TY - JOUR TI - Blockchain adoption and design for supply chain management DO - https://doi.org/doi:10.7282/t3-wxwf-xj62 PY - 2019 AB - In the current business environment, firms are eager to adopt new technologies as they observe more and more successful business applications thereof. One of the disruptive technologies, Blockchain technology (BCT), is currently drawing public attention owing to the cryptocurrency phenomenon for which BCT serves as the backbone technology. In view of certain innovative features, BCT holds out the promise of impacting Supply Chain Management (SCM), both operationally and financially. This Blockchain-centered research investigates the impact of BCT on SCM operations as well as its strategic adoption. It provides a holistic treatment and analysis in terms of: (1) Reviewing BCT and comparing it with peer technologies; (2) investigating existing and potential applications of BCT; and (3) identifying business benefits and the impact of BCT, including safety, cost savings, demand growth and yield improvement. Finally, we extract and explore useful managerial insights via rigorous modeling and analysis, and extensive numerical studies. Combining the strategic decisions on BCT adoption and operational decisions pertaining to supply chains, we develop two mathematical models: (1) a Blockchain-enabled Newsvendor model, and (2) a Dynamic Programming (DP) model. With the objective of optimizing total expected profit, a Newsvendor model is developed to study how BCT adoption impacts optimal inventory decisions and ultimately how to determine optimal BCT adoption. The model is illustrated with closed-form solutions for selected demand distributions, specifically, Uniform and Normal distributions. We construct a DP model underlain by a generic stochastic model, where the firm seeks to maximize the total expected discounted profit by jointly managing (1) Blockchain design, (2) production or ordering decisions, and (3) dynamic pricing and selling. We first show that the deployment of BCT can assist firms in reducing order quantities, lowering selling prices and reducing target-inventory levels. It is also shown that higher volatility in either supply or demand lowers the expected profit as compared to lower-volatility counterparts. Our numerical study produces useful managerial insights. For example, some types of goods (e.g., credence goods and experience goods) greatly benefit from the adoption of BCT, but it may not prove beneficial to leverage BCT for certain other types of goods (e.g., search goods). Finally, considering the lifecycle of typical experience goods, it is recommended to adopt BCT as early as possible. KW - Blockchain technology KW - Management KW - Blockchains (Databases) KW - Business logistics LA - English ER -