OM Forum—Distributed Ledgers and Operations: What Operations Management Researchers Should Know About Blockchain Technology

TLDR

Blockchain is a distributed ledger technology whose full potential and downsides, particularly for operations management, remain incompletely understood. The article aims to fill this knowledge gap by outlining blockchain’s relevance to operations management. The authors review technical foundations and then examine various business and policy aspects of blockchain. They identify five strengths (visibility, aggregation, validation, automation, resiliency), five weaknesses (privacy, standardization, data quality, black‑box effect, inefficiency), and three research themes (information, automation, tokenization) with managerial implications for inventory, ethics, and industrial organization.

Abstract

Problem definition: Blockchain is a form of distributed ledger technology. While it has grown in prominence, its full potential and possible downsides are not fully understood yet, especially with respect to operations management (OM). Academic/practical relevance: This article fills this gap. Methodology: After briefly reviewing the technical foundations, we explore multiple business and policy aspects. Results: We identify five key strengths, the corresponding five main weaknesses, and three research themes of applying blockchain technology to OM. The key strengths are (1) visibility, (2) aggregation, (3) validation, (4) automation, and (5) resiliency. The corresponding weaknesses are (1) lack of privacy, (2) lack of standardization, (3) garbage in, garbage out, (4) black box effect, and (5) inefficiency. The three research themes are (1) information, (2) automation, and (3) tokenization. Managerial implications: We illustrate these research themes with multiple promising research problems, ranging from classical inventory management, to new areas of ethical OM, and to questions of industrial organization.