Blockchain-Enabled Cross-Border E-Commerce Supply Chain Management: History
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Contributor:
Fuli Zhou
,
Yijie Liu

Driven by the internet-based advanced information technologies and logistics channel improvement, the cross-border e-commerce industry keeps an increasing trend in Chinese industrial market. Blockchain, as an empowered technology, contributes to the management innovations for industrial sectors. The blockchain technology, due to its transparency, visibility, and dis-intermediation characteristics, helps to improve operations management of cross-border e-commerce supply chain by innovative industrial applications.

  • blockchain
  • cross-border e-commerce
  • supply chain management

1. Introduction

With the rapid development of digital transformation and internet-based technology, there is an increasing trend of online shopping, contributing to the booming development of the e-commerce industry. The cross-border e-commerce facilitates access to products and worldwide service, and it has become a prevailing consumption form in the Chinese market, driven by the diversified e-commerce platform, modern logistics distribution systems, and effective operations management [1][2]. An important feature of cross-border e-commerce is the worldwide network; regardless of place, one can participate in electronic shopping. However, there are still some inevitable obstacles hindering the development of cross-border e-commerce due to the discrepant cultures and habits, and the fast delivery to online consumers is one of the crucial factors for further development of cross-border e-commerce due to time-consuming international logistics [3][4]; The long-distance transportation is usually time-consuming for cross-border e-commerce business [5]. The effective supply chain management innovation practices contribute to performance improvement of cross-border e-commerce due to effective operations management [6][7][8][9]. It will be regarded as a triumph for cross-border organizations that have a developed logistics network and a high efficiency distribution system [6][10][11][12]. For the cross-border supply chain management, the trust problem is a key issue due to multiple participants. Due to the discrepancies in terms of cultures, legal provisions, and consumption habits of different countries and regions, it is difficult to establish a stable and reliable alliance for all participated parties [13]. With the technological development and the changing consumer awareness, the core of competition in cross-border e-commerce has changed from the basic attributes of goods, such as quality and cost, to the after-sales service ability of merchants to customers, namely the service ability of the supply chain [14][15][16][17][18][19]. To improve the performance and efficiency of cross-border e-commerce, efficient management of the segmental elements of business flow, logistics, and capital flow should be integrated efficiently. The development of management service capacity of the supply chain is based on these three sectors and their effective interactions [20]. Blockchain technique, as a crucial technology enablement, could significantly improve the efficiency of supply chain management by innovative management practice and further promoting the development of cross-border e-commerce [21]. Therefore, there is great significance and research value in studying the relevant literature of blockchain technology enabling cross-border e-commerce supply chain management for exploring the development status and further exploring problems.
The transparency, visibility, and dis-intermediation characteristics of blockchain motivate its prevailing applications in industrial sectors during the digital transformation and Industry 4.0 period [22][23][24]. Blockchain is an open distributed ledger, and all the information recorded in the blockchain is open and transparent. This feature contributes to establishing a mutual trust trading network, solving security problems in the trading process, and assisting the realization of mutual trust among all parties of the supply chain. However, the current application of blockchain in the supply chain is far from reaching this level even though it has great potential application opportunities from a theoretical viewpoint [11][25][26].
As a mainstream technology, blockchain technology has been widely used in all walks of life and industrial sectors [27][28][29]. It is regarded as a strategic frontier technology in China, which has been the focus of academic researchers and industrial managers. Blockchain technology can effectively solve the problem of information opacity and information asymmetry, as well as effectively protect the security of operational data. It plays a significant role in promoting innovative development and regional transformation, and there is a vast amount of papers addressing blockchain industrial applications [30]. However, as far as the current research status is concerned, there is little research focusing on the integration of blockchain technique in the e-commerce supply chain area to the-state-of-the-art of the knowledge.

2. Blockchain Technique Background

2.1. Consensus Mechanism

The consensus mechanism determines the rules of block generation in the blockchain and completes the verification and confirmation of transactions in a short period of time, ensuring decentralized trust issues. It guarantees the honesty of each node, the robustness of the system, and the fault tolerance of the ledger [9]. The prevailing consensus mechanisms mainly include PoW (Proof of Work), PoS (Proof of Stake), DPoS (Delegated Proof of Stake), and PBFT (Practical Byzantine Fault Tolerance).
The PoW consensus algorithm is based on the principle that all participating nodes perform calculations and compete for the rewards of generating new blocks and bitcoins, with the node that takes the least amount of time to solve becoming the master node [31][32]. It can reduce malicious node attacks, tamper with data, and improve the security of the blockchain [33].
The competition concept of PoS algorithm is similar to PoW, and PoS reduces the search space to an acceptable range. By introducing the concept of “currency age”, the competition of computing power is transformed into the competition of equity. It aims at saving computing power, preventing malicious attacks from nodes, and maintaining the stable operation of blockchain [32]. Although the PoS mechanism can, thus, shorten the time required to reach consensus, it still essentially requires nodes in the network to perform mining operations. Therefore, it does not fundamentally solve the problem that the PoW mechanism is difficult apply in the commercial field.
The DPoS consensus algorithm introduces the electoral system in PoS [34]. At the same time, compared with PoS, DPoS does not consume computing power, which can improve the verification speed. There are two types of nodes in DPoS, namely, normal nodes and trusted nodes. Each node selects trust nodes through a democratic vote process. In the election process, each node can participate in the voting, which can avoid the generation of the main node tending to the high-interest node [35]. However, such voting does not directly represent the practical complex voting situation in the real world. Xu et al. [36] designed an improved DPoS consensus mechanism based on fuzzy sets, which can explain the voting model more intuitively. Although DPoS reduces cost and time compared with PoW and PoS, the consensus process of DPoS is easily centralized, resulting in a small number of nodes controlling the election process, which will threaten the security and accuracy of the DPoS election process [37]. In addition, the consensus mechanism is dependent on tokens that are not adopted in many commercial applications. Therefore, the consensus mechanism cannot perfectly solve the application of blockchain in business.
PBFT is characterized by removing the mortgage with the rights and reducing the consumption of competitive resources, which can reduce the cost of malicious nodes, and reduce the impact of malicious nodes on the consensus. Furthermore, it can also improve the fault tolerance [38][39]. The point-to-point communication of PBFT solves the problem of poor scalability of the other mechanisms, which inevitably increases the communication cost. Constructing multi-layer PBFT to form sub-consensus can reduce the cost, but multiple sub-consensus increases the system reaction time and causes a long delay [40].
Apart from the above-mentioned four consensus mechanisms, the PoC (Proof of Activity) and PoA (Proof-of-Authority) are often addressed in the literature. Each of these mechanisms has its own advantages and disadvantages, and it is necessary to make a reasonable choice by considering their advantages and disadvantages in the practical application.

