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Supply chain financing scheme based on blockchain technology from a business application perspective

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  • Chien-Hua Tsai

    (Chihlee University of Technology)

Abstract

Supply chain finance (SCF) essentially provides a flexible cash flow solution that maximizes the working capital situation for the main stakeholders in the supply chain. Buyers benefit from longer payment terms and reduced working capital requirements, suppliers have early and accelerated cash flow, and financial intermediaries obtain revenue by providing business finance. However, current SCF platforms have some opaque factors, such as information asymmetry that results in delayed payments to suppliers; this is particularly harmful to small and medium-sized enterprises. Cybersecurity risks (e.g., fraudulent invoices, duplicate transactions, and double-spending payments) have also been increasing rapidly and continue to threaten technology-reliant SCF platforms. Blockchain technology is a disruptive innovation that provides security benefits for business parties because of characteristics such as decentralization, transparency, and immutability; these elements enable SCF platforms to increase transparency and trust and decrease the potential of transaction manipulation among participants. This paper proposes a blockchain-enabled alternative SCF model to address current challenges in supply chain financing processes. By adopting the underlying techniques of blockchain technology through an ancillary decentralized application and smart contract, the proposed scheme can provide the buyers, suppliers, and financial institutions in the SCF ecosystem with efficient, transparent, and secure financing services.

Suggested Citation

  • Chien-Hua Tsai, 2023. "Supply chain financing scheme based on blockchain technology from a business application perspective," Annals of Operations Research, Springer, vol. 320(1), pages 441-472, January.
    • Handle: RePEc:spr:annopr:v:320:y:2023:i:1:d:10.1007_s10479-022-05033-3
    DOI: 10.1007/s10479-022-05033-3
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    1. Chan, Hau-Ling & Choi, Tsan-Ming & Mendez De la Torre, Daniela, 2023. "The “SMARTER” framework and real application cases of blockchain," Technological Forecasting and Social Change, Elsevier, vol. 196(C).

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