DIT MODULE

DIT MODULE: NITL9000 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT
MSc Supply Chain Management
Title
Critically analyze Blockchain specific to Manufacturing, Logistic Service Providers in the below mentioned aspects.

How Blockchain will benefit for the firm adopting it?
What are the barriers of implementing it?
How would it impact on other supply chain members?
How may the chosen technology or innovation be used to developed further in the future?
Introduction –
Blockchain is redistributed transaction and data management technology which is developed by Bitcoin cryptocurrency in 2008. The involvement in block chain has been increasing due to important factors such as its central attributes that provide security, anonymity and data completeness without any third party organization in control of the transactions.

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In short, blockchain is a mechanism of record keeping which makes it simple and safer for businesses to work together on the internet. Idealization was initially planned for financial transactions, businesses of all kinds are getting creative with the blockchain ledger, as it can be used to record, track, and check trades of virtually anything that holds value. There are some companies and industries who beginning to see blockchain’s potential.

How would it benefit for the firm adopting it?
Case :1
A report on Unblocking the Retail Supply Chain with Blockchain (TCS ,2017) states that blockchain helps retailer to solve customer’s dilemma and create trust by giving every product ‘digital id’ that maintain security of all information with product life cycle from origin to retail store.

At the role of it, blockchain is a distributed database ledger operating exceeding network of nodes, below are cryptographic protocols for data authentication, sharing and validation. The network maintains an immutable chain of data enabling agreement among trustless parties about existence and status of information stored on the network. The mechanism which enables mass-collaboration and implementation of collective self-interest, blockchain is a digitally
autonomous way of conduct efficiency and reliability to the
ever-expanding retail supply chain
Fig. 1 Blockchain deployment along the retail supply chain
(Unblocking the Retail Supply Chain with Blockchain, TCS 2017)
Case :2
An earlier report modum data integrity for supply chain operations, powered by blockchain technology (2017 modum.io AG) highlighted that a well-organized solution to meet regulations ‘modum’ offers better efficient supply chain solution, which qualify companies to prove acceptance with GDP regulations using blockchain technology. The modum solution permits remarkable cost savings towards the distribution of medicinal products, which do not require active cooling. The modum solution is:
1. That permits mass use as low-cost solution.

2. higher flexibility provided.

3. Easily balanced with existing customer systems.

4. Outline for pharma standards with a calibrated tempera- ture sensor data ownership, independent verification, auditability, security and data integrity.

5. Automated to a high degree and fully wireless.

Economical benefits-
Palfreyman (2015), Olnes (2016), Tapscott (2016) states cost reduction is one of the important factor while considering blockchain benefits because cost of acceptance and conducting a transaction must be reduced as there is no need of human activity and involvement in this system. However, according to research of Gervais et al. (2016) on Increased resilience to spam and attacks i.e. Higher levels of resilience and security decrease the costs of measure to intercept attacks.
Informational benefits:
Tapscott and Tapscott (2016) describes Information stored in a system coincide with what is being shown in reality due to need for concurrence voting when transacting and distributed nature. hence this expresses the higher quality. Where Cai and Zhu (2016) research on reducing human errors as due to atomization in transition and control, human errors reduced. While Tapscott and Tapscott (2016) state that User can be unknown by providing relevance keys or access can be ensured to avoid others to view the information therefore privacy is also one of the benefit of block chain.
Technological benefits:
Gervais et al. (2016) and Underwood (2016) states, as data is stored in different types of databases using manipulation, hacking is not possible and this the main factor as security in block chain. However, energy consumption of the network is decreased by increased efficiency and transaction mechanisms so reduced energy consumption is one more benefit of block chain, this is shown in research of Tapscott and Tapscott (2016).

Case :3
According to Blockchain in government: Benefits and implications of distributed ledger technology for information sharing (Government Information Quarterly Volume 34, Issue 3, September 2017), there are
various potential advantages of block chain technology in different manner, such as transparency is possible when democratizing access to data and history of any transition is remains observable as well as every nodes has complete overview of transaction. Atzori (2015) and Underwood (2016). Although Kshetri (2017) describes about reducing corruption due to blockchain as by storing landownership as well as having transparent rules for changing ownership which could not be handle. However, there are some organizational benefits such as J. Palfreyman (2015) research on increased trust and D. Yermack (2017) express about clear ownership is the main advantage of block chain as governance required clear and briefly defined how information can be changed.

What are the barriers of implementing block chain?
A report on Unblocking the retail Supply Chain with Blockchain (TCS ,2017) states that sometimes blockchain in retailer supply chain not to be deployed because blockchain is visualize as source of elixir to solve different types of problems in supply chain whereas at the similar time there is a fear of incidents equal to the DAO hack. Blockchain require tangential benefits as it is over-estimated and under-estimated at same time, and be suitable for inefficient and ineffective when used,
1. For transactions considering trusted parties (includes internal hand-offs within the similar group).

2. between particular small number of participants.

3. In midst of a central party acting as an assistant.

4. For inventory counting or resource handling within same establishment.

with no problems involving trust, recently used centralized databases gives better performance as compared to blockchain. However, the increasing problems of supply chains and business models will bring in more stakeholders and an increasing number of multi-party transactions developing in effort spent in dealing with them.

