The Potential of Blockchain in Supply Chain Logistics

Abstract: Today, it is important to understand how logistic systems can become more efficient and effective through increased digitalization and information sharing, as the exponential development in technological advancements during the recent decade has opened up new opportunities for digitalization of businesses. Blockchain is considered to be one of the most disruptive technologies of modern times. (Dinh & Thai, 2018) Information generation and information sharing are important for integration of partners in a supply chain, and for the logistics in a supply chain to function efficiently. To understand how blockchain can impact information sharing through supply chains and logistics, the purpose is to explore the potential of blockchain in supply chain logistics. The thesis focuses on explaining blockchain to make it approachable and easy to understand. The thesis is divided into two parts, the technological part, with comparisons to other digital technologies in order to pinpoint how blockchain relates to other technologies, and the information sharing part of the supply chain. With that foundation, the analyses look into the contributions blockchain can provide, how it compares to traditional IT-systems for information sharing and what to consider before and during an implementation of a blockchain protocol in a supply chain.   To categorize information sharing, important aspects were chosen from literature and validated through a survey sent to supply chain managers from companies operating at different parts of supply chains and different industries. In order to evaluate the actual potential of blockchain, interviews with four highly experienced blockchain experts were conducted. The research resulted in the conclusion of how important it is to conduct an investigation of what blockchain is intended for, and what value it adds to all parties involved, before starting the technical implementation. Furthermore, this research concluded that the possibility to use blockchain both independently and in combination with other technologies in a chain to provide fully automated processes of disseminating and storing information provides a greater potential for further use. Through the characteristics the technology possesses, such as, consensus, traceability (provenance), immutability, finality, decentralisation and persistency, blockchain can have a big impact on information handling in many industries. Companies should however consider whether a blockchain solution is necessary, since its complicated, demands involvement from multiple parties and comes at a substantial cost. A supply chain aims to maximise added value, which correlates well with the opportunity blockchain presents of eliminating the need for unnecessary intermediaries, streamlining the information flow, while simultaneously building trust.