Blockchain Technology in Supply Chain Management: Opportunities and Challenges

Introduction

The supply chain can be defined as a complex network of interconnected organizations engaged in various processes and activities that result in the creation of value through the delivery of products and services to end consumers (Christopher, 1998). In the vast domain of global supply chains, products across international borders, contributing to formations comprised of intricate production processes, transactions, and knowledge exchanges. Notably, global exports of goods reached an astounding $19.48 trillion in 2018 (World Trade Organization, 2019). According to World Bank data, the annual movement of products across international borders exceeds $16 trillion, and the estimated annual cost of global commerce is $1.8 trillion (Maersk Strategy Group, May 2016). The elimination of barriers in the international supply chain has the potential to boost economies by nearly 15 percent and create new employment opportunities (Moavenzadeh, 2013).

Before ultimately reaching consumers, products encounter multiple ownership transitions within the framework of a dynamic supply chain. Supply chains aggregate products from numerous small-scale producers to larger partners for further processing and eventual transformation into end-products, particularly for low-value-added goods such as agricultural and certain mining commodities.

Typically, current supply chain models begin when manufacturers and importers ship their products to subsequent phases of the supply chain (Khan, Khan & Nallaluthan, 2023). This stratum consists of wholesalers who further process the products received from exporters, processors, and other supply chain participants. The final phase includes retailers and food service establishments that facilitate product sales. The encapsulation of data within various supply chain elements, which hinders information sharing, is a significant drawback of this model. Therefore, consumers are unable to verify the origins of the products they intend to purchase (Vara et al., 2018).

Moreover, supply chain stakeholders face challenges in sustaining seamless operations across complex chains of resources, activities, and organizations, especially when numerous small-scale contributors are involved. Traceability is defined by ISO standard 9000 as the capacity to monitor the history, application, use, and location of an item or its attributes using recorded identification data. Absence of openness and incentives can hinder sustainability efforts.

In present-day supply chain systems, consumer trust in the dependability of data remains dubious. In the context of global supply channels, this difficulty is exacerbated. Establishing a trustworthy system, particularly on a global scale, requires a difficult, if not impossible, foundation of trust. However, the emergence of blockchain technology as a disruptive force in various aspects of our daily lives heralds a paradigm shift in overcoming the numerous challenges inherent to supply chains (Andrei, Kwok & Treiblmaier, 2023; Gul, Khan & Ghouri, 2023). The participation of entities in a blockchain-integrated supply chain are depicted in figure 1. Forecasts indicate that the inflection point for blockchain adoption will occur when approximately 10% of the global gross domestic product (GDP) is stored on blockchain ledgers by 2027 (Li, Fu & Cheng, 2020).