Working Paper Article Version 1 This version is not peer-reviewed

A Blockchain-Coordinated Supply Chain to Minimize Bullwhip Effect with an Enhanced Trust Consensus Algorithm

Version 1 : Received: 10 September 2021 / Approved: 13 September 2021 / Online: 13 September 2021 (09:34:06 CEST)

How to cite: Sarfaraz, A.; Chakrabortty, R.K.; Essam, D.L. A Blockchain-Coordinated Supply Chain to Minimize Bullwhip Effect with an Enhanced Trust Consensus Algorithm. Preprints 2021, 2021090196 Sarfaraz, A.; Chakrabortty, R.K.; Essam, D.L. A Blockchain-Coordinated Supply Chain to Minimize Bullwhip Effect with an Enhanced Trust Consensus Algorithm. Preprints 2021, 2021090196

Abstract

The profitability of a supply chain (SC) is proportional to the stability of all its stakeholders as well as their consistent information sharing with an effective and efficient communication mechanism. Various inefficiencies such as bullwhip effect (BWE) and product unavailability may be caused by the lack of coordination in SC systems. Considering a multi-echelon SC, BWE is often considered as a significant factor with respect to optimal inventory management. The importance of sharing consumer demand has been quantified by comprehensive studies, given that all SC participants will access the same information. However, only a few studies were committed to identifying the importance of minimal coordination or visibility of information, while considering their effect on the overall efficiency of a SC. This paper aims to fill this void by proposing an advanced Blockchain technology (BCT) to explore the interaction of collaboration and coordination in a multistage SC. BCs are distributed ledgers in which, under certain conditions, all parties in a network can have access to data and may use this information to enhance their planning and reduce the impact of BWE. A new BC architecture is designed and evaluated in this paper for reducing BWE. However, in an SC, information sharing is challenging when data asymmetry can help certain people avoid liability or help others increase their profits. Hence stakeholders may not really trust each other in this setting and may be reluctant to share complete information. Considering that, this paper offers some insights into understanding BC information-sharing strategies and on how to create a distributed trust-enhanced environment by an improved consensus algorithm that will increase trust in a decentralized SC model. The findings indicate that complete transparency of demand data and trust among partners tends to boost overall SC efficiency and minimize BWE.

Keywords

Blockchain; Supply chain collaboration; Bullwhip Effect; Lead time; Consensus Protocol; Trust

Subject

MATHEMATICS & COMPUTER SCIENCE, Other

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