The Application of Blockchain-Based Crypto Assets for Integrating the Physical and Financial Supply Chains in the Construction & Engineering Industry

TL;DR

This paper explores how blockchain-based crypto assets can enhance supply chain integration in construction by linking product flow with payment settlement, validated through a smart contract-based case study.

Contribution

It introduces a novel approach using crypto assets for supply chain integration, emphasizing atomicity and granularity, validated in construction progress payments.

Findings

Crypto assets improve synchronization of cash and product flows.

Blockchain-based payments enable transparent and automated settlement.

The approach enhances supply chain efficiency in construction.

Abstract

Supply chain integration remains an elusive goal for the construction and engineering industry. The high degree of fragmentation and the reliance on third-party financial institutions has pushed the physical and financial supply chains apart. The paper demonstrates how blockchain-based crypto assets (crypto currencies and crypto tokens) can address this limitation when used for conditioning the flow of funds based on the flow of products. The paper contrasts the integration between cash and product flows in supply chains that rely on fiat currencies and crypto assets for their payment settlement. Two facets of crypto asset-enabled integration, atomicity and granularity, are further introduced. The thesis is validated in the context of construction progress payments. The as-built data captured by unmanned aerial and ground vehicles was passed to an autonomous smart contract-based method that utilizes crypto-currencies and crypto tokens for payment settlement; the resulting payment datasets, written to the Ethereum blockchain, were analyzed in terms of their integration of product and cash flow. The work is concluded with a discussion of findings and their implications for the industry.