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Article

Blockchain Technology for Oil and Gas: Implications and Adoption Framework Using Agile and Lean Supply Chains

by
Javed Aslam
1,
Aqeela Saleem
1,
Nokhaiz Tariq Khan
2 and
Yun Bae Kim
1,*
1
Department of System Management Engineering, Sungkyunkwan University, Suwon 16419, Republic of Korea
2
Faculty of Business and Management, Information Technology University, Lahore 54590, Pakistan
*
Author to whom correspondence should be addressed.
Processes 2022, 10(12), 2687; https://doi.org/10.3390/pr10122687
Submission received: 2 November 2022 / Revised: 29 November 2022 / Accepted: 6 December 2022 / Published: 13 December 2022
(This article belongs to the Section Energy Systems)
Browse Figures
Review Reports Versions Notes

Abstract

:
Oil and gas (O&G) supply chain management (SCM) is complex because it deals with different geographic locations to manage demand and supply, transportation, inventory, and distribution. Blockchain technology has created an interesting research gap in the SCM domain, and this study is designed to describe the relevancy of blockchain technology for O&G SCM. SCM is based on agile and lean supply chains (SCs). Agile SC focuses on increasing flexibility and responsiveness to gain competitive advantages, and lean SC is based on eliminating waste and processes to improve firm performance. This study is an initial effort to propose a framework that suggests the implication of blockchain for O&G by providing an overview of O&G SCM. Data were collected from SC managers of O&G companies, and we analyzed the impact of agile and lean SCs on firm performance. The results indicate that agile SC is highly important for O&G industries in comparison to lean SC. This study proposes the key requirements of agile SC and how blockchain can uplift agile SC technology with state-of-the-art properties such as data-driven management, information sharing, data privacy, cyber-security, transparency, smart contracts, visibility, traceability, and reliability, which boost SC agility as well as firm performance.

1. Introduction

Oil and gas (O&G) are considered the world’s most important sources of energy, and their products underpin modern society, fueling vehicles for the transportation and delivery of supplies. O&G-related products are critically important for almost every industry due to their usage in daily life [1]. The supply chain (SC) is one of the most effective tools for achieving business objectives, such as controlling manufacturing processes or providing a competitive edge by delivering a product more quickly, efficiently, and effectively to the right place, at the right time, and of the right quantity [2,3,4]. The transition from a traditional SC to smart SC comprises four stages. The first stage is a determination of where the SC stands now (using, e.g., enterprise resource planning (ERP)). The second stage comprises product innovation focused on the customer; SCs with stable structures already in the second stage must focus on process innovation, which is the third stage. The final stage is where the SCs are revamped for both product and process innovation. This process of innovation can be achieved through emerging technologies such as the Internet of Things (IoT), information and communication technologies (ICT), big data, artificial intelligence (AI), and blockchain [5,6]. Industry 4.0 combines these concepts, as they are interlinked [7,8,9,10]. For example, big data can be produced through IoT and needs to be processed through AI. Similarly, IoT may require strong ICT and blockchain. As one of the hurdles in IoT implementation is security, blockchain may play a vital role. Recently, many challenges have arisen in maintaining modernized SCs, as process innovation is abrupt. Innovations must align with the need for emerging technologies, as different vendors are participating globally in SC processes. In this context, a shared common database is essential, along with maintaining all transactions in a ledger [11].
O&G SCM is complex because it deals with different geographic locations at the same time to manage the demand and supply, transportation, and distribution of O&G products in more competitive environments. To cope with increasing competition, many SCs have started adopting lean SC practices in general, and just-in-time (JIT) approaches in particular [12,13]. These types of practices for managing and eliminating “waste” provide higher levels of productivity and efficiency, and potentially remarkably increase productivity and efficiency for small- and medium-sized SCs [14]. Furthermore, participating in agile practices provides flexibility and responsiveness to SC functions [15,16,17]. Blockchain technology has created an interesting research gap in the SC domain, as it replaced old technologies and reduced human interactions during service delivery while optimizing logistics via virtual agent techniques and providing secure and real-time information [18]. Lean and agile practices play a significant role in the O&G industry to boost SC performance. Agile SCs focus on increasing flexibility and responsiveness to gain competitive advantages. In this context, blockchain may increase firm responsiveness by reducing uncertainty and increasing the trust level of suppliers and customers through a real-time information-sharing platform, along with transparency, reliability, privacy, and visibility in all SC functions [19,20]. In contrast, a lean SC is based on eliminating waste, processes, poor information, and resources to improve firm performance and efficiency [21,22], and blockchain may provide immutable and irrevocable data-driven management and smart contracts, which increase the lean performance.
This study describes the relevancy of blockchain technology for O&G SCM and focuses on agile and lean supply chain practices. This study proposes a framework which suggests the importance of blockchain for O&G. This study analyzes the impact of agile and lean SC on firm performance, illustrating the relevancy of blockchain technology with agile and lean SCs in the context of the O&G industry. To this end, the Pakistan O&G sector was chosen because this sector is highly neglected by researchers, and the Pakistan O&G sector plays a vital role in the economy and it is necessary to uplift this sector. To fill the research gaps, this study represents an initial effort to examine the need for blockchain in SCs according to lean and agile SCs. We identified SC practices according to agile and lean SCs; then, we analyzed the impact of these practices on firms’ SC performance. Based on the literature, we developed an understanding of blockchain’s relevancy to agile and lean SCs. We gathered empirical evidence regarding which SC approaches (agile and lean) are highly implemented. Then, we identified which SC types are suitable for the adoption of blockchain. To support this study, the oil and gas industries were chosen to validate the results. This study highlights the following research questions.
RQ1: How does blockchain technology fit into the oil and gas supply chain?
RQ2: How do agile and lean supply chain practices improve oil and gas performance?
RQ3: How are agile supply chain optimized using blockchain?
The remainder of this paper is organized as follows. Section 2 focuses on the literature review, including SCM practices and blockchain technology. Section 3 discusses the methodology and results of the study, and Section 4 presents a discussion. Finally, conclusions, implications, and future work are presented in Section 5.

