Modelling procurement problems in the environment of blockchain technology

Abstract

In the highly competitive business environment, Supply chain (SC) disruption strongly impacted the manufacturing cost. The poor goods management and bottleneck have muddled the SC. It leads to cross-delivery, wastage of delivery time, burglary, quality and sometimes damages to the essential and precious goods. Only digitisation can be seen as an alternative to neutralise these obstacles from the procurement problems in SC. Security, immutable data, traceability, and transparency are the significant goal of the digital supply chain (DSC), which can only cut down the operational cost and are decisive factors for meeting the customer demand in real-time without disrupting the smooth flow of information. The rising concern towards cross-delivery, delivery delay time, hacking of data, transparency, intermediated and burglary have forced us to integrate blockchain technology (BCT) with the traditional supply chain. This work presents the DSC’s integrated mathematical model, transforming traditional procurement problems into digital procurement. This research paper optimises the procurement cost after adopting and integrating the blockchain (an infancy technology). The proposed model is a Mixed Integer-Linear programming mathematical model that incorporates the block development cost while purchasing, ordering, transporting and holding processes. These four processes are the susceptible stages where leakage can be reported; therefore, an integrated MILP model is proposed to eradicate the leakage from the system and endorse transparency, traceability, and immutable information for DSC. Finally, the model is authenticated and verified over the three different scenarios illustration using the LINGO 10.0 software for digital procurement problems based on the randomly generated datasets.