Block Chain in Supply Chain
Block Chain in Supply Chain
Block Chain in Supply Chain
commerce 1
GRAD 695
Harrisburg, Pennsylvania
April 2019
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
commerce 2
Abstract
In the business environment, day by day new technologies which are evolving around the world
and are used in the different fields were applied to improve efficiency and performance. The digital
tools in the improvement of productivity played a key role beginning from the fourth industrial
revolution. In order to support the tasks of sending information and receiving information, different
kinds of technologies were used. Three factors that were kept in mind while exchanging the
information between the companies, they are trust, safety and speed. Many of the supply chain
professionals used Electronic Data Exchange (EDI) as the main technology to send and receive
information during a few decades. In the business environment, many of the aspects were changed
with the fourth industrial revolution and due to the Internet of Things (IoT). Productivity became
key, organizations and individuals must be more productive. For the business environment,
blockchain is one of the main streams. Bitcoin is the pioneer of the blockchain technology is the
argument by some of the researchers. To use the cryptocurrency as the exchange medium in the
market, financial companies joined forces to build a technological infrastructure. In the wake of
the global financial crisis, the first blockchain was conceived in 2008, and till now it has never
been hacked. Across a continuously and dynamic evolving landscape, supply chains are complex
networks of distant, separate entities which exchange goods, payments and data. Customer is
provided with the opportunity to understand how the supply chain works and how to get more
information about product traceability by taking advantage of the transparency and visibility
provided by the blockchain technology. To implement blockchain in logistics ns supply chain there
are some challenges which need to be addressed. This paper presents a theoretical review of the
impacts of blockchain n the supply chain and the current situation of the blockchain in the industry.
Technical architecture part that is applied in the blockchain is not covered in this paper. To apply
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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the blockchain in supply chain and logistics, the potential benefits were covered in the paper by
Table of Contents
Contents
Table of Contents .......................................................................................................................................... 4
List of Figures ................................................................................................................................................ 5
List of Tables ................................................................................................................................................. 6
Introduction .................................................................................................................................................. 7
Background ............................................................................................................................................... 7
Research Problem ..................................................................................................................................... 9
Research Purpose ...................................................................................................................................... 9
Research Questions ................................................................................................................................. 10
Literature Review ........................................................................................................................................ 14
Supply Chain............................................................................................................................................ 14
Characteristics of Supply Chain ........................................................................................................... 15
Barriers of Supply Chain: ..................................................................................................................... 16
Block Chain:............................................................................................................................................. 17
Concept Behind the Blockchain: ......................................................................................................... 18
Blockchain applicability in the supply chain: ...................................................................................... 21
Proposed Research Design and Methodology ............................................................................................ 24
Research Worldview ............................................................................................................................... 24
Research Design ...................................................................................................................................... 24
Literature Search ................................................................................................................................. 24
Research Approach ............................................................................................................................. 24
Qualitative Approach .......................................................................................................................... 24
Research Strategy ................................................................................................................................... 25
Data Collection ........................................................................................................................................ 25
Data Collection Method ...................................................................................................................... 25
Data Analysis ........................................................................................................................................... 25
Population ............................................................................................................................................... 25
Sample..................................................................................................................................................... 25
Proposed Schedule ..................................................................................................................................... 25
References .................................................................................................................................................. 27
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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List of Figures
Figure 1: Overview of the proposed concept, adapted from (Abeyratne, 2016) .......................... 18
List of Tables
Introduction
The main aim of this section of the paper is to introduce the background of the study conducted
to the reader of the paper. This section is divided into different subsections in which the following
four are worth mentioning, they are the background of the study in which a simple and crisp
introduction is given about the goals of this study by mentioning lack of the subject in the previous
studies with the introduction to blockchain technology and supply chain management. The next
subsection is about the research problem in which the importance of implementing blockchain
technology in the supply chain is stated. The next subsection which is research questions explains
more about the hurdles of the supply chain in all means like the trust, collaboration of chain etc.,
and mainly focuses on how blockchain technology can help to impact all these hurdles. And some
of the terms were defined which are used in the study and finally the limitations and delimitations
Background
To achieve better performance and to reduce the risks, the flow of the raw material procured,
goods manufactured, and the services provided must be managed, this management of all the
mentioned is the basic idea behind the concept of supply chain management (Tan, 2001). To
improve themselves and to improve the overall performance of the supply chain all the companies
need to work more closely together because of the fast-changing economy (Claudine Antoinette
Soosay, 2015). There are some proven strategies which impact the overall performance of the
company like the supply chain collaboration by enabling the trust in the chain (Horvath, 2001).
