MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS APPLYING BLOCKCHAIN TECHNOLOGY IN LOGISTICS AND SUPPLY CHAIN MANAGEMENT Specialization: International Trade Policy and Law TA KHANH LINH Hanoi – 2020 MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS APPLYING BLOCKCHAIN TECHNOLOGY IN LOGISTICS AND SUPPLY CHAIN MANAGEMENT Specialization: International Trade Policy and Law Code: 8310106 Full name: Ta Khanh Linh Supervisor: Dr. Vu Thi Hanh Hanoi - 2020 i DECLARATION I, Ta Khanh Linh, confirm that this Master's Thesis has been written solely by the undersigned and contains the work of no other person or persons except where explicitly identified to the contrary. I also state that said Master's Thesis has not been submitted elsewhere for the fulfilment of any other qualification. I make this statement in full knowledge of and understanding that, should it be found to be false, I will not receive a grade and may face disciplinary proceedings.
Signature: _______________________________________ Date: 23 March 2020 ii ACKNOWLEDGEMENTS I would like to express my special thanks of gratitude to my supervisor Dr. Vu Thi Hanh as well as our principal, Faculty of Graduate Studies and all professors of Foreign Trade University who gave me the golden opportunity to do this wonderful project on the topic “Applying blockchain technology in logistics and supply chain management”, which also helped me in doing a lot of research and I came to know about so many new things I am really thankful to them. Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing this project within the limited time frame. iii TABLE OF CONTENTS Page DECLARATION .ii LIST OF ABBREVIATIONS.
v LIST OF FIGURES .vii LIST OF TABLES. ix CHAPTER 1: INTRODUCTION. Statement of the Problem. The Purpose of the Study.
6 CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK. History of Logistics and Supply Chain Management. What is blockchain technology and How does it works?. Blockchain Applications in Financial Areas.
Blockchain in non-financial areas. Politics and E-voting. Blockchain in Logistics and Supply Chain Management. Potential blockchain applications in the logistics and supply chain industry.
Transformation phases of blockchain applications in logistics. 56 CHAPTER 3: ANALYSIS AND FINDINGS. Case study analysis. Walmart and the using of IBM Hyperledger Fabric in Food Supply Chain.
Maersk’s TradeLens with IBM. Everledger’s blockchain secure luxury goods. SmartLog - the proof of concept project for IoT blockchain solution in logistics industry. Some others adoption of blockchain to logistics and supply chain management projects.
Case studies summary. Discussion on the achievements and remaining concerns of the case study projects. Blockchain Features Tradeoffs in Supply Chain Management. Challenges and Possible Solutions.
Conclusion on the future of blockchain in logistics and supply chain management. 94 CHAPTER 4: DISCUSSIONS AND CONCLUSIONS. Limitations and future research. 99 v LIST OF ABBREVIATIONS 3PL - Third party logistics 4PL - Fourth party logistics AIR - Applied Innovation Review API - Application Program Interface APS - Advanced Planning and Scheduling ASIC - Application Specific Integrated Circuits BCO - Beneficial Cargo Owner BEV - Blockchain-enabled E-voting BFT - Broadcast File Transfer BIPS - Europe’s primary bitcoin payment processor for merchants and free online wallet service CEO - Chief Executive Officer CLM - Council of Logistics Management CSC - Connected Supply Chain DAO - Decentralized Autonomous Organization DHL, BMW, IBM, APL - name of enterprises ERP - Enterprise Resource Planning EVM - Earned Value Management FARC - Revolutionary Armed Forces of Colombia FTU - Foreign Trade University ICO - Initial Coin Offerings ID - Identification vi IoT - Internet of Things IP - Intellectual Property ISO - International Organization for Standardization IT - Information Technology JIT - Just in Time LCC - Low-Cost Carrier MNC - Multinational Company NFC - Near Field Communication PBFT - Practical Byzantine Fault Tolerance PC - Personal Computer PIL - Pacific International Lines PoC - Proof of Concept PoW - Proof of Work PoS - Proof of Stake R&D - Research and Development ROI - Return on Investment SCM - Supply Chain Management TC - Technical Committee TCT - Transaction Confirmation Time TPS - Transactions Per Second TTP - Trusted Third Party WTO - World Trade Organization vii LIST OF FIGURES Page Figure 2.1: A history of blockchain technology .3: Illustration of a blockchain transaction .4: Benefits of Blockchain .5: Buying a house on Ethereum .1: Foods Walmart is Tracking with Hyperledger .2: IBM Blockchain for Trade logistics .3: TradeLens blockchain business network .4: Globally connected via API .5: Simplified decision tree for identifying blockchain use cases .6: The steps for a blockchain implementation.
93 viii LIST OF TABLES Page Table 2. Potential blockchain applications in the logistics industry. Transformation phases of blockchain applications in logistics.1: Case studies’ status summary. 78 ix ABSTRACT This paper is an intensive research paper under the Master Thesis of International Trade Policy and Law program at Foreign Trade University (FTU).
