Proj 026 0115

BLOCKCHAIN & SUPPLY CHAIN: TOWARDS AN INNOVATIVE SUPPLY
CHAIN DESIGN
Jérôme Verny, Ouail Oulmakki, Xavier Cabo, Damien Roussel
De Boeck Supérieur | « Projectics / Proyéctica / Projectique »

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2020/2 n°26 | pages 115 à 130
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ISBN 9782807393875
DOI 10.3917/proj.026.0115
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BLOCKCHAIN & SUPPLY
CHAIN: TOWARDS AN
INNOVATIVE SUPPLY
CHAIN DESIGN
Jérôme Verny
Professor NEOMA BS
Ouail Oulmakki
Researcher NEOMA BS
Xavier Cabo
Head of Business Blockchain
Damien Roussel
Engineer NEOMA BS
A B S T R AC T
A blockchain is a peer-to-peer distributed ledger technology that securely and
immutably records transactions between parties in blocks. In its essence, block-
chain provides a trusted, accountable, and transparent environment where inter-
mediaries who were historically necessary to validate and record transactions are
no longer needed. Blockchain has various applications areas in the supply chain. In
fact, during the last few years, many blockchain projects have emerged around the
world especially in Europe and North America. In this paper we present the state
of the art of blockchain potential in supply chain. We also illustrate their current
application in industry and retail. We propose an original approach based on an
online game model with a simulation scenario to test and learn how blockchain
technology can affect the supply chain efficiency.
Keywords: Blockchain – Supply Chain – Logistics operations – Supply chain

design
proyéctica / projectics / projectique – n° 26 115

JÉRÔME VERNY, OUAIL OULMAKKI, X AVIER CABO, DAMIEN ROUSSEL
RÉ SUMÉ
La blockchain est une technologie « peer-to-peer » qui enregistre de manière
sécurisée et immuable les transactions entre les parties dans des blocs. La
blockchain est supposée fournir un environnement fiable et transparent où les
intermédiaires qui étaient historiquement nécessaires pour valider et enregistrer
les transactions ne sont plus nécessaires dans un monde de plus digitalisé. La
blockchain a divers domaines d’application en supply chain. Récemment, de nom-
breux projets de blockchain ont vu le jour dans le monde notamment en Europe et
en Amérique du Nord. Dans cet article, nous présentons l’état de l’art sur potentiel
de la blockchain à disrupter les modèles logistiques actuels. Nous illustrons son
application actuelle dans le secteur de l’industrie et le commerce de détail. Nous
proposons une approche originale basée sur un modèle de jeu en ligne en cours de
développement et proposant un scénario de simulation pour tester et apprendre
comment la technologie blockchain peut affecter l’efficacité de la supply chain.
Mots clés : Blockchain – Supply Chain – Logistique opérationnelle – modèles

logistiques innovants
1. INTRODUCTION
We observe that there are many existing works in the recent literature
exploring the potential of big-data and blockchain technology and how it can
disrupt the supply chains (Benzidia, 2013; Wang, 2019; Ageron et al. 2020;
Dubey et al. 2020). However, blockchain adoption by businesses is still on its
early stage. The most important literature is discussing the conceptual fra-
mework and how it can be implemented in supply chains. A few of research
papers are proposing a strategic approach based on stakeholder’s interac-
tions and decision making along the supply chain.
In the recent literature on supply chain operations, researchers and
practitioners argue that blockchain can provide a real time visibility in the
shipping industry among the stakeholders such as customs, ports autho-
rities, freight forwarders. The blockchain offers a framework with secured
sharing data, predictive and risk analysis capabilities.
Bocek and al., (2017), conclude that smart contracts can reduce the
number of intermediaries and provide more automation in the supply chain
process. Smart contracts can also reduce the operational costs. Pan (2020)
argue that Blockchain technology has the potential to enhance the informa-
tion sharing among the supply chain players.
Moreover, until now, there has not been any technological innovation that
had more potential to advance the supply chain industry than blockchain
technology. Over the last few years, companies of all sizes have identified
116 projectique / projectics / proyéctica – n° 26