Supply chain collaboration helps companies in achieving various advantages like cost reduction,
service performance improvement and adapting the changes rapidly (Chi-MingTsou, 2013). One
of the main problems, this study is mainly pointing is the status of how blockchain is implemented
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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in the supply chain management to address the lack of trust and transparency in the process of
sharing the information among the business partners in supply chain management. These problems
Blockchain technology had gained a lot of attention after it was first ever introduced as bitcoin
which is the first block chain application. When we consider the bitcoin, it is just a small
application area for the technology in the cryptocurrencies. The technology that can change the
cultures, supply chains and the industries is considered as blockchain (Underwood, 2016). Without
the requirement of any kind of brokers, blockchain helps in transferring transactions safely
between two or more parties in a digitally decentralized ledger (Swan, 2015). In supply chains,
blockchain applications are considered as the solution to trust issues. To stay competitive in the
market, enthusiasts of the decentralized applications are promoting early adoption of the
technology for companies (Kshetri, 2018). At the early stage itself, many companies like Walmart
in cooperation with IBM and Maersk had started the planning for the implementation of the
blockchain in their supply chain as a pilot project to gain the benefits of the technology in the
supply chain (Lohr, 2017). Soon the full version of the implementation of the technology in the
companies supply chain will be made ready and it is assured by both Walmart and Maersk (Lohr,
2017). Providing the solutions for the problem facing in the supply chain management is still in
its early stage, companies can have lot of opportunities in the future when the technology is further
Research Problem
Many of the researches were conducted to figure out the important factors that help in making
supply chain management more effective. Some of the researchers figured out that supply
chain collaboration was the major strategy which helps in improving the performance and gain
a competitive advantage (Simatupang, 2002). Many of the researcher’s state that the trust is
the major issue in the supply chain management as it requires sharing of information which
includes the sensitive data and the transparency between different parties (Ramanathan, 2014).
Any evidence of proposing a convincing technology which allows the sharing of the sensitive
information is completely safe and transparent manner which helps in enabling the trust among
the partners of the supply chain was not captured in the literature. Implementation of
blockchain in the supply chain is a kind of strategy which helps in achieving the transparency
in sharing the sensitive data. Researchers already mentioned the positive impact on the level
of trust in the supply chain by the implementation of the blockchain (Wong, 2017). Many of
the researches had concentrated on how blockchain shows its impact on the financial sector
and very less evidence was left on how the technology can impact the supply chains.
Research Purpose
As there is very less evidence left on the impact of the blockchain on supply chain and the
Way it can improve the trust among the partners in the supply chain, this study mainly focuses on
the impact of the blockchain technology on the supply chain and the present situation of the
blockchain in the supply chain industry. Various blockchain solutions like the usage of smart
contracts in the transactions will be discussed as the technology provides many other benefits for
supply chain other than the common use of the cryptocurrencies like bitcoin (Thomas Bocek,
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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2017). The working nature of the blockchain in the supply chain and its implementation in the
business fields will be studied. This study will explain the way in which the implementation of
blockchain can change the process of sharing the sensitive information among the partners and the
way how it can improve transparency and trust in the supply chain process. By studying the
impacts of the blockchain technology on the supply chain, this study helps in understanding the
potentials of this technology in the current situation. The impacts of the information sharing, and
the trust findings will be provided. Since trust is the major issue in the process of supply chain
management, the analysis will be done if blockchain can be the solution to increase the trust
between the supply chain partners. Information regarding whether the companies are ready to
adopt this new technology and their view regarding the opportunities provided by the blockchain
Research Questions
The above-mentioned research purpose had led to the below-mentioned research questions,
