This Blockchain Technology for Enhancing Supply Chain Resilience case study evaluates the importance of the Blockchain technology in supply chain management.
Harvard Business Review (BH950-PDF-ENG)
January 15, 2019
Case questions answered:
Evaluate the importance of Blockchain in supply chain management.
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Case answers for Blockchain Technology for Enhancing Supply Chain Resilience
The Blockchain Technology is an increasing list of records known as blocks connected by means of cryptography (Korpela et al., p.3). Every block encloses the previous block, transaction data, and timestamp in a cryptographic hash. According to Apte and Petrovsky (p.10), a blockchain by design prevents data modification. The technology is a distributed ledger that is open which can effectively record transactions between two companies in a permanent and verifiable way.
To be used like a distributed ledger, it is collectively controlled by a peer-to-peer network validating new blocks and following inter-node communication protocol. The essay objective is to assess whether Blockchain is an effective technology for streamlining paperwork in supply chain management and tracking shipments. Besides, it aims to examine whether this technology can help solve logistic issues, errors in bills of lading, and information tempering.
Iansiti and Lakhani (p.4) assert that blockchain is a technology that allows parties to distribute digital data without being copied. This can be described as an appropriate method of sharing information. It is an incorruptible ledger for digital economic transitions. What makes blockchain the appropriate technology for supply chain management specifically international shipping is that a protocol has to be followed and the validation of new blocks is collectively managed by a peer-to-peer network.
Korpela et al. (p.8) state that this digital ledger is resistant to modification. Therefore, once data has been recorded in any block it cannot be retroactively altered without all successive blocks alteration. This setting demands network majority consensus and thus information is secure for the involved parties. Blockchain has provided a solution for bitcoin by solving the problem of double-spending without using a central server and it can do so for supply chain management to reduce fraud.
Blockchain Technology enables transactions recording across many computers to avoid data alteration without the network consensus. Therefore, because it is a digital ledger that is decentralized, it permits the involved parties to audit and verify transactions inexpensively. As explained by Iansiti and Lakhani, a blockchain database is by means of distributed timestamping server and controlled autonomously by a peer-to-peer network (p.6). Mass collaboration driven by mutual self-interest is used to authenticate the digital ledger.
The result of using blockchain is a robust workflow where data security is regarded as marginal by the participants. Besides, the application of this technology eliminates infinite reproducibility characteristic from the digital asset. Apte and Petrovsky’s report demonstrates that blockchain has solved double-spending long-standing problems by approving that every unit of value is transferred only once (p.24). Compared to traditional systems, it is quicker, cheaper, and safer to complete the blockchain-exchange of value.
The shipping industry must solve the excess administration to simplify supply chain management. Bill of lading is subject to fraud/forgery because they are paper-based. BOL combined with blockchain could provide the needed security in the shipping industry. What makes the Blockchain Technology the solution to supply chain management is that it…