BLOCK AIN & SUPPLY CHAIN
and tested dozens of blockchain use cases and applications to help address
operational problems, improve processes, and reduce business costs.
These potential applications range from end-to-end process visibility and
real time product traceability to data security and transaction reconciliation.
While these potential benefits are quite promising, there are hurdles that
still remain which prevent blockchain technology to see a widespread adop-
tion. One of these key challenges is the lack of knowledge and understanding
of this technology by supply chain executives and professionals. This paper
investigates both benefits and barriers of Blockchain adoption in supply chain
management. In this paper, we discuss blockchain potentials in supply chain
management by providing some examples of blockchain applications in the
shipping industry and common use cases. Then, we propose an interactive
game model allowing professionals, students and supply chain managers
to help better understand blockchain fundamentals and potential. Finally,
the paper will present our innovative educational tool to tackle the current
knowledge gap in the marketplace.
2. BLOCKCHAIN FUNDAMENTALS
2.1. Shared Ledger
First and foremost, the blockchain is a shared (distributed) and decentra-
lized ledger (Wamba, & Queiroz, 2018). This is arguably the biggest idea
behind blockchain, the idea that makes it different from databases or regu-
lar ledgers. On a shared ledger your company’s data doesn’t sit in one place.
Rather, there are thousands of secure copies of that data on different com-
puters (nodes) around the world. This increases the security of your data as
it is far easier to hack a centralized ledger that only has one copy of your data
than thousands of copies of a shared ledger.
If your company requires decentralized information then blockchain is
usually a more efficient and less expensive than traditional databases since
your business doesn’t have to rely on intermediaries to record and track
transactions as well as maintaining the integrity of the transaction data. The
key characteristic that makes blockchain different from traditional data-
bases is the combination of distribution, decentralization, and a consensus
mechanism.
For example, let’s say Anvils Unlimited contested an order of 100 anvils
for $1,000 from Acme Incorporated. Anvils says the order cost is really
$10,000 and Acme owes them $9,000. If anyone checked the block on the
blockchain that represented the Anvils Unlimited/Acme transaction they
would see that 999 computers have copies of Acme’s order of 100 anvils for
$1,000 from Anvils Unlimited. If Anvils Unlimited is the only side that says
the amount of the transfer is different from what everyone else has, there’s a
good chance Anvils is incorrect or, worse, a malicious actor. That’s the power
of a distributed ledger.
proyéctica / projectics / projectique – n° 26 117

2.2. Permission
Not all blockchains are the same. Some blockchains are permissioned and
permissionless (Babich and Hilary, 2019). Indeed, permissionless block-
chains allow anyone to participate in them. This makes sense for Bitcoin
and Ethereum, two cryptocurrencies that individual consumers want to
participate in and trade with. While permissionless blockchain are theore-
tically more secure because there are more ledgers out there to confirm or
deny claims, permissionless blockchains are also subject to more malicious
actors entering the network and causing havoc because they are open and
have no vetting process.
Conversely, a permissioned blockchain requires those who want to
participate in a transaction to get permission to do so first. Permissioned
blockchains assign a unique identifier to each participant which allows a
business to set specific policies and rules for transaction details and data
access. For instance, if Acme Incorporated and Anvils Unlimited are recor-
ding their transactions on a permissioned blockchain they don’t want Noisy
Blinky Toys Inc. who have nothing to do with their business butting in on their
permissioned blockchain.
Figure 1. Permissioned vs Permissionless Blockchain
Source: MOBIS, according to BusinessBlockchainhq.com
As you can imagine, permissioned blockchains are less susceptible to

malicious actors because they are not open and require permission. While
there are less total participants involved in a permissioned blockchain, it is
less secure than permissionless blockchain because there are fewer copies