3. How much impact can the blockchain technology show on the way how companies share
4. What is the current situation of the blockchain the supply chain management sector?
Hypothesis:
The question that the researcher is going to study in this particular paper is related to the
effects of the block chain technology implementation in supply chain collaboration in e-commerce
industry. The problem that this paper is going to deal with is about the transparency in the supply
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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chain management collaboration in the e-commerce industry. My hypothesis regarding this study
is that, if the block chain technology was implemented in the supply chain process of the e-
commerce industry, then the chances for increasing the trust and transparency also increases. The
independent variables and dependent variables are studied throughout the research, the way e-
commerce sites had adapted the technology till date and how they are going to treat the block chain
when it comes to the trust will be measured by changing the independent variables like the benefits
of adopting block chain technology and the dis advantages of adopting it as the data which is
sensitive need to be shared, by analyzing the behavior of the dependent variables the research will
be concluded. The hypothesis mentioned in this study is completely testable by gathering the
information from different e-commerce personals and the employees of the e-commerce websites,
Definition of Terms:
In this paper the term block chain in supply chain is used to mean “the implementation of
block chain in the supply chain collaboration process of e-commerce websites. The term effects
of blockchain on supply chain collaboration means the advantages and disadvantages the e-
commerce companies which are implementing the supply chain collaboration process in their day
to day activities like getting the end product from the seller and listing them in their websites and
delivering the product to the end user through their logistics from the ware house. The term e-
Ethical Consideration:
According to (Fouka, n.d.), the major ethical issues in conducting a research includes the
informed consent, beneficence- do not harm, respect for anonymity and confidentiality and respect
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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for privacy, vulnerable groups of people. Coming to this research all the above mentioned were
taken care in the following manner, the informed consent is guided using the questions like are
you willing to participate in the research to the participant and after taking his permission only the
research was conducted. All the participants who are all participated in this research had
voluntarily participated in the research. Coming to the beneficence do not harm, no participant was
harmed and there was no potential harm in any manner when this research in considered. Respect
for anonymity and confidentiality was given priority while stating about the participant response,
any kind of anonymity raised by the participant was stated like either from reliable sources or from
a person who is familiar in the e-commerce trends requested anonymity. For respecting the privacy
of the information shared by the participants, statements which are required to be private was not
stated in the paper if requested by the participant. There are some groups of people who were fired
from the e-commerce companies because their unethical behavior or for some any other those
group of people were considered as the vulnerable group and those kinds of people were not
involved in the process of data gathering for this paper. Overall no unethical practices were
Limitations:
The limitations of this study majorly include the limitations related to the sample, this study is
conducted as a research study mainly based on the existing data available and the data that is
gathered from the samples(participants) who worked/working in the supply chain process of the
e-commerce websites in the neighborhood (New Jersey) of the researcher. So, the data that was
collected to conduct the research are majorly specific to a region. In future studies the researchers
can have a detailed study by collecting the data from different countries and from different
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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samples. This can help the future researchers to overcome the cultural bias and other traditional
marketing issues.
Delimitations:
The reason for the researcher to choose this study was to find the observations and to
become the part of the technical transformation of the traditional supply chain collaboration
process in the e-commerce industry. The delimitations of the study include the scope of the study,
the scope that was set by the researcher for this study was to use the e-commerce platform and
industry to conduct the study regarding the process of supply chain collaboration. The delimitation
also includes the technology and terms like the block chain technology was limited to this study
and the terms that were used as the data from the samples where like the trust, information sharing
and relation. Future studies can have different other kinds of technologies which helps to enhance
the e-commerce business and can have different data which are related to the supply chain.
