Dr Atanu Chaudhuri and his colleagues explore the challenges and benefits that come with using Blockchain technology to encourage ethical supply chain processes.
Blockchain could be an enabler for improving social sustainability, increasing transparency and eliminating risks, enabling companies to act in a more ethical manner.
In a recent study, we investigated how the technology can be deployed to support companies in becoming more vigilant about how their practices affect the world around them, at every level, and in reducing potential risks companies might face from unethical activities in the supply chain of which they are unaware.
This research was conducted with Professor Kiran Fernandes at the School, and in partnership with Dr Bhatia of Coventry University, Professor Fosso Wamba of Toulouse Business School and Dr Kayikci at the Turkish German University.
Currently, global supply chains are subject to fraud, counterfeit products, child labour and the risk of low quality. Blockchain technology has been touted as having the potential to alleviate the above challenges. Traceability using blockchain can ensure that fair practices are followed and minimise risks.
To arrive at these findings, we conducted interviews with the co-founders and CEOs of service providers providing blockchain solutions to diverse industries such as coffee production, aviation spare parts, shipping fuel and recycled plastics for consumer goods industries. The interviews provided us with a first-hand perspective on how blockchain implementation was improving social sustainability and reducing risk in the supply chain. To support these perspectives, we also requested additional information and evidence from the companies involved.
Concerningly, when identifying service providers to interview who had successfully implemented blockchain, we discovered that the majority of them had faced multiple challenges doing so.
Our research revealed a lack of understanding of the mechanisms needed for blockchain implementation to improve sustainability and risk management in supply chains. To tackle this, our study identifies a number of steps that blockchain service providers can take.
Developing user-friendly interfaces, customised secure digital payment systems and easily accessible technical support for suppliers are all suggested vital steps for ensuring that stakeholders across the supply chain can engage with each other effectively. Furthermore, applying local-level knowledge and building relationships facilitates smoother adoption of the technology.
With companies under pressure to adapt their practices to better contribute to the UN's Sustainable Development Goals and to be accountable to governments, investors and consumers alike, blockchain can be effective in highlighting problems in the supply chain and keeping track of how they are being addressed. It also provides the opportunity for companies to continuously learn and improve their services.
As blockchain enables businesses to track and trace the complete movement of raw materials and products throughout the supply chain, the technology can help identify any potential risks or questionable practices and reduce risk.
The full research paper, Improving social sustainability and reducing supply chain risks through blockchain implementation: role of outcome and behavioural mechanisms, is available upon request.