of the transaction out in the world. On the other hand, it runs faster as there
are less nodes to validate for a given transaction.
2.3. Cryptography
In addition to the security that comes from the distributed ledger, blockchain
technology uses cryptography to add another higher level of security (Babich
and Hilary, 2019). Cryptography is a fancy word for a coded message. It’s like
a decoder ring but much longer and far more difficult to crack. Cryptography
is also used to ensure that past records cannot be tampered with.
Blockchain cryptography uses the data your company puts onto the block-
chain as an input and outputs a hash. Typically, a hash is 64 characters long
or 16 times longer than that password you most likely use on your phone. As
of this writing, no one has ever hacked a blockchain hash. Each block on the
blockchain – that is, each transaction recorded on the ledger – is connected
to the blocks that precede and follow it with a 256 bit hash that is 64 charac-
ters long. Another important element about the structure of a block is the
Merkle root which is the hash of all the hashes of all the transactions in that
specific block.
Figure 2. Simplified Bitcoin Blockchain
Source: Network World
2.4. Consensus
In the context of blockchain, consensus means that two or more parties
agree on the correct state of data on the system and synchronize the data on
the blockchain (Babich and Hilary, 2019). This means each copy of the shared
ledger will have the exact same data.
Without consensus, deals and transactions fall apart and are not saved to
the blockchain because they are never agreed upon. Specifically, this means
that the participants cannot agree to a truth. For instance, Acme claims to
have bought 500 anvils from Anvils Unlimited for $1,000 on April 10, 2018
while Anvils Unlimited claims they only received $900. If the two sides of the
transaction cannot reach consensus there is no deal and nothing is added to
the blockchain.

In more layman’s terms, consensus serves to help two or more parties

that don’t trust each other to trust each other. How do consensus algorithms
do this? They build trust between parties by establishing trust in how the
data between them is handled and committed to the blockchain. If the data
and how it is recorded cannot be gamed by either party or any malicious
actors then the transaction parties should trust the process, each other, and
the results.
Trustworthy consensus is one of the main reasons the blockchain exists.
How often have you struck a deal and done your part only for the other party
to fail to do theirs, to question the terms of the deal, or reneg on their res-
ponsibilities? These are the kinds of problems that blockchains and consen-
sus solve.
That being said, there are different ways to achieve consensus.
Specifically, there are different consensus algorithms. Examples of enter-
prise blockchain consensus algorithms include:
y Proof of Work (aka mining) which requires network
users to resolve a complex mathematical puzzle with the
goal to validate a transaction and create a new block
y Proof of Stake which selects the creator of the next block
based on several stake related factors such wealth and
age
y Practical Byzantine Fault Tolerance which achieves
consensus as a result of a minimum number of other
nodes in the network ratifying the new block
y Proof of Elapsed Time which is a hybrid of a random
lottery and first-come-first-serve basis
y Proof of Authority which requires sign-off by a majority
of designated nodes for a block to be created
As of this writing, there is no industry-wide best practice when it comes
to consensus algorithms which is an issue. It’s an issue because depending
on which one you choose or have to work with, you will have to deal with
different sets of pros and cons.
2.5. Smart Contracts

Contracts, whether they are leases, mortgages, loans, or for services, have
been around a long time. But when something goes wrong and one party
fails to perform their part of the contract, what happens? Then you have to
go back and forth with them until they come around. And if they don’t? Then
you have to call an attorney or a mediator to help persuade them. At that
point, you are looking at spending hours and thousands of dollars to get the
other party to simply execute their half of the contract.

Figure 3. Smart contacts explained
Source: Businessblockchainhq.com
While traditional contracts require both parties to execute their res-
ponsibilities, smart contracts self-execute predefined actions when specific
conditions associated with a given transaction are met (Babich and Hilary,
2019). An easy way to understand smart contract is to view it as “program-
mable money.”
For example, if you are a landlord your tenants have leases. The smart
contract contains key data of both parties such as the name, contact informa-
tion, bank account details as well as information about the lease itself inclu-
ding lease amount and payment date. When a smart contract self-executes
on the pre-defined lease payment date, it automatically withdraws funds
from the tenant’s bank account and deposits the funds into your account.
This saves you the monthly rental statements in advance, of reminding the
tenant to pay, and from hounding the tenant once the late date has passed,
never mind eviction notices, court dates, and attorney’s fees.
3. BLOCKCHAIN IN SUPPLY CHAIN

Since the introduction of blockchain technology several years ago, almost
every single industry has been experimenting with this novel technology and
conducting proof of concept projects to see if it can address their respective
legacy challenges that other technologies have fell short to resolve. With
many use cases ranging from product traceability and transactional cost
reduction to inventory management, supply chain has emerged as one of the
industries that can benefit the most from blockchain.