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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Literature Review
Supply Chain:
A network of entities in which the material flows to develop a product which can be used
by the end user is the definition of the supply chain (Lummuns & Albert, 1997). Entities here
include suppliers who supply the raw materials, the transformers who use logistics to transform
the raw material, the distribution center through which the product developed is distributed, the
retailers who sell the product and finally the end customers who buy the product developed. TO
supply goods or services to a company or to end customer is the main function of a set of
interconnected companies which can be called as supply chain (Slack, 1999). To increase the
performance and to decrease the risk management of the flow of goods, services and information
in an effective manner is the general idea behind the supply chain management (Tan, 2001).
According to (Christopher, 1997), a leader company composes a set by including all the other
companies with whom they interact either directly or indirectly, by anyways through its customers
or suppliers either in upstream or downstream, starting from the point of origin like the raw
materials or basic services to the point where the end customer consumes the products or utilizes
the services.
To achieve the competitive advantage in the present world competition and the fast-
changing economy, industries and companies are not ready to take the risk by depending on their
own skills and capabilities instead they are mutually working with supply chain partners. Due to
the globalization that is impacting the industries and the existence of new and emerging
technologies, competition in the market made the role of supply chain very crucial over the years
and in fact it has become the main strategy to improve the performance of the companies and
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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sustainability of the companies in the competitive world (Claudine Antoinette Soosay, 2015). To
make better results to increase the profits and to gain competitive advantage two or more
companies work together to fulfil different kinds of requirements related to the development of the
To achieve goals mutually, benefits and rewards companies deal with each other based on
information exchange (Min, 2005). The successful supply chain can be established is more
dependent on openness and trust (Festus O. Olorunniwo, 2010). To improve the performance
maintaining the long-term relationships and developing joint business processes is crucial (Daniel
F. Lynch, 2009). Benefits of the supply chain in a huge number can be gained through long-term
relationships. To achieve the trust and to maintain long term relationship, companies are willing
to invest in different tools to exchange information and communication which helps in improving
performance (Ramanathan, 2014). All the companies in the chain must know about their strengths
and requirements and they must also know about their weakness (Peter M. Ralston, 2017). The
main aim of the supply chain is to gain the advantage of performing higher as a group rather than
completing the tasks individually (Simatupang, 2002). Sharing of the resources, skills and process
are helpful for achieving these improvements (Stanley E. Fawcett, 2012). Improvements in
performance can be related to the profits, process improvement or it can be competitive advantages
Different kinds of aspects are there which can influence the supply chain. According to
(Barratt, 2004), trust, exchange of information and mutuality, openness as the crucial
characteristics of the supply chain. Trust is the key role in maintaining the relationship among all
the team members to implement the supply chain and maintain its collaboration (Nesheim, 2001).
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Information sharing jointly and investing jointly are the collaborative activities which are fulfilled
by the committed partners in the supply chain who trust each other (Nyaga, 2010). Increasing
profits and occurring risks are more related to mutuality (Min, 2005). IN supply chain mutually
created knowledge helps in influencing the business positively (Scholten, 2015). Trust and
openness depend on the information exchange, so many of the researchers consider that as the
The link between information transfer and supply chain was marked as crucial (Wu I.-L.
C.-H.-H., 2014). Sharing of information and technology are closely related in the supply chain
process, companies need to deal with both the issues and advantages (Wu I.-L. &.-L., 2018).
Network resources and other information related to the company must be shared among the
partners of the supply chain (Wu I.-L. C.-H.-H., 2014). To achieve and control customer
satisfaction and to increase performance technology uses behaviors (Osterhaus, 2007). The less
transparent information that is shared with weak technology as the intermediate platform can
impact on the cost by increasing the costs and decreases the performance (Popp, 2000). Openness
and communication can also lead to successful supply chain and helps in gaining the advantages
of the supply chain in the company (Kumar, 2014). The methods that are used in the process of
communication must be clear and help the process of exchange of information and must give an
overall idea of supply chain processes (Frankel, 2002). To achieve the trust and to avoid the risk
of communication gap all the partners of the supply chain must be open and honest (Popp, 2000).
