Frequently recurring supply chain disruptions due to natural and manmade calamities are highlighting the importance of the supply chain ability to prevent, withstand, and overcome disruptions of all kinds. Blockchain technology (BCT), a key Industry 4.0 technology, with its inherent strength as an open-sourced distributed database with the immutability of transactions has the potential to transform traditional supply chain (SC) operations. In spite of the potential advantages of the BCT in the supply chain management (SCM) area, the adoption of this novel technology is still in its very early stages. This chapter per the authors proposes a quality function deployment (QFD)-based strategic decision support tool to determine the aptness of BCT adoption in a given SC context. In addition, the proposed tool also allows us to understand the maturity of BCT capabilities in addressing the key SC performance aspects. The application of the proposed tool is explained through a couple of illustrative examples.
TopIntroduction
Covid-19 pandemic has highlighted the vulnerabilities of the existing supply chain (SC) architectures and showed the need for a thorough rethinking of the supply chain design and operations to improve visibility and resiliency while not losing sight of the efficiency objective, which hitherto has served as one of the key supply chain performance metrics. Natural and manmade disasters, raw material contamination, ethical sourcing, geopolitical reasons etc., constitute some of the key causative factors to rethink the supply chain architecture to make it more robust and resilient.
Emphasis on the visibility, resiliency, and efficiency aspects in the context of supply chain management (SCM) is not new. Dual and multiple sourcing, enterprise resource planning (ERP) support systems, vendor managed inventory (VMI) systems etc., have been considered as some of the solutions for addressing the issues related to supply chain visibility, resiliency and efficiency. However, increasing potential for cyber based disruptions, black swan events such as the Covid pandemic etc., have refocused the need for coming up with robust solutions, which would improve the visibility of supply chain operations while simultaneously making them more secure, resilient to supply chain disruptions, and also improve the trust among the supply chain constituents. Also, it is to be noted that these objectives would be pursued not in place of but in addition to the traditional supply chain focus areas such as efficiency and responsiveness (Chopra and Meindl, 2004).
Blockchain concept, which originally came into prominence as an innovative technology to facilitate bitcoin transactions (Nakamoto, 2008) with its decentralized architecture (Francisco and Swanson, 2018), disintermediating ability (Queiroz et al., 2020), transparency (Tapscott and Tapscott, 2018) and more importantly, immutability of transactions (Seebacher & Schüritz, 2017) that it affords the network constituents stands out as a potential solution for improving the supply chain visibility, resiliency, and efficiency. Blockchain technology (BCT) is relatively a new technological frontier still gaining adherents in the area of SCM. Current research dealing with BCT and SCM integration is still in its early stages (Queiroz et al., 2020). Power industry (Kang et al., 2017), shipping and pharmaceutical industries (Kshetri, 2018), food safety and diamond sourcing (Clancy, 2017) etc., are some of the areas that offer examples in the application of blockchain technology. BCT is still the new kid on the block and has not attracted enough adherents to be considered as a mainstream technology as reflected in the few SCM applications in the available research literature. According to Batwa and Norrman (2020), BCT applications in the SCM area are limited to only SC traceability in the research literature.
Supply chain managers wonder if the BCT would be the right technology aligned with key performance drivers unique to their supply chain and how it compares with other alternative technology options. The fear of unknown, resistance to change and the lack of information on the cost of BCT adoption are other reasons why this novel technology has not attracted significant number of adherents. In spite of the apparent advantages of the BCT, it’s adoption in the SCM area is slow on the uptake. A blockchain largely depending on the high difficulty of the proof of work algorithm and on the large number of honest blockchain miners impacts the integrity of the blockchain, while at the same time a difficult proof of work limits the blockchain adaptability (Conoscenti et al., 2016). Also, public blockchains’ exposure to 51% attacks, in which a group of users control most of the network's computing power can potentially lead to the control of the blockchain ledger (Esmaeilian et al., 2020). Reader may refer to Saberi et al. (2019) for additional information on the challenges and barriers to be managed for BCT adoption and implementation in SCM.