Blockchain technology has the potential to transform global supply chain management, according to a new paper published in the International Journal of Production Research.
The paper, titled “Blockchain in global supply chains and cross border trade: a critical synthesis of the state-of-the-art, challenges and opportunities”, was co-authored by Weidong “Larry” Shi, associate professor of computer science at the University of Houston and Texas A&M University engineers Yanling Chang and Eleftherios Iakovou.
The researchers say that blockchain technology could enhance the speed and security of handling the flow of goods at international borders.
“It’s an emerging technology. It’s evolving,” said Shi.
The paper suggests that tracking the movement of goods globally with blockchain technology could benefit both industry and agencies tasked with ensuring the safety of cargo entering the country.
“It could move items through customs more quickly, and it would allow customs to focus its resources on the minority of cargo that needs closer scrutiny,” said Shi.
The researchers outlined key challenges to widespread adoption of the technology and focused on six supply chain “pain points”– traceability, dispute resolution, cargo integrity and security, supply chain digitalization, compliance, and trust and stakeholder management.
“The wide adoption of blockchain technology in the global SC (supply chain) market is still in its infancy,” they wrote. “Industry experts project that on average, it may take about six years for the widespread adoption of blockchain.”
Challenges include the need for common standards and applicable laws and regulations and decisions on which blockchain technology should be used.
Shi said that blockchain technology would also reduce fraud.
“The data can’t be changed. Everyone (along the supply chain) has a copy. You can add information, but you can’t change it.”
“Three years ago, people didn’t know what blockchain was,” Shi said. “They thought it was bitcoin. Now they understand that it’s a technology.”
What is blockchain?
Put simply, blockchain is a list of records that is growing all the time. The blocks are linked and secured using special codes, i.e., cryptography.
Yanling Chang, Eleftherios Iakovou & Weidong Shi (2019) “Blockchain in global supply chains and cross border trade: a critical synthesis of the state-of-the-art, challenges and opportunities”, International Journal of Production Research, DOI: 10.1080/00207543.2019.1651946