2. Literature Review

2.1. Oil and Gas Industry and Supply Chain Management

The O&G value chain is based on three stages: upstream, midstream, and downstream. Upstream involves multiple activities, such as exploration and production of O&G with the help of acquiring the land rights for digging to find O&G reserves. Midstream SC is involved with the transportation and storage of the raw products, and finally, downstream SC focuses on the refining and distribution of products (Figure 1). In the modern era, exploring O&G reserves uses the latest theological equipment, which is based on artificial intelligence (AI). After the exploration of reserves, production activities also consist of modern technology, such as mechanical digging and automated fracking. With the advancement of technology, O&G exploration and production methods developed rapidly in recent years using artificial intelligence, big data, and the Industrial Internet of Things (IIoT), such as marine digital platforms, intelligent O&G fields, and drilling, and predictive maintenance using machine learning algorithms [23]. Using these emerging technologies, the O&G industry is gradually developing in the direction of automation, digitalization, and intellectualization. Unfortunately, the operational activity, especially SCM, is relatively less developed because the use of emerging technologies is limited, and this causes poor SCM, high operational costs, higher lead time, and higher uncertainty.
According to the oil consumer index, Pakistan is the 33rd largest country to consume O&G products. In Pakistan, the consumption of petroleum products is mainly for transportation, energy production (power sector), and manufacturing. Among them, the transport industry’s consumption is 60%, the energy production sector consumes 32%, and the manufacturing sector uses 8%. Due to the higher dependency of major industries on O&G products, the smooth flow of supply is critically important for Pakistan’s O&G sector. Unfortunately, Pakistan O&G reserves meet just one-fifth of the total demand, and the remaining demand is fulfilled via high-price imports [24]. Therefore, Pakistan O&G is highly dependent on importing O&G products around the globe, and the entire SCM is more complex because it deals with different geographic locations. Due to the importance of O&G products in Pakistan, the SCM of this sector should be optimized, responsive, flexible, fully integrated, and with a highly secure payment platform, with end-to-end visibility to avoid any hurdles for the smooth flow of products to meet the demand and supply requirements on time. Consequently, blockchain technology is highly recommended for Pakistan’s O&G industry to manage supply chain operations more effectively using state-of-the-art technological properties such as transparency, cyber-security, real-time information sharing, reliability, traceability, and end-to-end visibility. O&G SCM deals with various organizations, suppliers, stakeholders, and customers; therefore, decision-making is difficult in this complex SC structure, and many uncertainties may exist. These can be overcome by using a strong integration system among all SC functions. Ideally, this integration is achieved through real-time information sharing; however, the idea of such real-time information sharing through web-based platforms has been challenging over time owing to security issues. Consequently, blockchain provides a better understanding of SC operations through real-time information sharing, visibility, and transparency to minimize uncertainties and improve SC performance [25,26]. In one study, blockchain technology was used in a digital distributed ledger for SCs to design a digital platform summarizing the information and documents of a shipment that could be managed [27]. An SC can be enhanced by using a digital infrastructure system such as blockchain, where all participants (such as vendors) can access and share product-related information such as the rate/price, payment (in a transparent manner), delivery status, lead time, and shipment details with delivery tracking. In this system, suppliers or customers can monitor product and payment issues in detail using digital control. Blockchain technology provides greater security than traditional information technology (IT) infrastructure [28,29]. Blockchain may enhance IT by providing different usable applications related to SC and operations management with the help of advanced computing and distributed software. The application of blockchain to the SC is based on a combination of different theories to allow for the implementation of the blockchain structure in the SC [30], such as network theory, resource-based view, transaction cost theory, transaction cost analysis, and principal–agent theory [31]. In the literature, the implementation of blockchain for SCM has been widely discussed, but most approaches are from a generic perspective. Therefore, it is important to understand the blockchain needs according to the SC type. This study is an initial effort toward providing a framework for understanding the implementation of blockchain as per SC type, based on the oil and gas sectors of Pakistan.

