Covid-19 has placed significant pressure and strain on supply chains, creating issues around product shortages, delays and increase in costs.

During this time the resilience of supply chains has become a talking point across online and offline media platforms throughout the world, with many experts and industry insiders expecting the world to look vastly different post-lockdown.

The expectation by many experts is the movement by organisations towards a digitisation strategy where technology is a key driver in future decision-making. Industry 4.0 tools have the potential to open up new opportunities for creating tools and services which are transparent, traceable and provide quick transfer of information and transactions. Within this, tools such as the blockchain have the potential to bring unique value to supply chain management.

Blockchain and supply chains

The blockchain is a permanent, immutable distributed ledger to record all or any transactions of value. A tool originally designed to ensure the smooth running of bitcoin has evolved into a powerful industry tool with the potential to act as an intermediary of trust.

It is based on the fundamental principles of decentralisation it is designed to be resilient in times of data or network failure. Its permanent state allows for the creation of applications which rely on data which cannot be changed, ideal for situations within a finance scenario.

For supply chains this can be a game changer: this unique approach to data storage creates an efficient and effective transfer of good and services while minimising costs. The permanent nature of the data store creates an undisputable record of any contractual or regulatory agreements, creating a single point of truth.

As supply chains continue to evolve, merge and grow into complex ecosystems made up of hundreds of entities working together to fulfil consumer demand by adding value from the raw material stage to the final fulfilment process the role of technology in managing the process becomes imperative.

Complexity in the chain is also created through transactions (both physical and informational) and there is need for informational transactions to match the physical. Trust, that this alignment will provide transparency and traceability within the supply chain, is essential.

The foray of blockchain within the supply chain environment follows this intention in the first instance. The blockchain environment if implemented appropriately, is able to create verifiable, immutable transactions within the supply chain, thus enhancing trust and creating information resilient supply chains.

Current blockchain pilots

For many supply chain businesses this is an enticing prospect. Over the past few years, companies such as IBM, Walmart, Zurich Insurance, Maersk, Nestle, Unilever and Amazon, have invested in pilot blockchain based supply chain projects to develop and test the technology.

Nestlé is piloting blockchain services by providing software that allows customers to identify a “chain of origin”. Customers can scan a QR code and look inside the supply chain, where the beans were planted and where they were roasted.

Walmart is piloting a food traceability scheme where customers and Walmart can trace the origin of goods along the supply chain. For Walmart this is a significant project with the potential to reduce the firm’s provenance from seven days to just 2.2 seconds.

In a Covid world this kind of efficiency and transparency can help many organisations to identify new markets, products and services. While there are a significant potential benefits, researchers pre-lockdown urged caution arguing that while there is a significant amount of potential, the risks are still great with many operational challenges that still need to be resolved.

Blockchain in a post-Covid world

In a post-Covid world the blockchain has the potential to increase trust and transparency within a broader organisational strategy. As organisations move towards digital platforms, the blockchain can support the development of information resilient supply chains for future performance.

Covid-19 has highlighted the need for technology and data which is inclusive, interoperable and has integrity. The blockchain can create a platform where transactions can be quickly executed and verified in a secure environment. Supply chain resilience can also be enhanced through the transparency and integrity provided by the blockchain, a permanent data store alongside a decentralised secure solution provides an improved technological solution.

A certain amount of scepticism is prevalent within industry and academics about the use of blockchain and the real benefits to supply chains. There is discussion regarding the security of the platforms and hence the immutability of the data, along with the issues of “garbage in—garbage out”. There is also a need for the technology to evolve to increase the rate of transaction processing as this currently considerably less than normal database technology.

However, the Covid-19 situation has underlined the vulnerability of supply chains and the challenges to curb supply chain fraud. As the blockchain technology evolves further, it is envisaged that post-Covid-19 it will be useful in managing fraud within food and pharma supply chains. There is also scope for the technology to be utilised to create accessibility of products and future business models.

Dr Abdul Jabbar is the director of learning development and the head of the digital transformation research cluster at Huddersfield Business School.

Professor Samir Dani is professor of operations management and head of marketing, management and organisation at Keele Business School.