Increasing Supply Chain Visibility by Incentivizing Stakeholders to Use Blockchain

Abstract

With increasing customer expectations for fast and cheap deliveries and competition to capture market share, retail organizations are increasingly compelled to make their supply chains as efficient as possible. A major driver of inefficiency in supply chains is the lack of visibility of the goods, information, and financial flows. This lack of visibility leads to decreased customer service levels and increased disputes in the supply chain. To tackle this problem, companies are investing in supply chain visibility tools such as blockchain technology. But there is no clear understanding of the impact of this new technology on supply chains. Our research models the transportation network of our corporate partner, Walmart, through system dynamics methodology and quantifies the impact that blockchain technology would have on the transportation service level and the number of shipment-related disputes. Our results suggest that when stakeholders in a supply chain introduce blockchain-enabled visibility technologies, there is a significant increase in the percentage of deliveries that are on-time and in full (OTIF), and a reduction in dispute management costs. At the same time, there are several disincentives and challenges, such as high setup cost and lack of understanding of the technology, that Walmart needs to consider to increase blockchain adoption among its stakeholders.