2.2. Agile and Lean Supply Chain, Supply Chain Management-Related Firm Performance, and Blockchain Technology

The supply chain network depends on a set of different activities called SC practices for completing the SCM process and delivering the final product to customers with an efficient integrated system. These practices include sourcing, managing supplier relationships, procuring raw materials, production planning, scheduling, warehousing and inventory management, ordering techniques, distribution management, providing transportation, and managing logistics [32,33,34,35]. In this study, 12 SC practices were derived from identified SC types, and their needs for blockchain were discussed according to the essential blockchain features of each type. An SC network can be classified as agile (responsiveness) or lean (eliminating waste) according to the operational needs of the SC [16,36,37,38,39]. Furthermore, SCM-related firm performance is generally based on five dimensions: increases in sales, more accurate costing, increases in coordination with vendors, increases in coordination between departments, and increases in coordination with customers [15,16]. An agile SC focuses on flexibility and the ability to handle changes in supply and demand under uncertain conditions. Agile SCs respond quickly and effectively to changes in customer preferences in unpredictable environments [40,41]. Consequently, an agile SC must develop strong partnerships and interactions among suppliers, partners, and customers to build flexibility and responsiveness. An agile-based SC avoids certain warehouse costs by using outsourcing and third-party logistics (3PL) techniques while minimizing inventory. The literature shows that agile SCs are based on different SC practices, such as close partnerships with suppliers, close partnerships with customers, outsourcing, e-procurement, 3PL, subcontracting, and using many suppliers; these help the SC maintain flexibility in managing the uncertainty in supply and demand [15,16,17]. Blockchain is a modern internet-based technology offering a high-tech technological architecture for SCs with various benefits including transparency, visibility, and security in transactions during procurement [42,43,44]. Blockchain can help agile-based SCs perform more responsibly and flexibly because it has an inherent capacity for integration among all SC networks. It can provide more accurate stock management and demand forecasting, improve the tracing and tracking of inventory, and remove payment problems by providing or facilitating digital trust in third parties, subcontractors, and suppliers [45,46]. Blockchain technology is useful for these types of SC practices because they require strong integration, effective flows of information, and transparency within the entire SC, and boost firm SC performance by developing effective coordination among vendors, customers, and departments [47,48].
In contrast, a lean SC focuses on maximizing savings through continuous improvement techniques and eliminating waste and processes from SC networks. The lean SC represents a traditional “factory” chain for producing high volumes at a low cost [49,50]. Lean SCs focus on reliability and predictability rather than flexibility and adaptability. This type of SC is widely used in production, as the primary purpose of lean SCs is to reduce costs and improve firm performance by more accurate costing and reduced inventory levels. There are numerous lean SC practices, e.g., JIT, strategic planning, benchmarking, holding safety stock, and using few suppliers [21,22,51,52]. Lean SC practices help firms reduce their lead times and optimize their performance by using JIT delivery/supply, providing effective planning for inventory (raw, in-process, and finished), and maintaining useful collaboration within the organization. Therefore, an effective lean SC firm can produce high-quality products with minimal waste. Lean practices also focus on eliminating unnecessary processing and/or providing process improvement techniques [53]. Lean SC is highly dependent on information-sharing systems, trust levels, and financial transactions with vendors [54]. Lean SCs face many challenges, such as those concerning the links between physical and information flows, accessibility, continuity of information, and trust. In this context, ERP and IoT have been used for resolving information-sharing and trust problems [55,56,57]. There is active adoption of ERP and IoT for lean practices [58,59], but the acceptance of emerging technologies such as big data, AI, and blockchain remains slow and questionable [60]. Blockchain has effective properties for lean SCs for improving lean firm performance, including immutable and irrevocable information sharing, data-driven management, trust, smart contracts, centralized data, and control [61,62,63]. Table 1 summarizes the blockchain properties and their implications in agile and lean SC environments.

