Integrating blockchain, RFID and IoT within a cheese supply chain: A cost analysis

Abstract

This study aims to estimate the costs of integrating RFID and IoT with blockchain for supply chain management. The study is based on the comparison of two simulation scenarios in a cheese supply chain, the as-is case vs. the integration of the following technologies: blockchain, smart contracts, RFID and IoT. Using the Time-Driven Activity-Based Costing method, costs are allocated for six actors: dairy farm, 3PL, wholesaler and three retailers. In addition, the costs of each player are allocated for each supply chain area: logistics, warehouse and order management. The study shows in which areas and for which actors implementing and integrating different technologies is economically suitable. Different procurement policies are modelled for evaluating the cost impacts for each retailer: Economic Order Quantity, Period Order Quantity and Lot for Lot. Moreover, the costs of non-compliant products are assessed in both scenarios. The results show that specific areas such as warehouse management and logistics in the to-be scenario are not economically optimized, however the entire supply chain cost is optimized. The area with positive economic feasibility for all the participants in the supply chain is order management. The combined use of technologies is economically beneficial when the Economic Order Quantity procurement policy is adopted. Finally, in the to-be scenario the non-compliant products management is economically optimized with economic benefits ranging from 8% to 63%.