Blockchain Technology in Supply Chain Traceability Systems

Abstract: Background Tracing physical objects from producers to end consumers is a challenging task. In the wake of Bitcoin’s success, the retail industry sees potential in using blockchain technology to tackle some of these challenges. While blockchain technology itself has been subject to extensive research lately, the intersection between blockchain technology and supply chain traceability is still rather unexplored. Since the industry wishes to better understand the benefits and limitations of the technology in their context, this study aims to guide businesses in this assessment. Purpose The purpose with this thesis is to develop a framework for evaluating the applicability of blockchain technology in supply chain management to improve traceability. Methodology A sequential method was used with three phases: 1) a literature review on existing theory which condensed to a theoretical model, 2) an interview study with experts in relevant fields to improve and adjust the model, and 3) an interview study with business representatives to validate the model and also to reach conclusions on the applicability of blockchain technology in this context. Conclusions The evaluation framework was successfully developed. In the evaluation, businesses first identify the drivers for traceability, and map the current traceability system to identify what improvements are needed to satisfy the driver. Secondly, key properties of blockchain technology are assessed, and a draft for an application is designed. Lastly, the drafted application is evaluated based on goal fulfilment, data requirements, degree of novelty and complexity of the application, and the inherent technical limitations of blockchains. Two hypothetical use-cases are presented in the study, and their limitations are discussed. The first case uses a blockchain for storing digital certificates of products to combat fraud, the second case uses a blockchain for storing the same type of traceability data as the companies store right now, only in a distributed fashion. While some properties of blockchain technology are aligned with some of the core concepts of successful traceability, it is still difficult to pinpoint exactly how blockchain technology should be used to effectively improve traceability.