, blockchain technology helps in securing the cybersecurity space of the

manufacturing industry. The current digital landscape adopted in the manufacturing industry has

made manufacturers a soft target for hackers who exploit the security flaws and the companies in

order to commit theft or fraud. It does not pass a week without an essential story in the news

about data breaches in the manufacturing industry. The secure nature of blockchain technology is

ideal for the manufacturing industry because of its ability to maintain not only the financial

integrity of the financial industry but also secure the company's communication networks. For
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the prosperity of the manufacturing industry data, authenticity must be guaranteed to protect both

the company and its stakeholders. Adoption of blockchain technology will help in the realization

of data security in the manufacturing industry through its ability to impose a digital signature

called a hash. The digital signature attached to the data can either stored on a private or public

distributed ledger. The hash functionality incorporated in blockchain technology makes it

impossible for unauthorized personnel to alter the data because of the incompatibility between

the previously hashed and the tampered signature (Zheng, 2017).

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References

Pilkington, M. (2016). 11 Blockchain technology: principles and applications. Research

handbook on digital transformations, 225.

Yli-Huumo, J., Ko, D., Choi, S., Park, S., & Smolander, K. (2016). Where is current research on

blockchain technology?—a systematic review. PloS one, 11(10), e0163477.

Zheng, Z., Xie, S., Dai, H., Chen, X., & Wang, H. (2017, June). An overview of blockchain

technology: Architecture, consensus, and future trends. In 2017 IEEE International

Congress on Big Data (BigData Congress) (pp. 557-564). IEEE.