Supply chain finance and blockchain technology the case of reverse securitisation

Primary data is collected through a systematic search and review of the literature [59], while additional data is collected from grey literature. To avoid biases stemming from omitted literature, the articles were located through keyword search in the core collection of Web of Science of terms related to SCF, trade finance, and more generally, supply chain and international trade. Considering the inter-disciplinary nature of the topic and the diversity of the outlets, no constraints were imposed on specific fields or journals.

The platform, called Blockchain auto SCF, provides equal visibility on transactions and collateral custody information to interested parties and collaborates with financial institutions to supply inventory financing and purchase order financing [30]. This is achieved by leveraging reliable information stored in a blockchain that demonstrate to the financer, based on the customer’s operational information, the sufficiency of the credit or assets. The proposed model also enables the customer to mortgage its assets, which can range from raw materials to finished products, and transfer these assets to the financer in case of default, all happening in an integrated manner on the blockchain [162]. In this context, there are several reasons for undertaking a critical literature review on the interface of blockchain and supply chain finance. First, the industry has expressed a keen interest in adopting new technologies and SCF is well oriented in innovative financing solutions. Second, the growing body of academic literature [23] and the emerging range of supply chain financing systems deserve a review, which will illuminate the benefits and the limitations of blockchain SCF procedures.

  • Game theoretical network formation models [75] provide an analytical framework for such an endeavour, and can help identify SCF methods, market structure, and economic conditions under which blockchain-based SCF can be established.
  • According to the idealised view of supply chain management, supply chains are perceived as networks of organisations that collaborate together to produce competitive advantage [37].
  • Traditionally, supply chains have been plagued by information asymmetry, making it challenging to trace the origin, journey, and authenticity of products.
  • Using an immutable distributed ledger coupled with IoT-connected solutions in the supply chain can improve the traceability of the source and transport of goods and simplify compliance with consumer protection regulations surrounding temperature-sensitive goods.

What sets it apart is its immutable and transparent nature—once a block of data is added to the chain, it cannot be altered. This inherent security feature makes blockchain an ideal candidate for revolutionizing supply chain management. Despite the interesting introduction of how technology platforms can support open-account international trade, the authors are critical as to whether pure peer-to-peer payments will replace existing solutions on B2B transaction levels. Instead, they stress the value of a faster and leaner cash settlement and resulting lower transaction fees.

Blockchain-enabled supply chain operations and financing: the perspective of expectancy theory

Others consider technology an essential component in the SCF scheme, describing it as financial services solutions stemming from technology service providers [36, 89]. In the operations management literature, SCF solutions have been classified with respect to the party that provides the financing, i.e. trade credit, buyer finance and inter-mediated finance [10, 34, 135]. This article will hereinafter build upon this definition and use the relevant terminology suggested by the GSCFF, which applies irrespective of the role or the existence of an intermediary and the specific enabling technology.

  • However, firms might get stuck in long-term adversarial relationships with their suppliers, making them susceptible to opportunistic behaviour due to information asymmetry [83].
  • For example, a comparative study regarding the appropriateness of different blockchains of the same type (e.g. Hyperledger Fabric and Corda) for SCF would be an important contribution.
  • We conclude by identifying promising research directions about the implementation process, inviting further research into the transformation of business models toward a more collaborative nature.

Hence, parties that extract information rent are expected to be reluctant to take part in blockchain platforms that decrease information asymmetry. As discussed in previous parts, blockchain integration emerges as the most promising drive towards digitalisation of the SCF processes. Blockchains pledge to streamline the flow of information in supply chains and achieve the synchronisation of material, information, and financial flows [10, 95]. In the following, we analyse the ways the blockchain-driven SCF has been proposed or shown to address the challenges above based on the review of the academic studies and the industry applications summarised in Tables 2 and 3, respectively. One of the biggest hurdles of the existing SCF processes is the regulatory requirements that have been imposed on financial institutions [74, 103, 117].

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4 discusses the insights the literature offers for the barriers and pain-points of SCF systems, the ways blockchain can alleviate these, and the implementation challenges for the adoption of blockchain-based SCF systems. This section goes on to identify promising research directions using a cross-disciplinary perspective, and it concludes by presenting the limitations of this study. Using this framework, the book subsequently discusses relevant use cases for the technology, which could open up new opportunities A Contribution to the SCF Literature in the SCF space. It demonstrates that blockchain and distributed ledgers technologies could deliver substantial benefits for all parties involved in SCF transactions, promising to expedite the processes and lower the overall costs of financing programs. Having summarised the key findings from the application of this technology for approved payables financing techniques, it has become clear that there is greater potential for SCF instruments that are initiated earlier in the supply chain process.

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By working together, sharing solutions and embracing innovative technology, the healthcare industry can overcome the systemic weaknesses exposed by COVID-19. Though the obstacles are immense, nurses, doctors, supply chain experts and others across healthcare strive tirelessly to provide exceptional patient care. With many companies relocating assets into the U.S., this shift marks a stark reversal in the maturation of global supply chain ecosystems.

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The UCC article that applies will determine how parties to a financial transaction could perfect a security interest in virtual currencies or other blockchain assets (a transaction that might include the use of smart contracts). Given that blockchain’s peer-to-peer nature does not require a centralized database, and the true copy of the database is continuously replicated and reconciled across all the nodes, it is less susceptible to hackers. This is because a successful hack of a specific node’s copy of the database would soon be invalidated and overwritten by the network’s consensus mechanism.

Here, we provide a timely review of state-of-the-art industry applications and theoretical perspectives on the use of blockchain as the medium toward digitalisation for supply chain finance systems. We argue that blockchain technology has an innovation promoting role in supply chain finance solutions through reducing inefficiencies and increasing visibility between different parties, which have hitherto constituted the main challenges in this sphere. Based on a review of the academic literature as well as an analysis of the industrial solutions that have emerged, we identify and discuss the financial, operational and legal challenges encountered in supply chain financing and the promise of blockchain to address these limitations.

State governments like California, have reiterated their commitment to the agreement by enacting similar reporting and carbon reduction policies at the state level. In fact, California is requiring all businesses with over $500 million in annual revenue to disclose their carbon emissions beginning in the calendar year 2025. As a result, many large companies are requiring carbon emissions reporting from their upstream and downstream manufacturing and distribution partners to complete their own statutory carbon reporting obligations.

By leveraging blockchain’s traceability features, businesses can quickly identify and isolate counterfeit products, safeguarding their brand reputation and fostering consumer trust. This not only protects consumers from substandard goods but also bolsters the overall integrity of the supply chain. Additionally, the enhanced traceability provided by blockchain allows for more precise inventory management, reducing the risk of overstocking or stockouts.

The global procurement platform Ivalua announced November 28 that it had launched a new generative artificial intelligence offering to its platform dubbed Intelligent Virtual Assistant (IVA). “Our capabilities are especially relevant in the current macro environment as they allow small- and medium-sized enterprises cheap and efficient access to debt capital, which is crucial in the rising interest rate environment,” Wyss told Blockworks. There’s an urgent need to rebuild strategic reserves of medical supplies after the massive drawdowns early in the pandemic. Higher stock levels of items such as masks, gloves, and medications will allow hospitals to withstand unexpected demand spikes and supply shocks. Mitigating environmentally damaging business practices is top of mind for business leaders and local economies alike. The Paris Agreement of 2015 set the stage for ambitious carbon emission reduction across 196 nations, including the U.S.

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