DESIGN AND IMPLEMENTATION OF A SUPPLY CHAIN MANAGEMENT SYSTEM USING BLOCKCHAIN TECHNOLOGY

1.1 Introduction

Supply Chain Management is the strategic and systematic coordination of traditional business functions (Nakov et al, 2014) which facilitate the distribution network between customers, and the company's internal activities (Barraza et al, 2016). Similarly, supply chain council articulated that supply chain is a network of organizations that work together, and are connected to control, manage, and improve the flow of materials, and information from suppliers to end customers (Jaklic et al, 2006). Changes in the distribution of supply chains are very dynamic, the things that affect it include direct customers and also announcements of new regulations (Bastas and Liyanage, 2018). Supply chain practices greatly influence company or organizational performance. Competitive advantage shows that the supply chain is correct, because it includes supplier management, customer management, inventory management, distribution, development, and design of new products (Truong et al, 2016; Psomas et al, 2014).

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitations of the Study and Definition of technical terms.

1.2 Background of Study

Over the past few years, more emphasis has been placed on gaining competitive advantage by organizations locally and internationally by incorporating Supply chain management practices in their operations. Many organizations have realized the importance of creating an integrated relationship with the suppliers and customers. This simultaneous integration of customer requirements, internal processes and upstream supplier performance is referred to as supply chain management (Tan et.al 2010). With dwindling support from central government to its agencies, there is need for better ways for managing operations so as to reduce cost and increase efficiency. Adoption of good SCM practices can thus provide a good avenue to meet these goals.

In every business organization, the prime concern is to maximize profit after the deduction of all expenses and to make it a going concern. To maximize profit, there must be adequate and proper planning in all departments of the organization including purchasing and supply departments and co-ordination by management.

The supply chain encompasses all of those activities associated with moving goods from the raw-materials stage through to the end user. Advocates for this business process realized that significant productivity increases could only come from managing relationships, information, and material flow across enterprise borders. The best companies around the world are discovering a powerful new source of competitive advantage. It’s called supply-chain management and it encompasses all of those integrated activities that bring product to market and create satisfied customers.

The Supply Chain Management Program integrates topics from manufacturing operations, purchasing, transportation, and physical distribution into a unified program. Successful supply chain management, then, coordinates and integrates all of these activities into a seamless process. It embraces and links all of the partners in the chain. In addition to the departments within the organization, these partners include vendors, carriers, third party companies, and information systems providers.

The supply function continues to evolve as technology and the worldwide competitive environment require innovative approaches. The traditionally held view that multiple sourcing increases supply security has been challenged by a trend toward single sourcing. Results from closer supplier relations and cooperation with suppliers question the wisdom of the traditional arm’s-length dealings between purchaser and supplier. Negotiation is receiving increasing emphasis as opposed to competitive bidding, and longer-term contracts are replacing short-term buying techniques. Organizations are continually evaluating the risks and opportunities of global sourcing. All of these trends are a logical outcome of increased managerial concern with value and increasing procurement aggressiveness in developing suppliers to meet specific supply objectives of quality, quantity, delivery, price, service, and continuous improvement (Evans, 2011).

Supply chains encompass the companies and the business activities needed to design, make, deliver, and use a product or service. Businesses depend on their supply chains to provide them with what they need to survive and thrive. Every business fits into one or more supply chains and has a role to play in each of them. The pace of change and the uncertainty about how markets will evolve has made it increasingly important for companies to be aware of the supply chains they participate in and to understand the roles that they play. Those companies that learn how to build and participate in strong supply chains will have a substantial competitive advantage in their markets.

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves.

Effective supply chain management requires simultaneous improvements in both customer service levels and the internal operating efficiencies of the companies in the supply chain. Customer service at its most basic level means consistently high order fill rates, high on-time delivery rates, and a very low rate of products returned by customers for whatever reason. Internal efficiency for organizations in a supply chain means that these organizations get an attractive rate of return on their investments in inventory and other assets and that they find ways to lower their operating and sales expenses.

1.3 Statement of Problem

Investigation revealed that most suppliers lack the technical expertise to dispense their duties. This may lead to situations where the supplier selected cannot meet the capacity and logistics requirement of the company. Another problem is inadequate supplier selection and this is one of the most important decisions in the purchasing process. There is also the problem of lack of good contractual arrangement and a clear description of the product or supplier requirements may not be available. Also, there are delivery problems.

Suppliers deliver too late, deliveries are not complete, products are damaged or may not meet quality requirements, packaging of the product is not sound and information labels in most cases cannot be read. The reason for this can be traced back to unclear specifications or careless supplier specification. The purchasing and supply department of many business organizations lack clear rules and guidelines with regard to procurement and supply governance. It is in view of these problems that this research study is carried out.

1.4 Aim and Objectives of the Study

The aim of the study is to design and implement a Supply Chain Management System using Blockchain Technology. In achieving this aim, the following specific objectives were laid out as follows to develop an application software that will:

1. Establish the extent of supply chain management practices implementation using block chain technology.
2. Manage supply functions in an organization
3. Aid easy capture and retrieval of supply chain details.
4. Help in maximizing profit by determining priority of supply chain.
5. Present reports of supplies when needed by management.

1.5 Significance of Study

The significance of the study is that it will provide a better means of managing the supply function of an organization. It will enable the organization to maintain adequate record of supply records and to easily update, retrieve and get reports when needed. It will facilitate the maximization of profit by enabling the organization to determine the priority of supply.

This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

1.6 Scope of Study

The scope of the research is focused on the Design and Implementation of a Supply Chain Management System using Blockchain Technology. The proposed system will cover only the supply chain of Pepsi Bottling Company in Nigeria.

1.7 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Research material: availability of research material is a major setback to the scope of the study.
3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
4. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).

1.8 Definition of Terms

Blockchain: A blockchain is a distributed database that uses cryptographically signed transactions and is shared among the nodes of a computer network.

Supply: To provide, give, sell, or make available something that is wanted or needed by somebody or something.