2.2. Hash Algorithm

The principle of the hash algorithm is to turn a piece of information into a fixed-length binary value, called the hash value [41]. The hash value could be obtained by the input function, which could be used to test whether the data is complete or not. The hash algorithm can be used to ensure the authenticity and invariance of ledger data, and the process of converting input data to fixed-length by hash algorithm is irreversible [42].
Yang et al. [43] designed a new Dohashi algorithm, which can effectively replenish the shortcomings of the network flow scheduling optimization algorithm by conflict probability reduction and query performance improvement. Zhou et al. [44] established a multi-pattern matching algorithm based on the double hash algorithm, which improved the time efficiency.

2.3. Smart Contract

It is extremely costly to keep a contact from being broken by inserting contract terms into hardware and software. The concept of smart contracts has been put forward for a long time, but it was applied to industrial practices until the prevailing booming development of blockchain technology [45]. A smart contract in a blockchain is a script stored in the blockchain, and it runs automatically without any interference from the signer of the contract [46]. The capabilities of smart contracts allow them to be associated with areas such as insurance, health care, and smart cities [47]. Vo et al. [48] developed a blockchain smart contract-based micro-insurance quotation solution to facilitate insurance companies to manage and analyze pay-as-you-go auto insurance data. Hamamreh et al. [39] discussed the security and feasibility of accessing electronic health records based on intelligent contracts in the field of health care. Kuo et al. [49] applied smart contracts to address healthcare privacy protection while leveraging blockchain technology to improve interoperability between institutions and national healthcare delivery capabilities. Yang et al. [50] adopted blockchain technology to study current security and privacy deployment strategies for e-government in smart city environments, disclosing the feasibility of applying smart contracts as an alternative to real contracts. Lazaroiu et al. [51] built a smart city model based on the blockchain and IoT platform, and smart contracts are employed to conduct autonomous distributed management of community power grids and smart meter technology. In addition, the advantages of smart contract transaction information, such as traceability and irreversibility, make it widely used in the supply chain field. Natanelov et al. [52] proved that blockchain smart contracts could minimize supply chain operation risks and reduced cash flow cycles in traditional supply chain financial models. Salah et al. [53] adopted blockchain and smart contracts to improve the transaction reliability and operational efficiency in the agricultural supply chain.

2. Recent Trends in Cross-border E-commerce Supply Chain Management

With the continuous development of Internet-based techniques and digital transformation, cross-border e-commerce has gradually developed [54]. It brought a wider variety of goods and enlarged the range of choices for domestic consumers. In the last few years, cross-border e-commerce exportation has become a new economic and trade growth point in the Chinese market [5]. To promote the rapid development of cross-border e-commerce, innovative management practices are studied and conducted regarding the supply chain activities, including production, warehousing, logistics, customs declaration, distribution, marketing, and other processes [38][55][56][57]. The operational management practices and innovations have motivated the continuous improvement of the e-commerce supply chain management, including strategic pricing, supply chain network optimization, delivery strategy, and lean management through strategic contact and mechanisms [19][34][35][41][58]. With the gradual formation of cross-border e-commerce supply chain, the principal competition part of cross-border e-commerce is transforming a single subject to the supply chain. In addition, the transaction process and logistics process of cross-border e-commerce are also gradually becoming more open and more transparent in the global environment [59].
The e-commerce payment, as a typical application scenario, has proven to be an effective innovation in the blockchain-enabled cross-border e-commerce sector, which helps with improving the trustworthiness of the transaction process, the encryption of customer data, and the tracing of the product supply chain. The payment system is an important link in the process of e-commerce transaction. The payment gateway in the current payment system usually requires authentication, which will increase the cost of e-commerce transactions. The public key, private key, and digital signature technologies in the blockchain technology can ensure the security of electronic payment, and the operating cost is reduced at the same time [60].
With the booming development of cross-border e-commerce, security is considered to be one of the key issues restricting the development of e-commerce [61]. It is of great significance to promote e-commerce so that the public will build a solid transaction with great trust. It is easy to cause customer privacy disclosure or information modification once the platform is attacked [62]. The decentralized technology of blockchain can solve these problems mentioned above. In blockchain-based systems, the data update of all nodes is synchronous and consistent, and all blocks are connected in chronological order [63]. Therefore, blockchain technology can effectively ensure the stability and security of platform data [55].
The trust issue has become one of the difficulties in the development of cross-border e-commerce. Due to the characteristics of cross-border e-commerce transactions, it requires close cooperation and mutual trust among supply chain participants [25]. However, the cultural and legal differences among different nations leads to a lack of trust. Ronaghi developed a model to test the maturity of blockchain in the agricultural supply chain [64].

This entry is adapted from the peer-reviewed paper 10.3390/su142315918

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