2.3. Proposed Framework and Hypotheses

This study derived SC practices based on agile and lean approaches: seven practices are linked to agile SCs (close partnership with customers, close partnership with customers, outsourcing, e-procurement, 3PL, subcontracting, and many suppliers), and five practices belong to lean SCs (JIT, strategic planning, benchmarking, holding safety stock, and few suppliers). Agile and lean SCs improve a firm’s SC-related performance by providing more accurate costing, increasing sales, and increasing coordination among vendors, departments, and customers. Below, we analyze the impacts of agile and lean SCs on firm SC performance based on hypotheses H1 and H2, respectively. The proposed framework of this study is presented in Figure 2. This study identifies the relationships between the agile and lean SCs and firm SC performance and examines the relevancy of blockchain properties to agile and lean SCs (refer to Table 1).
To understand the impacts of SC practices (agile and lean) on SCM-related firm performance in the O&G industry, this study examined the following hypotheses.
 H1.
Agile SC practices have a positive and significant impact on SCM-related performance in the oil and gas industry.
 H2.
Lean SC practices have a positive and significant impact on SCM-related performance in the oil and gas industry.

3. Methodology

The methodology of this study is as follows:
i.
Classify the SCM into two dimensions i.e., agile and lean.
ii.
Determine the SCM practices according to SC type (agile and lean).
iii.
Examine the impacts of these SC practices (based on agile and lean) on firms’ SCM-related performance.
iv.
Identify the relevancy of blockchain to agile and lean SCs.
v.
Recommend the implementation of blockchain according to the needs of each SC type.

Sampling and Measures

According to the literature, SC practices were identified in the context of these SC types (agile and lean). The agile SC was based on seven SCM practices: close partnerships with suppliers, close partnerships with customers, outsourcing, e-procurement, 3PL, subcontracting, and having many suppliers. The lean SC was based on five SCM practices: JIT, strategic planning, benchmarking, holding safety stock, and having a few suppliers. SC managers in the oil and manufacturing sectors were asked to what extent the identified SCM practices were implemented in their firms based on a five-point Likert scale ranging from 1 = not at all implemented to 5 = fully implemented [16]. The objectives of the SC management and practices were divided into two types. First, the short term was based on uplifting productivity, minimizing lead time, and reducing on-hand inventory. Second, the long term included the integration of the SC among all SC partners (vendors, stakeholders, distributors, logistics providers, and customers) and increasing the market share. In light of these objectives and the effective implementation of SCM, the firm performance was improved and measured according to five dimensions (increase in sales, more accurate costing, increase in coordination with vendors, increase in coordination between departments, and increase in coordination with the customers). The questions also asked how the firm performed in the past three years relative to their competitors under implemented SCM practices on a five-point scale ranging from 1 = definitely worse to 5 = definitely better. Seventeen questions were used to examine the impacts of the SC approaches (agile and lean) on SCM-related firm performance [15,16]. The Appendix A presented the survey questionnaires. The O&G industries of Pakistan were selected for analysis, and a non-probability convenient and judgmental (professional experience) sampling technique was used. The O&G industry has a complex SC environment owing to its flexibility and responsiveness, as numerous activities are involved in procurement, logistics, and scheduling [64,65]. In this context, focusing on agile SC approaches to fulfil customers’ needs requires a limited lead time. The data were collected from November 2021 to January 2022 from SC managers working in the O&G sectors (each manager represented one firm). A total of 200 SC managers were selected, 185 managers participated, and after data cleaning, 152 SC managers were considered suitable for this study. The overall response rate of this survey was 76%.

4. Results and Discussion

4.1. Demographic Analysis

In this study, 185 supply chain managers from oil and gas companies participated in the survey. For analyzing the profiles of respondents, they were asked four questions on their gender, age, qualifications, and experience with oil and gas SCM. Regarding gender, 85.4% were male and 14.6% were female, which shows that Pakistan’s oil and gas sector is predominantly male. Regarding age, 51% of respondents were 36–45, which indicates that the SC managers are experienced. In the context of qualifications, 54% of SC managers had a master’s degree and 19% had a post-graduate degree, which shows that SC managers are generally well educated. Lastly, in terms of respondent experience with oil and gas SCM, 29.72% of SC managers had more than 20 years of experience, and 21.6%, 24.3%, and 16.2% had 6–11, 11–15, and 16–20 years of experience, respectively, which demonstrates that the SC managers are overall experienced and professional. Table 2 presents the respondent profile in detail.

