Blockchain or smart contracts have no way to solve this without abandoning the decentralized and permissionless aspects, at which point you’re giving up loads of efficiency for none of the benefits.
This is the problem that every large non speculation based blockchain problem has encountered: any system will be reduced to its weakest link. Any problem that requires crossing off chain into the real world will necessarily lose many of any benefits blockchain can provide.
Blockchain really only solves a few specific problems in a few specific domains. There’s a reason that a decade on, all we’ve managed to build are massive casinos that can’t be shut down by authorities
Moreover, I think one of the big problems with "blockchain [jazz hands]" is what you're doing here: a solution looking for a problem. The right way to build something is to start with actual problems actual people have and then find the most economically efficient technology that best fits the solution. When approached from that perspective, I still haven't heard of a case where a blockchain turned out to be the right answer.
I agree that a distributed ledger could under very specific circumstances protect against some very specific types of internal fraud. But again, that's the wrong way to look at it. The way to do it is to look at actual fraud problems that businesses are actually having and then see what measures, technological and otherwise, best mitigate the problem.
Even if the fraud in question was of the very specific type where somebody fiddles records after the initial write (as opposed to fiddling them before, or on output, or making offsetting transactions, or any of the many other ways to hide internal fraud) I still wouldn't try to set up some sort of multi-organizational distributed blockchain ledger. I'd just write a regular ledger to some immutable medium. E.g., AWS's WORM solution. [1] That would not only be simpler, clearer, cheaper, and more thoroughly vetted, it would also be very easy to prove compliance with the sorts of standards used to prevent fraud.
[1] https://aws.amazon.com/blogs/storage/protecting-data-with-am...
But I think the core value proposition of blockchain to supply-chain like situations is to solve the problem of "who's version of the database do we trust", without needing to resort to escrow or other 3rd parties. It won't completely solve the problems of parties being in disagreement - lawyers will still be needed, but it might address a subset of problems.
That looks like waste to the "blockchain [jazz hands]" crowd. But it prevents other wastes. Like trying to get a whole industry to come to consensus on ontology and process. Or trying to comply with systems build around that fantasy process when local needs differ from the standards.
A blockchain (not proof-of-work, but permissioned/BFT-based) is pretty clearly the optimal way to have an irrevocable digital trail.
But you can encode fulfilment into a smart contract for physical goods, assuming that those physical goods have some digital representation on-chain. Discrepancies between the chain and the real world continue to be resolved through the court systems in various jurisdictions, but on-chain activity is just strong evidence that any court can rely on.
> a distributed ledger only has value over and above a non-distributed one if other parties worry about the centralised database manager tampering with records
An alternative viewpoint is that a centralized database manager can be seen as a potential risk. One of the general ways we progress in society is when we reduce sources of risk, and a permissioned blockchain where you need 2/3rds of a cabal to collude is a pretty clear reduction of risk compared to a centralized DB. (I mean, how would you keep track of whether a central DB has been tampered with? You'd probably maintain your own copy, reconcile the two periodically, and flag discrepancies if and when they happen. That's exactly what a blockchain is.)
To be clear, I'm pretty skeptical about blockchains in general, but this seems like a very compelling use case.
But why would I want to? Unlike a smart contract for some verifiable code-based outcome it doesn't offer any guarantees I get paid, which I still rely on the courts for, it just adds complexity and unfamiliar risk.
> An alternative viewpoint is that a centralized database manager can be seen as a potential risk
Sure, in theory it can be. But relative to all the other potential supply chain risks, the ERP cloud vendor colluding with a part of the supply chain to remove records from or silently update a datastore is pretty near the bottom of the list in terms of likelihood, expected cost and chances of it not being glaringly obvious to other parties and used as evidence of bad faith on their part in court.
To be clear, I'm not saying blockchain can't be used as a datastore, I'm saying that overall its about as useful for mitigating supply chain risk as insurance against your spouse committing identity fraud is for mitigating potential problems with marriage.