Fostering Supply Chain Integration through Blockchain Technology: A Study of Malaysian Manufacturing Sector

Mobashar Mubarik, Raja Zuraidah binti Raja Mohd Rasi, Muhamamad Faraz Mubarak
2020 International Journal of Management and Sustainability  
Article History Keywords Blockchain technology Supply chain integration Digital supply chain Sustainable supply chains. . The study aims to identify the role of the blockchain-based supply chain in supply chain integration. The study also aims to investigate the role of various factors that possibly mediate the relationship between blockchain-based supply chain management and supply chain integration. The study adopted a twofold mixed-method approachsequential explanatory-to attain the
more » ... s. In the first phase, data were collected from Malaysian electrical and electronic firms, and by applying PLS-SEM, hypothesized relationships were examined. In the second phase, through a qualitative study, the results of the first phase are discussed with the industry experts to seek their expert opinion. In doing so, the semi-structured interview from seven experts, selected through purposive sampling, were conducted. The findings of both inquiries reveal that blockchain technology has significant potential to enhance the integration between numerous actors in multi-level supply chains while ensuring the transparency and traceability in the transactions. Moreover, the findings reveal that certain pre-requisites are missing at the moment in the Malaysian manufacturing sector, which are inevitable to be met, before implementing the block-chain based supply chain. Sophisticated infrastructure which could suffice the blockchain-based technologies implementation in supply chains and the absorptive capacity is prominent amongst them. Consequently, it is recommended that appropriate training should be given to employees in order to cater to the requirement of the technical skills needed to handle such advanced technology. Further, continuous infrastructural investments should be made to implement blockchain-based technology in the business ecosystem of Malaysia at the government level. Contribution/Originality: This study contributes to the literature on BDSCM in two ways. First, taking experts from the major industries of Malaysia, this study unveils the potential of BDSCM in transmuting the efficiencies of Malaysian firms. Secondly, the study unleashes the role of BDSCM in supply chain integration. accountability. In this vein, the exponential increase in technological advancements in the last ten years can help to substantially improve the traceability, accountability, and verifiability of the transaction taking place in the complex supply chain networks. Likewise, digital technologies, together with big data, can be instrumental in supply chain integration, which comes through the timely generation and sharing of the information with relevant partners in the supply chain. Nevertheless, for supply chain integration, the questions of what information to share, how much to share, and to whom it should be shared are essential to be addressed. In this context, blockchain-driven supply chain management appears to be the most suitable option. It is a supply chain that unites the major developments in digital technologies, big data, and blockchain technologies under one umbrella. Blockchain is considered as one of the disruptive technologies of modern times. However, despite its heightened importance, the majority of the businesses are unsure of what blockchain is? how does it work? what fields of application the technology has? and, how their business can benefit from implementation? A common misconception is that blockchain and Bitcoin are the same things, which is not the case. Blockchain is applied for bookkeeping of the Bitcoin, which is one of the many applications for which blockchain can be used for Kranz (2018). Blockchain has the potential to be applicable in many industries, not only in the financial services industry, where most attention has been directed so far. Several industries are continuously adapting it to perform their business operations and other critical business functions like management of electronic health records, strengthening data privacy, ending counterfeiting in the supply chain (Kranz, 2018) . Another important application of blockchain is the smart contract, which can operate and automate business processes in a fully decentralized way (Kranz, 2018) . This, combined with the opportunity of company integration, inter-company, inter-industry, and integration with suppliers will be much better if there will be a singular platform as blockchain technology is. Corresponding to the preceding point, it was also revealed that many people working in the Malaysian manufacturing industry have awareness about the blockchain technology and its whereabouts. Moreover, the respondents opined that as blockchain is a secure platform so the issue of security will be less as compared to conventional enterprise resource planning (ERPs) software's which they are currently using. Four respondents explicitly mentioned that, if the transactions are transparent enough and can be tracked and traced, then the integration of the supply chain will be exemplary in our manufacturing sector. As previously confirmed by Chen et al. (2017), Traceability and Transparency are prominent attributes of blockchain-based supply chain (Wang & Qu, 2019). Finally, the critical barrier in implementing the blockchain technology in the supply chains was enquired. As a result, the experts commented that, although the potentials of blockchain technology in integrating the supply chains are undoubtedly visible, certain pre-requisites are missing at the moment, which is inevitable to adopt such sort of advanced supply chain. The fact is reported in various researches. Markedly, the absorptive capacity and the sophisticated infrastructure is missing in the Malaysia manufacturing industries to adopt blockchain-based supply chain platform. CONCLUSION With the dawn of the fourth industrial revolution, numerous areas were of the business ecosystem were identified, which are still operating in a conventional way. As a result, they are considered vulnerable to many threats, including transparency and security. Prominently the complex supply chains, which encapsulate several stakeholders, including internal (intra-company, intra-departmental) stakeholders, external stakeholders including suppliers, customers, partners, government agencies, and a few more. They are acting in the contemporary supply chains, which have become more complex and multi-echelon. Moreover, the better integration and coordination amongst all these stakeholders is inevitable in order to promote transparency, verifiability, security, and trust in the course of multiple business transactions. At the moment, a string mechanism to make this possible is missing. According to many researchers, blockchain technology has the ability of transparency, variability, and security features to manage such multi-level transactions. Therefore, this study investigated the influence of blockchainbased technology on supply chain integration in the Malaysian E&E sector through seven semi-structured interviews. As a result, it is found that a blockchain-based supply chain management system can enhance the operations of complex supply chains in the form of a distributed ledger. However, some problems in implementing such technology were also reported, which include absorptive capacity and lack of sophisticated infrastructure in the Malaysian manufacturing sector. This study recommends that pertinent policies should be implemented at the government level to (gradually) invest on the required equipment and technologies, because the infrastructure required for these technologies is costly, and this system is required at country level or at least whole Industry (or manufacturing sector) level. Moreover, the workforce should be trained the relevant skills to handle and use that much-advanced technology.
doi:10.18488/journal.11.2020.93.135.147 fatcat:ehzjhouzvbhkto45orf6b32nsi