4.2. Factor Loading and Reliability Analysis

This study examines the relationship between SC practices (agile and lean) and SCM-related firm performance in the O&G sectors. To evaluate the measures, factor loading and reliability (α) were carried out using SPSS software (IBM, Armonk, NY, USA). The reliability values range from 0.756 to 0.768, i.e., greater than the acceptable value of 0.7. The factor loading ranges from 0.644 to 0.816, i.e., higher than 0.4. The results in Table 3 indicate that the measurement reliability and internal consistency are sufficient.

4.3. Descriptive and Correlation Analysis

To validate the relationships among SC practices (i.e., the agile and lean practices and improved SCM-related firm performance) in the context of the O&G sectors, a descriptive and correlation analysis is presented in Table 4. The correlation values of the agile and lean practices with the SCM-related firm performance are 0.236 (p < 0.01) and 0.179 * (p < 0.05), respectively, indicating that agile SCs have a higher impact on firm SCM performance (23.6%). Consequently, lean SC practices are relatively less important (17.9%) for O&G SCs.

4.4. Regression Analysis

A regression analysis was conducted to investigate the proposed hypotheses (H1 and H2) and present the impacts of both agile and lean SC practices on SCM-related firm performance. The results (Table 5) indicate that the effects of agile and lean SC practices are positive and significant for SCM-related O&G performance. The agile SC practice has a relatively higher impact (with a beta (β) value of 0.331 and p < 0.05), suggesting that H1 is supported by empirical evidence, i.e., that the Pakistan O&G industry is more focused on agile SC activities.
The results reveal that in the O&G sector, agile SC practices are highly implemented, and the impact of these agile SC practices is significant for SCM-related firm performance. Lean SC practices have a positive and significant impact on SCM-related firm performance, but a comparatively lower impact than agile SCs. Accordingly, this study concludes that the implementation of agile SCs is common in the O&G sector. The next question is how to improve the agile SC performance. The literature suggests that agile SCs are highly reliant on integration [66,67,68,69] and that integration can be achieved using blockchain technology [44,70]. Additionally, agile SC practices provide flexibility and responsiveness through strong integration among SCM functions, real-time information sharing, cybersecurity, visibility, traceability, reliability, and transparency [71,72,73,74]. Blockchain has the capabilities to provide a technologically oriented platform for supporting the agile SC, uplifting agile integration, and boosting firm performance. However, the literature indicates that the primary function of the lean SC is to increase the firm productivity while minimizing waste. In this context, lean SC practices are recommended for handling the continuous elimination of waste from the production processes, resulting in shorter lead times, lower production costs, and increased output [75,76,77]. Waste is something that customers are not willing to pay for and must be eliminated. To eliminate waste, firms already use effective tools such as total quality control, Kanban (JIY), and Kaizen (continuous improvement) [78,79,80]. Regarding information system support, ERP, industrial IoT, and management information systems (MIS) already provide effective platforms for managing information-sharing systems, transparency, coordination, and the facilitation of information flows among all departments [81,82,83]. To obtain greater benefits from technology, blockchain provides state-of-the-art technology for providing effective information flows, traceability, cyber-security, data management, privacy, and transparency [84]. However, the need for blockchain for lean SCs remains unclear because previously adopted technologies such as ERP, IoT, and MIS are still sufficient to fulfill the information and coordination needs [85,86].
This study observed that an agile SC based on flexibility and responsiveness can be achieved through integration to develop close relationships between suppliers and customers, third-party logistics, and e-procurement practices for managing financial transactions and information sharing. Therefore, secure and transparent information is important for this type of SC network. The blockchain can provide the best solution and enhance integration through real-time information sharing with security and transparency, resulting in increased efficiency by reducing the uncertainty and variation in the information [87,88,89]. The implementation of blockchain technology for confidential information sharing and financial transactions becomes more necessary with an agile supply chain in which many supply chain activities and members are participating, and trust is low. In contrast, the primary objective of lean SC practices is to eliminate waste and improve productivity by using SC practices such as JIT, strategic planning, SC benchmarking, holding safety stock, and having a few suppliers. However, the concepts of reducing waste and timely production also require a strong information-sharing system among all departments [78,79,80,81,82,83]. This can be achieved without blockchain using IoT and ERP [78,79,80,90]. Alternatively, the flow of quality information is also one of the success factors for boosting the internal function of an organization; therefore, implementing blockchain may reduce wasted time and safety threats for information sharing and financial transactions, respectively.
