Blockchain for Supply Chain Visibility
By the University of Surrey
Organisations face mounting pressure to know and disclose materials provenance in their supply chains. Consumer demands have led to organisations joining multi-stakeholder initiatives (MSIs) such as Fairtrade (Lafargue et al., 2021). Legislation has forced firms to disclose supplier and other information in an effort to demonstrate transparency (Rogerson et al., 2020). Much has been written on both firm efforts to drive visibility into their supply networks and to disclose the results of these activities (Sodhi and Tang, 2019). However, visibility remains a significant problem in the lower tiers of supply chains, threatening sustainability efforts (Hastig & Sodhi, 2020). Advances in technology have allowed firms to track products and materials through their supply chains, but not to understand what is happening at these locations (Rogerson & Parry, 2020).
Blockchain has become increasingly well known for its underpinning of cryptocurrencies. More recently, the technology has been employed for a much wider range of applications. It has been used in smart contracts, in the distribution of electricity, in healthcare data management, for personal identity assurance, in underpinning land registries, and more. It is in the protection of individuals and communities from direct (through helping to guarantee labour rights) and indirect (through assurance of food provenance) harm that we find one of blockchain’s most interesting and pressing uses.
In recent years, blockchain has become the subject of significant interest for its potential to overcome supply chain visibility issues. The expanding body of scholarly work on blockchain’s use in this sphere has, however, been largely conceptual to date. We are therefore motivated by the need to build on the work of Rogerson and Parry (2020) to understand how the technology can be employed to guarantee materials provenance and related human rights issues.
We investigate blockchain’s ability to deliver supply chain visibility for responsible sourcing through an in-depth case study of a firm providing blockchain services for visibility in tin supply chains to the automotive industry. The mining of metals used in the batteries for electric vehicles is associated with significant community health and environmental problems (Nkulu et al., 2018), and labour abuses (Calvão et al., 2021). Although much of the world’s tin is mined in areas of poor governance, often by ‘artisanal’ miners, including child labourers, in dangerous conditions (Faber, 2017; Sovacool, 2019), the metal’s supply chains have been the subject of little research. Increasing reputational risk and a growing body of legislation on mandatory disclosure (Rogerson et al., 2020) and materials and product provenance (Lafargue et al., 2021) have created an urgent need for a trust mechanism between supply chain parties. The visibility and immutability of a blockchain system allows potential partners to see both a trusted source of data and the provenance of the data. Whilst blockchain systems are not ‘trust-less’, and nor do they replace trust relationships, we believe that blockchain can play a key role in helping develop trusted status (Brooksbanks and Parry, forthcoming). Such systems help in assuring materials provenance, and in offering focal companies in supply chains more and better data into conditions in previously invisible areas of their supply chains.
References
Brookbanks, M. & Parry, G. (forthcoming) “The impact of a blockchain platform on trust in established buyer-supplier relationships: a case study of wine supply chains
Calvão, F., McDonald, C.E.A. & Bolay, M. 2021. Cobalt mining and the corporate outsourcing of responsibility in the Democratic Republic of Congo. The Extractive Industries and Society, in press.
Faber, B., Krause, B. & Sánchez de la Sierra, R. 2017. Artisanal mining, livelihoods, and child labor in the cobalt supply chain of the Democratic Republic of Congo. UC Berkeley CEGA Working Papers, available from https://escholarship.org/uc/item/17m9g4wm [accessed September 9, 2021].
Hastig, G.H. & Sodhi, M.S. 2019. Blockchain for supply chain traceability: Business requirements and critical success factors. Production and Operations Management, 29(4): 935-954.
Lafargue, P., Rogerson, M., Parry, G.C. & Allainguillaume, J. 2021. Broken chocolate: biomarkers as a method for delivering cocoa supply chain visibility. Supply Chain Management: An International Journal, at press.
Nkulu, C.B.L., Casas, L., Haufroid, V., De Putter, T., Saenen, N.D. et al., 2018. Sustainability of artisanal mining of cobalt in DR Congo. Nature Sustainability, 1: 495-504.
Rogerson, M. & Parry, G., 2020. Blockchain: case studies in fod supply chain visibility. Supply Chain Management: An International Journal, 25(5): 601-614.
Rogerson, M., Crane, A., Soundararajan, V., Grosvold, J. & Cho, C. 2020. Organisational responses to mandatory modern slavery disclosure legislation: a failure of experimental governance? Accounting, Auditing and Accountability Journal, 33(7): 1505-1534.
Sodhi, M.S. & Tang, C.S. 2021. Supply chain management for extreme conditions: Research opportunities. Production and Operations Management, 57(1): 7-16. Sovacool, B.K. 2019. The precarious political economy of cobalt: Balancing prosperity, poverty, and brutality in artisanal and industrial mining in the Democratic Republic of the Congo. The Extractive Industries and Society, 6(3): 915-939.