3.1. Current Blockchain Projects:

Benchmark
Blockchain
Key players Sectors
current projects
Maritime transport
Tradelens Maersk, CMA CGM, IBM, ports & container ship-
ping
Maritime transport
Smart port program (Port of Anterwep and T-mining)
& ports operations
Walmart & IBM Retail/food
Carrefour / Auchan / Casino Retail/food
Freight & logistics consortium
Freight transport
(Accenture, APL- shipping liner, Kuehne + Nagel,
& logistics
AB InBev- beverage manufacturer)
Freight transport
Blockchain in Transport Alliance
& logistics
Freight transport
UPS -blockchain
& logistics
The MediLedger Project:
(industrial consortium including IBM blockchain, Pharmaceutical
T-Mining, Block Verify, Chronicled, FarmaTrust, iSolve, indutry
Modum, OriginTrail, Provenance …)
Advanced Tracking and Traceability project :
Pharmaceutical
(SAP, Merck, AmerisourceBergen, GSK, AMGEN,
industry
Boehringer Ingelheim, McKesson, and Novo Nordisk)
Mobility Open Blockchain Initiative:
(A consortium for blockchain innovation in the mobility
Mobility
industry: Renault, Ford, BMW, General Motors,
IBM, Accenture…)
Source: author’s
3.2. Insight from the Shipping Industry on

the link between blockchain and supply
chain efficiency
In international freight transportation, due to the long cycle and opaque
logistics information, goods are difficult to track, something that increases
the logistics management cost and increases the risk of cargo loss. By
implementing blockchain technology, logistics information and documents
can be shared in real time, and the cargo transportation process is followed
up rapidly, to ensure that goods arrive at their destination safely and on
schedule.

Figure 4. Digitization in International Maritime Supply Chain

Source: Rodrigue (2018)
In the maritime shipping space, Maersk-IBM Blockchain platform

“TradeLens” solution has been developed in 2017 to provide more efficient
and secure methods for conducting global trades by using blockchain tech-
nology to manage and track container shipments. Blockchain as a distribu-
ted ledger technology share and receive information with the aim to help
the stakeholders increase the shipping efficiency by integrating information
and documents about shipments onto a secure platform accessible to
shippers, carriers, freight forwarders and others in the supply chain. With
blockchain, paperwork and errors can be reduced by using smart contracts,
which is one of the most powerful functionalities of blockchain technology.
It is programmable and can be fully customized to align with your business
logic, whether it is simple or complex as a way to digitize tedious middlemen
situations while at the same time making the job of arbitrators and lawyers
easier.
Recently, during the Covid-19 crisis, China Merchants signed a strate-
gic cooperation framework agreement with Alibaba Group and Ant Group.
With this partnership, the three parties will jointly promote the in-depth
integration of the port industry and digital technology, which makes China
Merchants Port the world’s first digital port open cooperation network
based on blockchain.
China Merchants Port is the largest public terminal operator in China.
It has 50 ports in 26 countries and regions in the world, with a container
throughput of over 100 million TEU. It plays a key role in supporting global
trade. The cooperation of such large scale operations makes the landing of
the blockchain a remarkable benchmark in the port.
In the upcoming years, blockchain is going to enhance shipping efficiency
by reducing costs, improving safety and reliability. This figure shows the
interoperability between IoT and blockchain in international shipping:

Figure 5. Interoperability IoT-Blockchain

Source: MOBIS
3.3. How to Successfully Implement a

Blockchain Project?
We identify four steps for a blockchain project in supply chain:
Figure 6. R&D framework for blockchain project
Source: MOBIS