The respective needs for blockchain for agile and lean SCs are illustrated in Figure 3. The literature shows that blockchain has numerous and highly significant properties for SC management. The relevance of blockchain to agile and lean SCs is shown in Table 1. The key requirements of an agile SC are strong integration, real-time information sharing, data privacy, security, visibility, traceability, transparency, and reliability. These requirements are closely related to the blockchain properties for SC management [71,72,73,74]. The key requirements for lean SCs are performance metrics, benchmarking practices, and effective coordination among SC partners, stakeholders, and departments [91,92,93,94]. Blockchain technology is the best solution for fulfilling these requirements, but the literature suggests that these requirements can be fulfilled using less expensive technology-based solutions, such as IoT, ERP, and TQM practices [78,79,80,90]. Therefore, this study concludes that a lean SC is less integrated and has low trust issues because the adoption of blockchain requires a significant amount of capital. The adoption of blockchain according to its properties under the agile and lean SC key requirements described in Table 1 is shown in Figure 3.
Blockchain is considered a game-changing technological innovation for supply chain management because SC professionals and managers believe that the adoption of blockchain boosts SC operation and increases firm capability and capacity [95,96]. Despite the interesting benefits of blockchain described in serval studies, it is also important to discuss the adoption barriers and challenges. This will help the firm to understand the possible barriers to the adoption of novel technology such as blockchain. The possible challenges for adoption are categorized into four types: (i) intra-organizational, (ii) inter-organizational, (iii) system-related, and (iv) external [73,97,98,99,100]. Intra-organizational challenges are related to the problems which arise from internal departments or within the organization. Blockchain technology is a novel technology for supply chain management and requires high investment, and firms face some financial constraints in spending huge amounts of capital on adoption. Thus, financial problems are fundamental challenges for the implementation of blockchain [101,102]. Furthermore, for the adoption of new technology, top managers should provide resources to their employees such as training, new personal computers, and software support and also acquire finance. The oil and gas sector focuses on the procurement, storage, and distribution of oil- and gas-related products. The top management is highly interested in investing the maximum resources to buy the products rather than spending to implement new technologies such as blockchain because it is capital-intensive technology [103]. Inter-organizational challenges refer to external stakeholders such as SC members (customers, suppliers, investors, third-party logistics contractors). Oil and gas SCs deal with different geographic locations, and the SCM culture can also be affected, e.g., because a partner did not understand the importance of blockchain and they were not willing to use it. If the customer is not aware of blockchain’s benefits for shipment and delivery tracking, then the firm should not invest in implementing blockchain. System-related barriers are related to new information technology (IT) tools because blockchain is IT-based software, and it requires new IT tools. Thus, firms need to replace previous technology structures with the latest ones. For example, blockchain provides real-time information and records high-volume data as well as gives access to all SC participants. Therefore, high data storage and advanced cloud computing systems will be demanded [104,105]. The external barriers refer to external institutions such as governments and industries which are not directly related to firm SC functions. The lack of involvement from the government to support the firms in adopting the new technology [106,107]. On the other hand, the lack of pressure from competitors is another barrier to adopting blockchain because still, few oil and gas companies are using blockchain.

