Supply chain operation decision based on commercial credit financing mode in blockchain environment
Commercial credit financing is a short-term financing service offered by upstream core corporations to downstream capital-constrained SMEs,mainly in the form that allows deferred loan payments.However,in reality,there are a number of issues.For instance,because supply chain enterprises'business and operational processes are intertwined,it is very likely that a default by one party will have an impact on the entire supply chain.Blockchain,a relatively new technology,has the potential to address some pressing issues in the commercial credit finance mode,including long delivery period,challenges in ensuring the authenticity of goods,and retailers'tardy repayment of outstanding debts.Although the application of blockchain for supply chain financing has been investigated in the past,the majority of the pertinent literature has concentrated on theoretical analyses of blockchain applications and the development of blockchain-based supply chain financing models using game theory,particularly the external financing mode involving banks.On the other hand,little research has been done on how the commercial credit financing mode using the blockchain affects operational decisions and business earnings.The operational strategies of the blockchain-based commercial credit financing mode,a typical internal financing mode,are therefore investigated in this paper.In the first and second parts of this work,two commercial credit financing modes with and without blockchain are constructed,taking into account that supply chain enterprises must pay blockchain operation costs when using blockchain.The main research method,Stackelberg games,is applied to solve the optimal pricing decisions of the supply chain members under the two modes.Investigated are the effects of variables such as the likelihood that a product is authentic without blockchain,the likelihood that a retailer will repay the remaining loans on time,the percentage of the supplier's loss due to the retailer's default,the unit operating cost of applying blockchain,and the delivery time after applying blockchain on supply chain operation decisions and enterprises'expected profits;the value of applying blockchain for commercial credit financing is analyzed.The optimal wholesale price is found to be unaffected by the blockchain operating costs,however the optimal retail price increases;nevertheless,the optimal expected profits for supplier and retailer both fall as a function of the blockchain operating costs.The wholesale and retail prices are lower than the traditional commercial credit financing mode if the risk of retailer default is very low or the supplier will suffer little loss.The wholesale and retail prices are higher than the traditional mode when the advantages of introducing blockchain features,such as reducing delivery time and guaranteeing product authenticity,are greater than a certain level.Every enterprise in the supply chain will benefit from blockchain adoption if the operating costs are lower than the maximum that the retailer is willing to pay.No firm in the supply chain will profit from the adoption of blockchain if the operating costs are higher than the cap that the supplier is willing to pay.Subsequently,the third section of this research then illustrates numerical analysis.Numerical analysis is used to graphically analyze the effects of different parameters,such as the probability of the retailer paying the remaining loans on time,which were previously mentioned on the optimal operational decisions and supply chain enterprises'expected profits under the two commercial credit financing modes.This is done to confirm the validity of the models that are constructed and to illustrate the research results more intuitively.Finally,the fourth section of this study concludes with a summary of the results.According to the findings,supply chain decision-makers can solve present issues with commercial credit financing and improve the current management level by adopting blockchain technology.Supply chain managers should consider factors like the convenience that implementing blockchain can bring to the supply chain and the necessary operating costs when deciding whether to do so.As advantages like reducing delivery time and verifying product authenticity are significant,the supplier and retailer are willing to pay more for the implementation of blockchain.The supply chain should prefer to embrace the blockchain in order to mitigate the risk of retailer default if the chance of default by the retailer is high or the supplier's loss is equally substantial when the retailer defaults.In conclusion,this study's perspectives,analytical method,and research results can offer practical guidance and useful references for capital-constrained supply chains under commercial credit financing,including whether to implement blockchain.
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