Different barriers are there to implement the supply chain and make the collaboration
possible despite supply chain offering many advantages for the organizations. Most of the
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companies will rely mostly on the new technology to implement the supply chain in their
businesses and they end up with the problems if that technology on which the company relied
doesn’t work out for applying the supply chain. The next barrier is choosing the correct partner in
the supply chain and start the process of manufacturing the product with the help of all the partners
in the chain. Thirdly, in some cases among the partners of the supply chain, there can be a lack of
trust (Ramon-Jeronimo, 2017). For a successful establishment of a proper supply chain, various
cultures of different organizations and different business structures must be brought into a common
Block Chain:
Blockchain is defined as a distributed, shared and encrypted database which serves as a
is underlying the bitcoin (Wright, 2015). According to (Nakamoto, 2008), bitcoin is a peer-to-peer
electronic cash system without any financial institution involvement which allows the online
payment from one party to the other party as a peer-to-peer electronic cash exchange. A blockchain
is both the network and a database which is secure and integrate which develop the transactions
based on the rules that are developed mathematically and enforces mechanically (Asset, 2016).
Combined with a system for “smart contracts” and a peer-to-peer distributed ledger forged
by consensus and other assistive technologies is the technical definition of the blockchain
technology which is based on Linux Foundation. Blockchain is a kind of technology which records
the transactions in a secure and permanent manner (Mougayar, 2016). Without any risk,
blockchain can save all the history of the transactions. As world wide web it is a kind of networking
technology which enables the decentralized exchange of data. In the most common manner,
blockchain can be treated as a distributed database a kind of ledger which persists a continuously
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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increasing transaction records which are maintained with timestamp and encrypted and are
organized as blocks which are linked internally with each other in the similar manner which is
adapted in Figure 1: Overview of the proposed concept, adapted from (Abeyratne, 2016).
A smart contract is a key technology behind the blockchain that allows the application of
blockchain in different kinds of application is the argument done by (Mougayar, 2016). Parties
information which is coded and uploaded to the blockchain makes this contract between them.
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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This contract doesn’t depend on the third-party authorities. The processes which are dealing with
such contracts are controlled automatically. After all the parties in the transaction completed their
respective duties, the clauses of the contract are executed. Considering the existence of external
dependencies, this function clears all the uncertainty related to the execution of contract conditions.
When the condition that is within the system are met certain predefined actions are
executed which are these smart contracts, in general, some simple computer programs. The
negotiation process and performance of a contract in the transaction is made easier and more
efficient with the help of smart contracts, the logic of the contractual clauses is clearly imitated on
the interface of the smart contract in general, securing the process of contracts and the reduction
of the cost which is related to the contracting is the main aim (Kakavand, 2017). The main feature
of the blockchain is a smart contract this helps in enabling the trustless transactions (Swan, 2015).