5. Conclusions

This paper provides an understanding of the adoption of blockchain in supply chains in the context of the agile and lean SC types that have been described in the literature [16,36,37,38,39]. For this purpose, we chose O&G industries to validate the implications of agile and lean SCs and the impact on firm SCM-related performance. With reference to the literature, SC practices were identified and divided into two SC types: agile and lean. The results revealed that both SC types positively and significantly impact a firm’s performance in the O&G industries. Additionally, agile SC is more important for O&G industries in comparison to lean SC. With the help of an extensive literature review, this study contributes to developing the need for blockchain technology for supply chain management in the context of agile and lean SCs [108,109,110]. Agile supply chains deal with complex supply chain networks and focus on increasing flexibility and responsiveness in the competitive environment and can be boosted with the adoption of blockchain. However, lean supply chains focus on eliminating waste and increasing the firm’s productivity and can be achieved using less expensive technology such as ERP and IoT. Therefore, agile SC is better suited for the adoption of blockchain because this technology has state-of-the-art properties such as data-driven management, information sharing, data privacy, cyber-security, transparency, smart contracts, visibility, traceability, and reliability, which are highly aligned with the key requirements of agile SC, such as strong integration and real-time information sharing.

5.1. Implications

This study has managerial and practical implications. From a managerial point of view, this study provides a distinction between lean and agile SC along with blockchain properties. This study highlights the implementation of blockchain according to supply chain types. Furthermore, this study develops the relevancy of blockchain technology for SCM, as well as how blockchain is suitable for an agile supply chain. From a practical point of view, this study gives examples of the adaptation of blockchain for the supply chain and suggests that supply chain managers or decision makers evaluate their supply chain types according to agile and lean, and then focus on the implementation of blockchain technology because the adoption of blockchain is costly and requires significant capital. Finally, we conclude that blockchain technology is recommended for agile-based supply chain firms.

5.2. Limitations and Future Work

The main limitation of this study is that developing the relevancy of blockchain properties with agile and lean supply chains is based on the literature and could not be expressed empirically. This study considered only the oil and gas sectors for analysis; other sectors such as manufacturing and services were not included. Due to the high capital investments required for blockchain adoption, we propose future work on a new concept of “blockchain as services”. This technique will provide customized blockchain services for supply chains according to their requirements, but it needs to be explored in further studies. Moreover, the adoption of blockchain is not easy, and we suggest that future studies consider the potential barriers and challenges to the adoption and implication of blockchain.

Author Contributions

Conceptualization, J.A. and Y.B.K.; methodology, N.T.K. and A.S.; software, J.A.; validation, J.A., A.S. and Y.B.K.; formal analysis, N.T.K.; investigation, J.A.; resources, Y.B.K.; data curation, J.A.; writing—original draft preparation, J.A. and A.S.; writing—review and editing, N.T.K. and Y.B.K.; visualization, J.A.; supervision, Y.B.K.; project administration, Y.B.K.; funding acquisition, Y.B.K. All authors have read and agreed to the published version of the manuscript.

Funding

This research was funded by the National Research Foundation of Korea (NRF), a grant funded by the Korea Government (MSIT) (NRF-2022R1A2C1013147).

Data Availability Statement

Data will be provided upon request to the corresponding author.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A. Survey Questions

Appendix A.1. Respondent Profile

Sr. No.VariableOptions
1GenderMale
Female
2Age (in years)20–25
26–30
31–45
46–50
Above 50
3QualificationDiploma
Under-graduation
Master
Post-graduation
4Total experience in oil and gas supply chain management (in years)<5
6–10
11–15
16–20
>20

Appendix A.2. Model-Related Questions

Table
Table A1. Agile supply chain practices. Q1. To what extent were the following agile SC practices implemented in your organization? [1 = not at all implemented; 2 = not implemented; 3 = partially implemented; 4 = implemented; 5 = fully implemented].
Table A1. Agile supply chain practices. Q1. To what extent were the following agile SC practices implemented in your organization? [1 = not at all implemented; 2 = not implemented; 3 = partially implemented; 4 = implemented; 5 = fully implemented].
SrQuestions(Five-Point Likert Scale Ranging from
1 = “Not at all Implemented” to 5 = ”Fully Implemented”)
12345
1Close relationship with customers
2Close relationship with suppliers
3Outsourcing
4E-procurement
5Third-party logistics (3PL)
6Subcontracting
7Many suppliers
Table
Table A2. Lean supply chain practices. Q2. To what extent were the following lean SC practices implemented in your organizations? [1 = not at all implemented; 2 = not implemented; 3 = partially implemented; 4 = implemented; 5 = fully implemented].
Table A2. Lean supply chain practices. Q2. To what extent were the following lean SC practices implemented in your organizations? [1 = not at all implemented; 2 = not implemented; 3 = partially implemented; 4 = implemented; 5 = fully implemented].
SrQuestions(Five-Point Likert Scale Ranging from
1 = “Not at all Implemented” to 5 = ” Fully Implemented”)
12345
1Just in time (JIT)
2Strategic planning
3Supply chain benchmarking
4Holding safety stock
5Few suppliers
Table
Table A3. Supply chain-related firm performance. Q3. How did your business perform over the past five years relative to major competitors on each of the firm’s performance criteria using SCM practices? [1 = definitely worse; 2 = worse; 3 = somewhat worse/better; 4 = better; 5 = definitely better].
Table A3. Supply chain-related firm performance. Q3. How did your business perform over the past five years relative to major competitors on each of the firm’s performance criteria using SCM practices? [1 = definitely worse; 2 = worse; 3 = somewhat worse/better; 4 = better; 5 = definitely better].
SrQuestions(Five-Point Likert Scale Ranging from
1 = “Definitely Worse” to 5 = ”Definitely Better”)
12345
1More accurate costing
2Increase in sales
3Increase the coordination among suppliers
4Increase the coordination among customers
5Increase the coordination among departments

