Enabling emergency production shifting: The value of blockchain in supply chain resilience confronting COVID‐19

Abstract

Nowadays, factories located in COVID-19 infected countries/regions are facing random outbreaks. If blockchain is adopted, then the outbreaks can be known immediately and emergency production shifting can be enabled, although high crash cost will be incurred. Otherwise, production delay will become inevitable. We therefore formulate the tradeoffs among the high crash cost, the benefit from quick production, and the efficiency loss because of supply chain decentralization in a global brand's blockchain adoption decisions. We show that, in the presence of supply chain competition, the global brand will be benefited from blockchain adoption when the competition intensity degree is high, the crash cost is low, and the probability of COVID-19 outbreak is high. We then verify the robustness of the main findings by studying the impact of the global brand's risk attitude, its overestimation of production delay, and the unexpected production delay in the low-risk areas. In addition, we examine the social welfare and find it can also benefit from the global brand's blockchain adoption but the consumer surplus cannot.