Over a digital network chain, this kind of transactions is considered as monitored, validated and
bilaterally enforced transactions. To gain the necessary approvals of the participant's multiple
digital signatures are incorporated through smart contracts. If there is a dependency of the smart
contracts on the real-time data, then to monitor and verify this real-time data system called oracles
will be implemented. When there are conditions within the system which are met, then there are
certain predefined actions with the help of the execution of computer programs which are
considered as the smart contracts. To modify the state of the ledger, the language of transactions
is required which is provided by the smart contracts. Anything related value can be deal with by
the smart contracts. All the partners who are part of the will be signing the smart contract after that
transaction was created, and all those transactions were placed into the block which is saved into
blockchain immutably as shown in Figure 2: Blockchain and smart contract Flow diagram
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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The blocks are created as per the business rules agreed on and the chain is created after the
creation of the blocks, all this process is done once the terms of a smart contract are executed
during a transaction. Each block of a transaction is verified digitally against the smart contract
which consists of clauses to assure the sharing of and visibility as a single version of truth (Road,
2018). A smart contract can provide the autonomy which can be developed by anyone by not
having any mediators such as lawyer and auditors. It can also provide efficiency as it removes the
considered as the potential to make it as best suited for supply chain according to the blockchain
trust accelerator (TrustAccelerator, 2018). The new entries or any changes in the ledger were
validated by the blockchain system which was lacking in the traditional centralized databases, this
validation was done using the cryptographic consensus mechanism which helps in eliminating the
mediators of the process. This helps in developing the trust between the parties in the transaction
which are not known to each other. In supply chains, the blockchains are explained as a solution
for the trust developed issues in the supply chains (Kshetri, 2018). Market enthusiasts are
encouraging the companies to implement the technology at the early stages to achieve a
competitive advantage over other companies. At an early stage itself, many companies like Maersk
and Walmart in collaboration with IBM had started to implement the technology in their supply
chain process (Lohr, 2017). And both the companies Walmart and Maersk had assured that the full
version was ready to implement in their operations across the organization soon (Lohr, 2017). The
Figure 3: Blockchain applied in SCM explains the farm to fork example on which the blockchain
is applied to its supply chain management starting from the farm to sending it to the end customer,
this example also includes the information added on the smart contract and the recorded blockchain
as well. The implementation and development of the blockchain solutions in the supply chains of
the companies are still at early, so there are a lot of other opportunities for the companies when
the technology is developed in the future (Nowiński, 2017). Different solutions were offered by
the blockchain technology to improve the collaboration between the partners of the supply chain.
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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background had proposed, the importance of related studies to future insights of developing
electronic commerce through promoting innovation in the management of logistics system of the
e-commerce (J. P. Qiu, 2002). Various factors like behaviors of the members who include the
manufacturer, retailer in the supply chain, adaption of the channel under the environment of the
electronic commerce environment are considered (Liu, 2015). By providing the proper guidance
and required recommendations, win-win development of e-commerce and the private logistics
providers is becoming tendency (Yang, 2012). With the advanced information technology
applications equipped or implemented with the e-commerce service platform can help and improve
the circulation of fruits and vegetables supply chain management (L. W. Bao, 2012). According
to (S. Kurnia, 2015), the organizations in the grocery industry supply chain collaboration adoption
of business to business electronic commerce technology is examined. From the capital and market
operations perspective and production, demand uncertainty perspective in the supply chain as the
Research Worldview
The research world view of this study is shaped up with the help of the researchers
known knowledge which the constructionism is and the researcher’s worldview which is
relativism. This relativism is defined as the interpretation of the researcher towards the reality and
this relativism is followed by the constructionism which consists of the known knowledge to the
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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researcher and ow the researcher gained that knowledge. Relativism is the theory behind the
ontology and constructionism is the theory behind the epistemology and these two are closely
connected and the theories behind them support each other (Easterby-Smith, 2015).
Other parts of the proposed research design and methodology need to be updated which will be
Research Design
Literature Search
In this section the work done regarding the collection and study of the literature will be
included.
Research Approach
The reasons for selecting the approach that is followed for this study will be highlighted
by the author.
Qualitative Approach
The way of using qualitative approach for this study is explained in this section.
Research Strategy
Different case studies were reviewed and finally a case study will be done by the author
Data Collection
Qualitative interviews were done as part of the research and it is the main chosen data
Data Analysis
The analysis method that was done on the empirical data was explained.
Population
Details of the population involved in the data collection process and in the research, process
Sample
The main target of this research is to find out the impacts and current situation of the
blockchain in supply chain management, the targeted sample for this research study are the
Proposed Schedule
In Grad 699 various improvements must be done to the current research by enhancing the
review of the existing literature and conducting the data collection and analyzing the data and
finally conclusions must be given by stating the gaps that were left over for further researches.
Running head: Effects of Blockchain on Supply Chain Colloboration in E-
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