1.1 Research background
In today’s business world, effectively manage the supply chain has become even more complex than ever due to several factors such as globalization, shorter product life cycles, outsourced manufacturing, longer supply chains and tighter product margins among oth-ers (Hidjaja, 2018). These challenges are disrupting current businesses and the relation-ships between supply chain partners, which can result in supply chain inefficiencies, higher costs, low quality and poor customer service.
Nowadays, the customers’ expectations are continuously increasing and varying, which leads in shorter product life cycles and more change in the market demands. This situation is adding pressure to manufacturers, who need to constantly working on adding more value to their offering and service responsiveness, at the same time prices must be com-petitive (bossard.com, 2018). This means that companies have to redesign and optimize their value chains in order to stay competitive and flexible to meet market demands (Berrios, 2014). Due to these claims, the globalization of the supply chains appears as a business strategy to achieve a competitive advantage by lower costs even if the delivery times take longer (Leung, 2018). This approach is based on the reallocation of manufac-turing to low cost countries in an effort to reduce direct and overhead costs and to mini-mize taxes (Berrios, 2014). Moreover, the globalization brings considerations that repre-sent a challenge in supply chain management, such as lack of transparency, breakdowns in product flow, quality issues or environmental and social considerations (Harrison, et al., 2008).
Within this context, the interdependence amongst supply chain partners is growing, re-quiring new levels of adaptation in order to achieve long-term mutual benefit. Despite the importance of the integration and coordination throughout the supply chain to obtain its effective management, there is still far from achieve (Harrison, et al., 2008). The trans-parency of information upstream and downstream is one of the main problems current supply chains face. The lack of mutual trust between supply chain members makes them to be reluctant to share required sensitive information, which directly affects the respon-siveness and processes efficiency throughout the supply chain. In addition, in most of the cases the information is not still appropriately communicate and shared among parties by current systems due to paper-based processes, information siloes instead of having com-mon information systems, outdated information, reconciliation processes, etc. These in-efficiencies in communication and data sharing not only make it more error prone, but also facilitate the counterfeit and fraud along the whole supply chain.
In the last years, a large number of technologies have arisen to facilitate the digitalization of current supply chains, such as Internet of Things, Big Data, or robotics. The digitali-zation helps to breaking the existing barriers in supply chains, and enables a more inte-grated ecosystem while enhancing the supply chain visibility. In addition, it also helps to improve the efficiency of certain supply chain processes, boosting the competitive ad-vantage in that supply chain. One of the technologies with more potential to improve and transform current supply chain management by its intrinsic features is the blockchain, which can increase the efficiency and transparency of supply chains.
1.2 Purpose of the study and research questions
Given the existing challenges that supply chains face in today’s business environment, this paper aims to explore the application of blockchain technology in current supply chains in order to enhance supply chain management.
Despite the vast amount of literature and reports about the supply chain management and slightly more limited about the blockchain technology. There is a need for a clearer pic-ture of the potential use cases of this technology in supply chains and its impacts in supply chain management. Moreover, it would be of interest explore the main challenges that companies are currently facing when they implement the blockchain technology to sup-port supply chain processes.
Thereby, the main objective of this paper is…
… to develop a framework for introduce the different potential applications of blockchain technology in supply chain management, as well as analyze current applications within this framework and identify the main effects and challenges in its implementation in sup-ply chains.
This research problem can be expressed in a form of the following research questions:
Why should blockchains be implemented in supply chains?
Which are the applications of blockchain technology in supply chains?
Which are the effects of blockchain technology implementation in supply chains?
Which are the challenges in the implementation the blockchain technology in sup-ply chains?
1.3 Scope and limitations
To keep the focus only on relevant applications of blockchain for this study and due to length limitations, future envisioned applications that are not possible to implement now-adays will not be discussed.
1.4 Structure of the thesis
This paper is structured in eight parts. The first chapter gives briefly a background infor-mation to familiarize with the topic and explains the main objectives of this paper. The second chapter reviews existing research methodologies and introduces the chosen one, as well as the research process undertaken in this master thesis. The third chapter refers to theoretical background related to supply chain management, its digitalization and an introduction on the basics of blockchain technology. A framework of the different poten-tial applications of blockchain technology in supply chain management is also introduced.
In the fourth chapter, the multiple cases under study are presented and summarized. The fifth chapter analyses how the different study cases fit within the framework presented, and how those potential applications of blockchain technology have been implemented.
The sixth chapter aims to give a general insight of the possible effects of the implemen-tation of blockchain technology in supply chains, and how it affects to supply chain man-agement. The seventh chapter addresses the main challenges companies face when they implement the blockchain technology in their current processes. In addition, the main concerns of different industry leaders in regards with the introduction of this technology in their supply chains are exposed. Finally, the eighth chapter summarizes and discusses key results of the thesis.