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Processes 10 02687 g001 550
Figure 1. Oil and gas supply chain stages.
Figure 1. Oil and gas supply chain stages.
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Figure 2. Proposed framework.
Figure 2. Proposed framework.
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Figure 3. Implication of blockchain for agile and lean supply chains.
Figure 3. Implication of blockchain for agile and lean supply chains.
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Table
Table 1. Blockchain properties and implications for agile and lean supply chains.
Table 1. Blockchain properties and implications for agile and lean supply chains.
Supply Chain Types and PracticesBlockchain Properties for Supply ChainsBlockchain Adoption for Agile and Lean Supply Chains
Agile Supply Chain
(Increase flexibility and responsiveness in a competitive environment)
[15,16,17]		OutsourcingReal-time information sharing; data security; privacy; transparency; reliability; traceability; trackability; visibility
[42,43,44]		Blockchain provides trusted visibility, ease of traceability, and trackability to the agile supply chain because supply chain operations are highly dynamic and uncertain related to supply, demand, and distributors. To improve the information and communication between suppliers and customers, blockchain provides state-of-the-art technology to fulfill this need, and integration is highly reliant on the blockchain.
E-procurement
Third-party logistics (3PL)
Subcontracting
Many suppliers
Close partnership with customers
Close partnership with suppliers
Lean Supply Chain (Minimize waste, processes, and resources that have no value addition for consumers)
[21,22,51,52]		Just in time (JIT)Data-driven management; trust; smart contracts; auditable; immutable and irrevocable information
[61,62,63]		There is no doubt that every lean organization suffers from immense waste emanating from a poor information flow and lack of trust. Blockchain has effective properties for lean SC such as immutable and irrevocable information, data-driven management, trust, smart contracts, and information sharing which increase the firm’s lean SC.
Strategic planning
Supply chain benchmarking
Holding safety stock
Few suppliers
Table
Table 2. Respondent profile.
Table 2. Respondent profile.
VariableFrequencyPercentage (%)
GenderMale15885.4
Female2714.6
Age (in years)<25158.1
26–352513.5
36–459551.3
46–553519
Above 55158.1
QualificationDiploma2010.8
Under-graduation3016.2
Master10054
Post-graduation3519
Experience in oil and gas supply chain management (in years)<5158.1
6–104021.6
11–154524.3
16–203016.2
>205529.72
Table
Table 3. Factor loading and reliability analysis.
Table 3. Factor loading and reliability analysis.
ConstructItemsOil and Gas Industry
Factor LoadingCronbach’s α
Agile SC practicesSCMAgile10.8160.768
SCMAgile20.705
SCMAgile30.807
SCMAgile40.715
SCMAgile50.774
SCMAgile60.720
SCMAgile70.760
Lean SC practicesSCMLean10.6440.765
SCMLean20.674
SCMLean30.680
SCMLean40.700
SCMLean50.712
SCM-related firm performanceSCMPerf10.8070.756
SCMPerf20.777
SCMPerf30.679
SCMPerf40.751
SCMPerf50.748
Table
Table 4. Descriptive and correlation analysis.
Table 4. Descriptive and correlation analysis.
VariablesMeanSD123
1Agile SC practices4.290.4781
2Lean SC practices4.170.4010.332 **1
3SCM-related firm performance3.760.5720.236 **0.179 *1
SD = standard deviation. * Correlation is significant at the 0.05 level. ** Correlation is significant at the 0.01 level.
Table
Table 5. Hypotheses testing.
Table 5. Hypotheses testing.
PathHypothesisβS.ET-Valuep-ValueResult
Agile SC practices → SCM-related performanceH10.3310.1122.9710.003Supported
Lean SC practices → SCM-related performanceH20.2140.0962.2270.027Supported
S.E = standard error.
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MDPI and ACS Style

Aslam, J.; Saleem, A.; Khan, N.T.; Kim, Y.B. Blockchain Technology for Oil and Gas: Implications and Adoption Framework Using Agile and Lean Supply Chains. Processes 2022, 10, 2687. https://doi.org/10.3390/pr10122687

AMA Style

Aslam J, Saleem A, Khan NT, Kim YB. Blockchain Technology for Oil and Gas: Implications and Adoption Framework Using Agile and Lean Supply Chains. Processes. 2022; 10(12):2687. https://doi.org/10.3390/pr10122687

Chicago/Turabian Style

Aslam, Javed, Aqeela Saleem, Nokhaiz Tariq Khan, and Yun Bae Kim. 2022. "Blockchain Technology for Oil and Gas: Implications and Adoption Framework Using Agile and Lean Supply Chains" Processes 10, no. 12: 2687. https://doi.org/10.3390/pr10122687

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