Analysis of resilience strategies and ripple effect in blockchain-coordinated supply chains: An agent-based simulation study

Abstract

Resilience enables supply chains to reduce their proneness to disruptions and recover faster. Many existing strategies to strengthen the resilience of supply chains are facilitated by the use of digital technology. Blockchain, as one of the promising innovative technologies, enables a transparent, secure, and timely data exchange and automation via smart contracts. In this paper, we discuss the impact of blockchain technology on supply chain risk management and, in particular, on supply chain resilience. We identify potential risk-related blockchain application scenarios and examine their impact on the existing resilience strategies. We explore the impact of the most promising applications with respect to resilience by using an agent-based simulation model of a complex supply network affected by disruptions. The theoretical analysis reveals a promotion of supply chain resilience strategies, especially if smart contracts are used for risk-related collaboration. The simulation study indicates an increase in resilience if the underlying collaboration is based on time-efficient processes: The propagation of disruptions, the network recovery time and total costs can be substantially reduced. However, depending on the duration of the disruption, negative effects can occur if process efficiency is insufficient. From our investigations, we derive insights for managers who are interested in practical implementation.

Highlights

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  Blockchain technology influences identified resilience strategies mostly positively.

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  Especially collaboration, visibility, agility, and velocity can be strengthened.

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  Impact of disruptions on a blockchain-coordinated network is tested with simulation.

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  Reduction of the network's ripple effect and recovery time possible but not guaranteed.

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  Physical process efficiency and length of disruption have significant influence.