4. BLOCKCHAIN APPLICATIONS
IN SUPPLY CHAIN
4.1 Walmart
A growing number of companies around the world have been experimen-
ting with blockchain technology to address logistics challenges in order to
improve their supply chain processes. Walmart has been on the forefront of
this trend by piloting blockchain since 2016. The objective of its first pilot was
to streamline the traceability of mangoes sold in the United States from farm
to store. With the implementation of blockchain technology, Walmart was
able to reduce the time to trace mango provenance from 7 days to 2 seconds.
The ability to quickly trace the origin of a produce is invaluable especially
when a food outbreak such as E.coli or salmonella occurs where you need to
identify the source of contamination and time is the essence.
Another key blockchain proof of concept project from Walmart took place
in China to increase the transparency of the origins of its pork products as
there had been growing concerns and lack of trust from local consumers.
Blockchain was a perfect fit to tackle this challenge and the pilot project
allowed Walmart to provide full transparency of the provenance of pork to
consumers by using digital certificates.
Today, Walmart can trace the origins of over 25 products from five sup-
pliers and by end of 2019, more than 100 Walmart leafy green vegetable
suppliers will be mandated to input comprehensive food data into Walmart
blockchain database. This mandate clearly shows Walmart commitment to
leveraging blockchain technology into its supply chain management.
As more large companies like Walmart adopt blockchain technology to
monitor their supply lines we can only expect more organizations to follow
suit. The complexity of the supply chain has remained problematic for quality
control for quite some time. In future, companies will be able to use block-
chain not just to give customers better products, but healthier ones too.
4.2 De Beers
Over the past decade, the diamond industry has come under a lot of
scrutiny for the usage of conflict diamonds. Many companies have found it
extremely difficult to separate conflict diamonds from those obtained from
natural mining. As a result of this, De Beers Group has deployed block-
chain technology to help track diamonds from the ground to the customer
(Lapointe & Fishbane, 2019).
De Beers blockchain project aimed to ensure that all their diamonds
are conflict-free. Conflict diamonds are generally sold in order to finance

widespread violence and war, so limiting their usage will help to reduce their
demand. The pilot was the first of its kind where diamonds are tracked all
the way from the mining process to the jewellers. By having visibility on the
value chain process from end-to-end, Be Beers is now able to verify the
integrity of their diamonds before they hit the market.
5. OUR MODEL: BLOCKCHAIN

GAME APPROACH
The concept of blockchain, like deep learning and most of the recent techno-
logies, is difficult to assimilate for untrained people. Interacting and mani-
pulating tools simulating these concepts greatly helps their assimilation. It
is therefore, with the aim of enabling the supply chain community and its
students to understand what the ins and outs of the blockchain are and how
it can impact the supply chain, that we have created a supply chain simula-
tion game integrating the key concepts of blockchain.
This game allows players to understand how the blockchain is useful in a
supply chain. Furthermore, the game will include several different versions
in order to adapt to various audiences.
The main principle is to offer teams to simulate a traditional supply chain.
Each member of each team will be assigned a key role of the supply chain
(Sourcing Manager, Production Manager, Warehouse Manager, Transport
Manager).
Each team will aim to maximize the overall performance of its supply
chain. The overall performance will be calculated according to two criteria:
the financial health of the company and its customer satisfaction. All players
Figure 6. Schematic representation of the game interaction
Source: MOBIS - BBHQ

will develop, according to their respective role, their supply chain by creating
new factories, warehouses, roads among other things. Those improvements
will facilitate their business development. At the end of the game, the team
with the most efficient supply chain will win.
The blockchain will obviously have its place in this simulation game.
Several of its major features will be highlighted including its decentralized
nature, disintermediation potential, and enhanced security. The discovery of
the benefits of the blockchain will be done during the game and will have a
significant impact on the success criteria of the teams.
6. CONCLUSION
In this paper we conclude that blockchain deployments at scale level is
mostly in the pilot stage (proof of concept). Currently, there is no evidence
of a large-scale adoption within the supply chains. Wang and al., 2019 argue
that there is no empirical evidence on how blockchain technology can disrupt
the supply chains in the short run.
Indeed, one of the main challenges for businesses is their lack of unders-
tanding of blockchain fundamentals and its potential to positively impact
supply chains. A stakeholders’ engagement and further empirical research
using supply chain data as well as simulations of the impacts of blockchain
on supply chain can stimulate and accelerate its adoption in supply chain and
logistics operations.
This paper is based an ongoing research project. Our goal is to offer an
innovative learning model for academics, students and for business profes-
sionals involved in the digital transformation of the supply chain. Considering
the level of complexity of blockchain technology, this educational tool should
be used in conjunction with traditional learning methods such as classroom
or online training to reinforce the knowledge acquisition and make the inte-
ractive game even more valuable. By introducing the blockchain game to
universities and companies, we hope to help bridge the current knowledge
gap that prevents blockchain technology to go mainstream. It is also our
intention to contribute to the emergence of new supply chain practices and
to improve engineering in process modeling through the implementation of
technologies such as blockchain technology and its applications in the sup-
ply chain. Finally, this applied research project represents an educational
innovation that we wish to present at scientific events in France and inter-
nationally.

