Analyzing Blockchain's Impact on Supply Chain Management: A Report

This report provides a comprehensive overview of blockchain technology and its application in supply chain management (SCM). It begins with an abstract and table of contents, followed by an introduction that highlights blockchain's emergence as a decentralized solution for tracking and delivering goods. The report details both qualitative and quantitative research methodologies used in data analysis, emphasizing how blockchain enhances SCM through improved tracking, cost reduction, and international expansion. The main body discusses the implementation of blockchain by companies like Maersk, Walmart, and Alibaba, and its integration with IoT applications. It also describes the architecture of blockchain, including its modules and data storage layers, and explores its benefits such as reduced transaction costs, improved visibility, and enhanced connectivity. The report also addresses challenges like infrastructure limitations and regulatory complexities, and concludes by summarizing blockchain's potential to generate value in SCM through cost savings, increased efficiency, and improved data security. It also provides examples of companies and applications that have implemented this concept and added value in the market.

What value can Block Chain
Technology add to Supply
Chain Management?

Abstract
This assignment has given an overview about block chain technology and how this
concept has emerged in supply chain management. Also, it has discussed about qualitative and
quantitative research methodology and its use. Moreover, it has been described about how block
chain technology will add value to supply chain management and how it is been implemented in
it. The data analysis is been done by using both methods that are qualitative and quantitative.
Furthermore, the challenges and benefits of BT in SCM has been described. There are many
examples also given of companies who has implemented this concept and added value in the
market.

Table of Contents
INTRODUCTION...........................................................................................................................1
Research methodology.....................................................................................................................1
MAIN BODY..................................................................................................................................1
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Supply chain management is a centralised process of managing and handling of overall
supply chain operations. In present times, block chain model has emerged as new concept in it. It
has provided flexibility in breaking centralised process into decentralised one. This has provided
flexibility in tracking, movement and delivering of goods from one place to another. Now, data
can be stored and accessed easily. Moreover, there has been rise in business value due to
improvement in performance. Block chain development refers to collection of records through
which distributors are linked together. This concept is entirely based on cryptography. Here, data
is stored in servers and is transactions are done from one supplier to another.
Research methodology
There are usually two types of research methodology which is used in collecting data and
information from authentic and reliable sources. They are qualitative and quantitative. In
qualitative only theoretical data and info is gathered and analysed. It includes analysing theories
and concepts related to block chain and how it will add value in supply chain. By interpreting
theoretical knowledge it will be easy to evaluate role and use of block chain in supply chain. This
method is basically used with secondary research.
On the other hand, quantitative method refers to analysing facts and figures related to
block chain in supply chain. Furthermore, in this only numeric data and info is gathered which
makes it easy to understand future impact on supply chain. Here, this methodology is integrated
with primary research. In context to present study data is analysed by using both qualitative and
quantitative methodology.
MAIN BODY
In recent time block chain technology has highly been used in supply chain management. It
has helped companies in managing their overall operations and inflow and outflow of products.
According to Korpela, Hallikas and Dahlberg, 2017, block chain measure product quality during
transportation. Here, tracking is done to analyse whether product was placed at right place or not.
This also helps in identifying decrease or increase in value. Through this, costs are reduced and
movement of goods is maintained. Usually, this concept has been implemented in food products.
It has allowed companies to expand at international level. Due to technological advancement it
has become easy to manage and operate supply chain management. Moreover, development of
IOT applications and its integration with SCM has allowed businesses to track products at each
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step. Many new things are been added in products such as chips, barcodes, sensors, etc. which
has eased in tracking their movement. The concept of block chain emerged from bitcoin in which
the transaction was done without having any intermediary. The trading and transactions was
done in form of crypto currency. It included a network and data was stored in blocks. The info
was verified by majority of suppliers.
In view of Jabbari and Kaminsky, 2018 block chain has enabled in maintaining integrity and
reliability of data. Funds are been easily transferred with help of intermediates. An example can
be taken is of bitcoin where currency was transferred directly from one account to another. Also,
smart contracts are been developed in order to make transactions in effective way. It contains a
unique address within a block chain. It is executed independently and automatically in a
prescribed manner on every node in the network, according to the data contained in the triggered
transaction. Many companies have implemented this concept in their supply chain. Maersk
shipping company track their products around the world. They measure certain attributes such as
temperature, GPS, other conditions, etc. it was useful for them in reducing a lot of paperwork.
As elucidated by (0 it is expected that in 2030 the block chain technology market will
exceed by $3.1 trillion. In September 2017, market value of digital currencies exceeded $135
billion. This was due to emerging of bitcoin in trading. Big companies like Walmart and Alibaba
have also implemented this technology. Through this, they are able to operate and track products
all over the world.