Similar to any emerging technology, blockchain technology will have to overcome hurdles in order for it to see widespread adoption and to eventually become a mainstay within global supply chain operations. As Blockchain technology becomes more mainstream, laws governing its use will not have precedent in the court systems.

Blockchain laws will be crafted from a clean slate. This means that the new laws created may pose an additional obstacle for users of Blockchain technology, requiring them to be able to adapt and adjust their operations to fit within those laws.
According to Kiviat (2015), the regulations surrounding virtual technology like Blockchain do not yet exist. Federal agencies like the US Treasury and the Internal Revenue Service, among others, have offered to assist in creating regulations to protect the integrity of the technology and also to protect those entities using it to conduct trade. One part of the US Treasury, the Financial Crimes Enforcement Network (FinCen), is the organization that has set up regulations to comply with both the Bank Secrecy Act (BSA) and Anti Money Laundering (AML) requirements (Mills, Wang, et. al, 2016). One of FinCen’s main goals is to set up the virtual network with regulations that closely resemble that of physical currency of trade. This is because the current laws, regulations, and governance of payment networks were established for conventional financial markets; there are no existing equivalents for any specific form of virtual or electronic financial markets like those which would be driven by Blockchain (Mills, Wang, et. al, 2016).
As companies look to incorporate Blockchain technology into their operations because they want more transparency, lower transaction costs, and an overall quicker operation, they will need to also have strong risk and fraud units to monitor transactions and file Suspicious Activity Reports (SARs) with the US Treasury, and they will also need Risk and Compliance departments to ensure that their operations are falling in line with guidelines that are currently in place and guidelines will which change as the technology matures. Lastly, a company’s legal department is going to need to be able to understand cryptocurrency, the way Blockchain transactions are kept secured. The number of lawyers with this knowledge is currently limited (Earls, 2016), and that limitation could be the hurdle that many companies cannot overcome.

3.How blockchain impact on other supply chain members?
Future Applications & Implications of Blockchain Technology We believe the current state of Blockchain shows tremendous potential but is not yet ready for mass usage. Both design and codebases are still being refined constantly, and there are no other established applications beside crypto currency. We simply cannot tell if the bandwidth exists for Blockchain to scale, nor can we predict whether enough of a mass of adopter’s will come forward to ensure the network is wide enough to realize all the potential Blockchain offers.
We believe that ultimately global trade will evolve into a battle of supply chains, where efficiency, block chain optimization, and in novative financing will yield best in breed organizations. As blockchain gains momentum, “there will be real time visibility, reduced complexities, improved accuracy and efficiency in the system, which in turn will help reduce costs and enhance trust. Its usefulness will not be limited to shippers or customers but will extend to lowering trade barriers, especially for developing nations which are not able to participate in global trade owing to cost considerations” (Bajpai,2017). Overall, “when adopted at scale, the solution has the potential to save the industry billions of dollars and benefit global trade and the world economy” (Bajpai, 2017). Unfortunately, many organizations rely heavily on extended terms (DPO) and financing to float logistics and operations costs. It has become an accepted business practice for larger companies to extend terms to free up cash flow. If blockchain backed by crypto currency becomes the norm, many organizations may suffer cash flow issues, simply unable to pay for transactions real time and thereby unable to compete. While currency inflation and deflation rates become more difficult to leverage, allowing for a fairer trading environment, we question if Blockchain somehow contributes to a de evolution of sorts, where “the iron law oligarchy” will inevitably surface. The golden rule which states “those who have the gold, rule” seems probable as access to working capital will become necessary in a more transparent environment. However, the tremendous benefits gained using blockchain technology should not be overshadowed by the potential risks. Possibilities for usage across various segments of the global economy for example, smart contracts can be used for transactions to exchange money, property, shares, or anything of value where blockchain defines the rules and penalties of the contract and automatically enforce those obligations, including expiration dates and validity. Additionally, blockchain can be integrated in the Internet of Things device management, voting confidence, and P2P insurance. All of these applications of blockchain are already being vetted and show favorable results.
According to Journal of Corporate Accounting ;amp; Finance banner (© 2016 Wiley Periodicals, Inc.) states that, Bitcon’s cryptocurrency alternatives litecoin and primecoin has been affect different financial service over a decade. However, blockchain is supporting tool and it impacts on financial service as well as different industries. Blockchain also have possibility to become a transformative technology. The way financial firms perform different types of activity, it will change at minimum. There is more impact of block chain on further industries like product validation, contracts, auditing and gambling. Financial service see this is perfect blockchain technology with their own settlement transition. Apart from this there are some other industrial impact as well as benefits on some industries such as auditing and authentication for event tickets management as well as luxury goods.

Blockchain is expected to revolutionize industry and commerce and drive economic change on global scale because it has beneficial advantage such as it is unchangeable, clear, redefined trust, secure and fast which can be public or private sector.
Financial services-
Secure transaction:
Observe transaction in actual time.

Decrease transaction time.

Reduce risk of cybercrime.

Information leakage avoided.
Transaction intermediaries can be removed.

In addition to this, blockchain is suitable for well contracts which used as computerized transaction in the application of product manufacturing, supply chain management, vehicle provenance as well as sharing resources like electricity.