A strategic distribution model for an upscaling project at an emerging market - and a blockchain technology use case approach to the supply chain

University essay from Lunds universitet/Teknisk logistik

Abstract: Background: Globalization is a phenomenon which has been around since the mid- 19th century, influencing companies to either expand existing markets or entering new markets, to seek new profits. For companies with a global supply chain, the total supply chain cost is a vital factor. It is of high importance to reduce the costs in the supply chain, as lower costs will increase the profit. The case company, where this report has been conducted, is on the verge of upscaling a new project on an emerging market, called the market, with limited previous presence. The new project, called Distributed Plant Project, referred to as DPP, aims on decentralizing the previous centralized production. Due to the uncertainty of placement of plants, different network scenarios have been investigated in a simulation model. Further on, as supply chains are getting more complex, an increased demand of transparency and traceability is desired as a matter of risk prevention and consumer- and labour protection. Due to this, blockchain technology has been investigated to see how DPP could benefit from the technology. The purpose of this master thesis is to investigate how a strategic distribution network could be designed for an upscaling of the Distributed Plant project (DPP) and to investigate how blockchain technology can be applied to the DPP. Research questions: (1) How can the distribution network be designed for an upscaling of the Distributed Plant Project? (2) How can blockchain technology contribute to the Distributed Plant Project? Methodology: The research study was designed as a mixed qualitative and quantitative case study with an abductive reasoning approach. The empirical data was collected through archive analysis, workshops, informal interviews and observations. The empirical data was then used to develop a simulation model and a report. Conclusion: An initial distribution network was formed and presented. The network was divided into two separated Phases; Phase 1 aimed to provide material to setup the plant whereas Phase 2 aimed on providing consumption material for the ongoing production. A simulation tool was established to analyse how warehouse(s) could impact the future upscaling of the supply chain. The financial advantage of having a well-functioning supply chain network was identified through the simulation model, but highly dependent on the surrounding conditions e.g. distances, transportation cost, emissions etc. The contribution to the MNC is to add a simulation model to design a distribution network, as it could increase the understanding of the logic in a supply chain and make it easier to tailor a solution in an unpredictable environment. It was discovered that blockchain technology could contribute to DPP in different ways. Three use cases were established, which could contribute to minimized counterfeit, increased traceability, reduced administrative work, ensure customers the right requirements regarding e.g. quality. Further on, it can increase the environmental awareness at the market, it can improve the MNC ́s CSR work and it can increase the motivation of employees with regards to cultural aspects

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