A multi agent system helps in solving complex problems in various applications. It
provides solution to a logistic problem. Another application of this is IOT. It has provided a new
model in which there is use of integrated applications and software. With advancement in
technology supply chain is integrated with various applications and software. In a report of
Blomqvist, 2018., it has been stated that 62% of suppliers are engaged in creating business
value. BT is a process in which peer to peer IT networks has been designed. Here, transactions
are done in digital mode. The transactions are been controlled by banks, financial agencies, etc.
For this certain rules and regulations are formulated. The architecture of block chain is a mesh
network which is decentralised. It contains several layers which govern networks. There are five
modules included in it which is as follows :-
 Data source module – Here a block is created that is distributed database. It is source or
point of origin of product.
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 Transaction module- This module allows in verifying transaction and writing a new
one. Each block consists of different transactions.
 Block creation module – it records and stores transaction in a file named as block. No
new block is created in P2P network.
 Consensus module- Which confirms and validates transactions using the proof of work.
 Connection and interface module- which facilitates web interfaces among users
including ones without coding, technical, or legal skill while synchronizing and
integrating all IT platforms, software, and algorithms needed for block chain applications.
It also helps in tracking data of input and output that makes it easy in measuring progress.
As elucidated by Kouhizadeh and Sarkis, 2018, in block chain, each supplier is connected
in a network by a computer. They hold duplicate copies of overall block chain derivatives
simultaneously. Through this, they can access information instantly with each other. All data is
stored in a database in three layers. The first is in cryptographic way. In this there are two keys
that are private and public key. A private key contains id and password of supplier whereas
public key is accessed by all suppliers in a network. Private Key helps in protecting info and
preventing others to access it. There are two types of block chain network that is public and
private.
As said by Wüst and Gervais, 2018, block chain helps in eliminating middlemen and
increases efficiency. Also, it enables in giving real time solutions. As said by Dallasega and
Sarkis, 2018 the supply and block chain models are completely different. The function
performed by them differs. Public networks are used by companies in retail, hospitality, etc.
whereas private are used in banking, telecommunication, etc. Hackius and Petersen, 2017, said
that in block chain network it is easy to identify which supplier left and who joined the network.
There are many other benefits of implementing block chain in SCM. The use of cryptography
has benefited to great extent in securing of data. In addition to it, the decentralisation of supply
chain enables in smooth flow and processing of data and info. This means that if there occurs any
failure or issue in one computer it will not affect the entire network. The overall network will
work in smooth way. Another benefit of block chain is as data is stored in blocks, there is proper
and sequential flow of info. It means that at any point of time if one block is lost in network then
by viewing previous transaction missing block can be recognised. It can be accessed and
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recovered easily. In this previous and current owner of that particular block can be identified.
Block chain technology can generate value in SCM practices as follows :-
 Reduced transaction costs/time resulting from better-preserved block chain platforms that
do not necessitate third-party involvement.
 Visibility improvement across the supply chain, a result of increased transparency gained
via open ledgers that any person can see
 Improved connectivity among trading partners through the integration of digital and
physical worlds which includes a shared visibility of transactions and information flows
across the supply chain
However, the most important aspect in block chain is that database can only been updated
on basis of two things. One is when correct credentials are applied that is both private and public
key are applied. The second is when majority of suppliers in network verify those credentials.
Thus, in this way entire database is secured. The blocks which contain data are transferred in
cryptographic way. It contains details of products which help supplier in identifying it.
But on contrary Ellram, Bals and Tate, 2018, stated that block chain is not as effective
as traditional SCM. This is because it completely works in decentralised way. In that products
can be tracked online and easily. The businesses are able to evaluate performance of each
supplier on basis of goals and objective set. Also, it is easy to identify areas where improvements
are required and changes are made. Besides this, it is very complicated task to implement a block
chain network. Moreover, it is important to manage and maintain integrity of network otherwise
it can result in failure. There are many challenges BT can impose on businesses. First is due to
lack of organisation IT infrastructure, it may be difficult to implement it. This situation exists in
countries that are not developed and is not having advance technology. Second is fraudulent IP
address of parities may manipulate activities of block chain. Third is due to complex global
environment there are various laws and regulations which has to be followed. So, any change in
laws may highly impact on overall block chain implementation. Fourth is BT built by IBM only
allows limited number of participants to have access of it. In this a hacker can easily target
specific participant and access data.
