B L O C K C H A I N I N S U P P LY C H A I N A N D

LOGISTICS MANAGEMENT
T U TA 3 3 0 0
KHUR AM SHAHZA D
 Benefits and
challenges of
blockchain in supply
chain and logistics
MODULE 5
 Lecture outline

▸ Opportunities of blockchain (BC) ▸ Limitations and barriers of

in supply chain (SC) and logistics blockchain technology
▸ Key enablers of BC adoption in SCs ▸ Barriers of BC adoption in SCs
▸ Major opportunities and benefits ▸ Barriers to sustainable SCs
▸ Role of BC in achieving SC ▸ BC technology limitations
objectives ▸ Compliance and legal implications
▸ SC transparency case studies

3 KHURAM SHAHZAD
 Blockchain as governance structure
in supply chains

▸ Blockchain as a governance structure enabling flow of secure and trusted

information – improved supply chain performance
▸ Mineral and mining industry – Cobalt used in lithium batteries→
▸ Blockchain addressing the challenges in diamond industry
▸ Child labor issues
Source: Wikipedia
▸ Money laundering and smuggling

4
(Kshetri, 2021; Time Magazine)
 Key enablers of blockchain adoption
in SCs
▸ Availability of quick and easy options to use blockchain
▸ Examples – Hyperledger Fabric (Technology companies IBM, SAP, Oracle and Microsoft offer
solutions based on Hyperledger Fabric)
▸ Affordability and ease of use of blockchain compared to alternative solutions
▸ Example – Traceability-as-a-Service (TaaS) by Circulor
▸ Efforts of civil society and other powerful actors
▸ NGOs, Amnesty international World Economic Forum etc.
▸ Increasing collaboration among key supply chain participants to develop blockchain
solutions
▸ Responsible Minerals Initiative (RMI)

5
(Kshetri, 2021)
 Some major opportunities

▸ Means to improve the welfare of disadvantaged groups IFC World Bank Group

▸ Mineral, metal and diamond industry

▸ Enhancing efficiency and responsiveness of SCs

▸ Powerful marketing, branding and communication tool

▸ Consumer empowerment, confidence, and satisfaction with services

(Kshetri, 2021)
Some major benefits of blockchain in
SC&L
▸ Reduced workload and ensure traceability
▸ Reduced labor costs and food wastes
▸ Solves communication problems in SC&L
Source: DHL
▸ Cyber security in transaction processes
▸ Reliability, traceability, and authenticity of information, along with smart contractual
relationships for a trustless environment
Source: Global Trade Magazine
▸ Detailed information throughout supply chain
▸ Facilitates sustainable supply chain
▸ Reduced opportunistic behavior and transaction costs

7
(Kshetri, 2021; Saberi et al., 2019; Demirkan, et al., 2020) Source: DHL
Role of blockchain in achieving SC objectives

8
(Kshetri, 2021)
Supply chain transparency – case studies
Shipping logistics
• Less amount of paper work and fraud prevention
• Reduced administrative and logistics timelines by 85%
Food production
• Increased transparency throughout SC
• SC visibility
• Farmers’ security – fair trade payments
Luxury manufacturing
• Protection against unauthorized tampering
• Immutable and secure SC data as well as transparency
Pharmaceuticals
• Tracking active pharmaceutical ingredients during
manufacturing
• Public safety issues are addressed
• Traceability of drugs from manufacturer to consumer

9
(Deloitte, 2017)
Barriers of blockchain adoption in SC
▸ The lack of institutional capacities

▸ Low degree of digitization

▸ Lack of technological expertise and absorptive capacity

▸ The rank effect and barriers faced by small companies

▸ Regulatory incompatibility and the lack of standardization
▸ Bringing all the relevant parties together
▸ Stockholder centric bias in the actions of blockchain start-ups

10
(Kshetri, 2021; Walsh et al., 2021; Saberi et al., 2019)
Barriers of
blockchain
adoption
in
sustainable
SCs

11

(Saberi et al., 2019)

Important barriers to BC adoption
identified by industry leaders

12
(PWC, 2018; Penzes et al., 2018)
 Source: Pixabay

Limitations of blockchain
technology

▸Trustworthy behavior of involved actors

▸Blockchain solutions often cannotprotect a SC against attacks

such as physical tampering and modification
▸The decentralized structure of blockchain

▸Performance challenges

▸Early adoption

13
(Kshetri, 2021; Walsh et al., 2021; DLA Piper, 2017)
 Compliance and legal
implications
Source: Pixabay
▸ Legislative and regulatory considerations affect whether, to what extent and
how BC solutions are used in SCs
▸ China’s Regulations on the Management of Blockchain Information Services requires
significant information from BC users

▸ Poor law enforcement and lawlessness makes implementation difficult

▸ General Data Protection Regulation (GDPR) issues

▸ Modern slavery’s challenge to SCM

14
(Kshetri, 2021)
Source: Pixabay
 Implementation of blockchain
concerns

▸ Personal data involved

▸ The EU’s general data protection regulation and blockchain

▸ Blockchain’s immutability feature

▸ Blockchain’s functioning is incompatible with the ‘right to be forgotten’

▸ French data protection watchdog (CNIL) against the use of permissionless
blockchain
▸ Regulatory frameworks need to be revised

15
(Kshetri, 2021)
 Concluding remarks

▸ Several key players, organizations and entities can play their roles as key
enablers in SCs
▸ BC facilitates valid and effective measurement of outcomes and performance
of SC processes
▸ Transparency, traceability, visibility is the value to everyone involved in SC

▸ Revising regulations and compliance to adopt BC in SCs

16
(Kshetri, 2021)
 THANK YOU!
KHURAM . S HA H ZAD @ U WA SA . FI