Adoption Of Blockchain Technology To Reduce Bull Whip Effect In Logistics

Abstract

The blockchain is a decentralized and distributed ledger that facilitates secure and transparent record keeping. Numerous industries, including finance, healthcare, and real estate, have adopted it extensively. The logistics sector is currently investigating the potential of blockchain to mitigate the whiplash effect. In supply chain management, the bullwhip effect refers to the phenomenon in which small variations in demand result in large fluctuations in the supply chain. This effect can lead to inefficiencies such as overproduction and stock shortages, as well as increased costs, longer lead times, and lower customer satisfaction. The implementation of blockchain technology in logistics has the potential to reduce the bullwhip effect by providing supply chain processes with traceability, transparency, and immutability. Tracking the movement of goods from the manufacturer to the final consumer and ensuring that all parties have access to the same data can be facilitated by blockchain. This enhanced visibility can help reduce supply chain uncertainty and variation, resulting in a more efficient and stable supply chain. However, the implementation of blockchain technology in logistics requires careful consideration of obstacles and limitations, as well as the collaboration of multiple supply chain stakeholders. In this paper, a model of exploiting the advantages of blockchain while limit its disadvantages will be shown, particularly data sharing in reducing supply chain costs.