Abeyratne and Monfared, 2016, said in support that block chain works effectively in an
environment where transparency is required. It also reduced complexity in supply chain
operations. The decentralised way makes it easy in trading and doing financial transactions. It
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consists of high storage capacity in which data can be stored in segregated way. However,
information such as driver license, details of products, etc. are stored in incorrect way, than it
automatically gets verified and corrected with help of public and private key. An example can be
taken is by using block chain network UN delivered services to Syria. Here, they collected
biometric data of people and ensured that first aid services are provided to right people in an
effective way.
According to Nowiński and Kozma, 2017, a block chain will be able to generate value in
supply chain through many aspects. First is in terms of cost small transactions can be done easily
without paperwork. It can be done through digital signatures. Also, IOT will be useful in tracking
of records, detecting any errors or issues. The speed of doing transactions will increase. This will
be because of securing and validating of records and efficient communication. However, risk of
loss of data and info is reduced. In block chain the data and info of individual that involve is
validated. Moreover, confirmation of identity reduce risk of cyber crimes. The tracking of data
and info through smart devices and applications helps in detecting errors. Generally, in food
sector it has delivered high value in SCM practices. It has provided flexibility to consumers who
are more concerned about suppliers from where products are been delivered. As stated by Maull
and et.al., 2017, through this it helps in implementation of strategies in SCM and attaining goals
and objectives.
A MAS model of block chain in agriculture sector is been developed. It can be
implemented in agriculture which will help in providing some crucial features. Here, products
can be tracked from point of origin to its delivery. Alongside it, all transactions can be done in
full proof manner and storing of data and info. The advantage of using this model is all products
are tracked and traced. With this consumers can be given info about origin of products, where
they are recycled and used first. In this way, consumer satisfaction is gained and they are
retained. Now all members of the supply chain save all their transactions in the block chain. This
enables a higher security in the transactions. The data is decentralized and each member can read
important data for its operations in the block chain. For instance, the producer can view the
product info of the process or and the pickup details of the transport provider.
It has been analysed that BT will transform overall operations in SCM. Through this, it
will be easy to track movement of products till it is delivered. Also, creating network will bring
in flexibility in doing transactions. It will allow suppliers to verify data and info of each block or
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product. The manual process will be replaced by automatic one by simplifying processing of data
and info. The company will be able to gain trust on participants by eliminating intermediaries. In
addition to it, many issues such as privacy, integrity, etc. of data and info will get solved. The
process will get simpler, easier and faster. Thus, in this way block chain technology will generate
value in SCM in the future.
CONCLUSION
From report it has been concluded that block chain in supply chain has benefited business
to a great extent. It has enabled in maintaining product value and creating network of suppliers.
Moreover, overall process of supply chain has been broken down. This has resulted in creating
network of suppliers and providing real time data and solutions. The BT will benefit business in
various ways. It will reduce paperwork in transaction that saves cost. Furthermore, use of IOT
will enable in tracking of records and detecting errors and issues. The transparency and integrity
of overall SCM operations will increase. It will enable consumer in agriculture sector to track
source of origin of products.
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REFERENCES
Books and Journals
Abeyratne, S.A. and Monfared, R.P., 2016. Blockchain ready manufacturing supply chain using
distributed ledger.
Blomqvist, L., 2018. Blockchain and Entrepreneurial Value Creation in the Textile Industry.
Dallasega, P. and Sarkis, J., 2018. Understanding greening supply chains: Proximity analysis can
help. Resources, Conservation and Recycling. 139. pp.76-77.
Ellram, L., Bals, L. and Tate, W. eds., 2018. Supply Chain Finance: Risk Management,
Resilience and Supplier Management. Kogan Page Publishers.
Hackius, N. and Petersen, M., 2017. Blockchain in logistics and supply chain: trick or treat?.
In Proceedings of the Hamburg International Conference of Logistics (HICL) (pp. 3-18).
epubli.
Jabbari, A. and Kaminsky, P., 2018. Blockchain and Supply Chain Management.
Korpela, K., Hallikas, J. and Dahlberg, T., 2017, January. Digital supply chain transformation
toward blockchain integration. In proceedings of the 50th Hawaii international conference
on system sciences.
Kouhizadeh, M. and Sarkis, J., 2018. Blockchain Practices, Potentials, and Perspectives in
Greening Supply Chains. Sustainability, 10(10), p.3652.
Maull, R. and et.al., 2017. Distributed ledger technology: Applications and
implications. Strategic Change. 26(5). pp.481-489.
Nowiński, W. and Kozma, M., 2017. How can blockchain technology disrupt the existing
business models?. Entrepreneurial Business and Economics Review. 5(3). pp.173-188.
Wüst, K. and Gervais, A., 2018, June. Do you need a Blockchain?. In 2018 Crypto Valley
Conference on Blockchain Technology (CVCBT) (pp. 45-54). IEEE.
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