ACKNOWLEDGEMENT
We wish to acknowledge the PROLOG CONFERENCE for given us the
opportunity to present this research during the 2019 annual conference
hosted by the IAE of METZ.
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Jérôme Verny is a Professor in Supply Chain Management and Director of the

Master of science « Digital & Innovative Supply Chain » at Neoma Business
School, Paris (28th in the "Masters in Management 2020" Financial Times
ranking). Jérôme VERNY is also a founder and Director of the International
Research Institute for Transport & Innovative Supply Chain. Jérôme leads a
several R&D projects in France and a broad and contribute to academic publi-
cations in several international journals.
jerome.verny@neoma-bs.fr
Ouail Oulmakki is a researcher at MOBIS Institute – The International

Research Institute for transport & Innovative supply chain – NEOMA BS. Ouail
OULMAKKI is the Head of education of the Master DISC « Digital & Innovative
Supply Chain » at NEOMA BS, Paris. Ouail is also member of several research
networks in France and worldwide.
ouail.oulmakki@neoma-bs.fr

Xavier Cabo is the co-founder of Business Blockchain HQ, a leading and

trusted online platform for high quality content and research on blockchain
technology for business professionals. He has over 10 years of experience in
technology management, strategic consulting, and business process impro-
vement in both the private and public sectors. He holds a MBA in Strategic
Management from Tulane University and a Bachelor of Science in Business
Administration from Florida Institute of Technology.
xaviercabo@gmail.com
Damien Roussel is research engineer at NEOMA Business School. He works

on a several innovative projects focussing on supply chain.
damienrousse1@gmail.com

Proj 026 0115

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BLOCKCHAIN & SUPPLY CHAIN: TOWARDS AN INNOVATIVE SUPPLY

Jérôme Verny, Ouail Oulmakki, Xavier Cabo, Damien Roussel

De Boeck Supérieur | « Projectics / Proyéctica / Projectique »

Distribution électronique Cairn.info pour De Boeck Supérieur.

Powered by TCPDF (www.tcpdf.org)

Keywords: Blockchain – Supply Chain – Logistics operations – Supply chain

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Mots clés : Blockchain – Supply Chain – Logistique opérationnelle – modèles

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Figure 1. Permissioned vs Permissionless Blockchain

Source: MOBIS, according to BusinessBlockchainhq.com

As you can imagine, permissioned blockchains are less susceptible to

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Figure 2. Simplified Bitcoin Blockchain

Source: Network World

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In more layman’s terms, consensus serves to help two or more parties

2.5. Smart Contracts

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Figure 3. Smart contacts explained

3. BLOCKCHAIN IN SUPPLY CHAIN

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3.1. Current Blockchain Projects:

3.2. Insight from the Shipping Industry on

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Figure 4. Digitization in International Maritime Supply Chain

In the maritime shipping space, Maersk-IBM Blockchain platform

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Figure 5. Interoperability IoT-Blockchain

3.3. How to Successfully Implement a

Figure 6. R&D framework for blockchain project

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5. OUR MODEL: BLOCKCHAIN

Source: MOBIS - BBHQ

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Jérôme Verny is a Professor in Supply Chain Management and Director of the

Ouail Oulmakki is a researcher at MOBIS Institute – The International

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Xavier Cabo is the co-founder of Business Blockchain HQ, a leading and

Damien Roussel is research engineer at NEOMA Business School. He works

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