Blockchain smart contracts for supply chain finance: Mapping the innovation potential in Australia-China beef supply chains

Abstract

This paper explores and demonstrates the innovation potential of blockchain and smart contracts for supply chain finance (SCF) based on cross-border beef supply chains from Australia to China. Our study adopts mechanism design and design-driven activities, and specifically employs the Agents Events Data (AED) process mapping method, which is a hybrid approach that combines Business Process Redesign (BPR) and the Resources Events Assets (REA) accounting model. The AED method consists of three sequential stages: (1) map supply chain's present state or condition; (2) introduce blockchain and smart contracts to improve supply chain processes and “traditional” SCF models; and (3) evaluate the technology and innovation impact and create new models for SCF innovation. This study identified examples of how financial risks can be mitigated or reduced with blockchain and smart contracts; and, where the credit financing itself could be fundamentally transformed. Based on this analysis, the paper's contribution is twofold: First, it proposes the group buying business model as a basis of whole-of-supply-chain finance promising new areas for SCF models that can reduce financial cost and improve cash flow performance due to greater buyer-led financing certainty and the direct involvement of buy-side demand for supply-side improvements. Second, the study demonstrates the utility of the AED process mapping as a holistic framework with fine granular levels for future empirical and fieldwork and opens up new avenues for research.