The main subjects of this topic are blockchain technology, logistics and supply chain management industry. The purpose of this paper is to introduce and analyze case studies about how blockchain technology is applied in the logistics and supply chain management sector. Logistics and supply chain management process play an important role in the international trade area. Nowadays, these two concepts appear in almost every aspect of the trading and production process.
Companies use logistics management to plan, control, and implement procedures for the effective and efficient storage and transportation of goods, tracking the products from the point of origin to the point of consumption. Supply chain management helps organizations to manage the flow of goods and services and includes all processes that transform raw materials into final products. In order to utilize the benefits of logistics and supply chain management in international trade, businesses started to think of adapting technology for them, including information technology, communication technology, and automatic identification technology. Improved technology has increased productivity in the supply chain, minimizing costs and errors.
Technology is an effective tool to enhance supply chain competitiveness and performance by enhancing the overall effectiveness and efficiency of the logistics system. Moreover, various innovations in technology have made the task easier and faster besides being less laborious. Blockchain technology is one of the innovations that are considered to change the way how logistics and supply chain management work. One lingering problem of modern logistics and supply chain is a lack of x transparency between buyers and manufacturers.
There is still a lot of miscommunication between vendors and suppliers, as well as difficulties in tracing each stage of deliveries. Luckily, blockchain technology is here to solve this challenge. Understanding the potentials of blockchain in the field of logistics and supply chain management and its future in international trade, the author has decided to make a research paper about the topic: “Applying blockchain technology in logistics and supply chain management”. The thesis paper contains 4 chapters that aim to answer the main statement of the problem: “What kind of inefficiencies can be managed with blockchain in the field of logistics and supply chain management and what are the barriers and challenges, and the prediction of the technology?”, with four sub-research questions.
The paper begins with an introduction that includes some of the background information that is intended to inform the reader. Following that section, a number of literature reviews and case studies will be introduced and analyzed to give a conclusion of the blockchain adoption process in the logistics and supply chain management sector. Finally a summary will connect all the information in a concise manner. Statement of the Problem Blockchain is an emerging technology in the business world, especially in the logistics and supply chain management area because of its huge benefits.
Blockchain may bring many opportunities for the development of the logistics and supply chain management due to the potential to lower the operating costs, boost the service quality, and consequently improve the organization and the entire supply chain competitiveness. However, blockchain adopters meet many challenges on their way of bringing this technology to the world. In theory, the blockchain can become the technological answer to solve many current problems in logistics and supply chain sectors, but it is very hard to change and adapt. It is not very easy to insert a new technology inside established supply chain systems because the integration challenges are not to be underestimated (Mougayar, 2016, 123).
Already many projects are underway to apply blockchain technology to global logistics, adding value by boosting supply chain transparency and automating administrative operations. It can be named several standing out projects such as Everledger, SmartLog, and DHL-BMW Proof of Concepts (PoC). These on-going projects are operated differently in many ways, but they all have the same purpose to find solutions for the problems of modern logistics and supply chain management in the 4. Addressing these projects and their operating status will have practical benefits for the future of the logistics and supply chain management sector, and contribute to the understanding of this widespread application.
At the end of this paper, it is expected to give an overview of the applying status of blockchain technology in the field of logistics and supply chain management and answer a part of the lingering question: What kind of inefficiencies can be managed with blockchain in the field of logistics and 2 supply chain management and what are the barriers and challenges, and the prediction of the technology? 1. The Purpose of the Study This study aims to go deeply in the application of blockchain in the logistics and supply chain management by examining various literature review provided in chapter 2 and the existing use cases introduced in chapter 3 to present the value propositions of blockchain in supply chain and logistics and several challenges of this technology. After that, some recommendations for adaptors and predictions for the future of blockchain technology in logistics and supply chain management will be represented. Research Questions The research will be based on the status of logistics and supply chain management industry, and the application of blockchain technology to the field.
As mentioned, the main goal of the thesis will be to evaluate the possibility of applying the blockchain in logistics and supply chain management. It will further be based on some case studies of several projects on applying blockchain in this industry. To be able to answer the problem statement, it has been seen necessary to use a couple of research questions, in order to get around the problem area and being able to answer the problem statement, in the best possible way. The following research questions have been seen necessary in order to answer my problem statement in the best way: Question 1: How has blockchain been adopted in logistics and supply chain management? Question 2: What are the challenges of applying blockchain in logistics and supply chain management? 3 Question 3: How could enterprises adopt better the technology and overcome the challenges? To answer research question 1, a literature review will be given to explain the purpose of applying this technology to the field of logistics and supply chain management and the way it works.
After that, several on-going projects will be discussed in details for a better view of the current status and the adoption trend in the world. Research question 2 will be answered by a summary of the literature review and the current status of these mentioned projects about applying blockchain technology in logistics and supply chain management to give out a list of the challenges when logistics and supply chain management apply the new blockchain technology. The research question 3 will be answered by some recommendation from the experiences of the mentioned cases for future projects in this area and a prediction for blockchain’s future in logistics and supply chain management industry.