Towards Synthetic Vertical Integration - How Blockchain might reshape Supply Chain Integration in the fashion industry

Abstract

Supply chain integration is a field that has been long studied to better understand how companies may improve their businesses. A broader supply chain integration has been traditionally linked to large or multi-national enterprises, who possess more resources and power to improve their supply chains, and pursue strategies such as vertical integration as means to gain a competitive advantage. However, emerging technologies have been enabling more companies of different sizes to pursue a deeper supply chain integration, although such integration remains very limited in small and medium enterprises. This thesis investigates how an emerging technological trend (Blockchain) might impact the supply chain integration in fashion small and medium enterprises. Using an inductive approach, this paper builds upon qualitative data collected through a multiple case study. Three case companies were interviewed to provide a broader understanding of Blockchain’s impact in SME supply chains today, and its potential impacts in the future. The results indicate that Blockchain’s impact in small and medium enterprises today is very limited in the fashion industry. However, with widespread adoption, the technology could eventually lead to decentralized networks across supply chains, which would enable a deeper supply chain integration for most actors, including SME. Such decentralized supply chain integration has been coined as a ‘Synthetic Vertical Integration’, as it could lead to very similar benefits as a vertically integrated supply chain. This thesis argues that this process could potentially enhance the role of SME in the global economy and reduce some of the competitive advantage traditionally retained by larger enterprises. Finally, while acknowledging the important role of Blockchain in reshaping today’s supply chains, this paper suggests that the emergence of Interoperability Systems (such as OriginTrail) could have more long-standing repercussions in the global supply chains. The author recommends that further research explore rather these systems could grow to become a general-purpose technology.