ANAHEIM, Calif.—Blockchain technology is becoming a key player in modernizing supply chains to enable easy tracking, automate transactions and delivery, and build end-to-end trust, Chandra Narayanaswami, principal research staff member, Member IBM Academy of Technology at IBM Research, told people attending a smart manufacturing session at the MD&M West conference here last week.
Today’s supply chains are no longer isolated functions within a company, said Narayanaswami, whose research includes applications of blockchain technologies for supply chain in multiple industries.
Additionally, “the supply chain of the past where you could configure it once and let it run—that’s no longer a valid way of doing things,” he said. “There’s a lot of volatility, uncertainty, complexity and ambiguity in today’s supply chains because they pick up and distribute much faster and more globally. What that means is you need to have an end-to-end planning system, tight execution and constantly be tuning that system. That’s because the moment you create the plan, it’s obsolete because a lot of new pieces of information will come in and conditions on the field will change.”
The three businesses processes behind a supply chain are: moving raw materials and finished products in one direction, moving money in the other direction, and moving information about what’s happening in both directions, he said. Common to all three processes, players need trust in the data and need that data to be delivered. They also need data to be trackable by entity, organization, purchase order and invoice.
Customer demands also have changed in terms of what, when, where and how they want their products, Narayanaswami said. Customers want goods immediately and delivered to the location of their choice – whether that’s a locker on a college campus or the grocery store of their choice.
Combined with AI and IoT technology, blockchain can meet these challenges as well as the challenges of logistics, ethical sourcing of products, automated warehouses, autonomous delivery, monitoring for compliance and smart contracts, he said.
For example, a nationwide manufacturer or retailer might find it more cost-effective to ship products or components the longer distance from Seattle to Florida as opposed to the seemingly logical choice of shipping from Alabama to Florida because the product or components in Seattle are no longer in demand and would have to be discounted to buyers, Narayanaswami said.
In addition to encryption, blockchain brings trust with immutability and security of data, he said. Each block in the chain has encrypted data and a signature of the data in that block. To enter a new block, the creator needs the signature of the previous block and the data in the current block to compute the signature for the new block.
Blockchain is tamper-evident because any attempted change in a block invalidates the chain and this becomes immediately obvious to all parties on the blockchain, he added.
“AI (artificial intelligence) provides the analysis and intelligence,” Narayanaswami said. “IoT provides the data. Blockchain provides the third leg of the stool. Blockchain builds trust and brings automation. Blockchain layers bring trust in the business processes and that’s how they connect together.”
The immutability of blockchain makes it easier to resolve conflicts. For example, in the event of a dispute among parties in the past, each player would bring its own private ledgers to the table to attempt to reconcile the issue, he said.
“With blockchain and smart contracts, we are able to automate a lot of this because now any piece of data that was put on the blockchain is certified,” Narayanaswami said. “It has an owner. Blockchain is about providing trust.”
Additive manufacturing introduces new supply chain challenges that blockchain can address, he said. Blockchain can help ensure that copies were produced according to what was authorized, he said.
Bitcoin and other cryptocurrencies were the first use cases for blockchain, but there is an important difference between blockchain used for Bitcoin and blockchain technology used in manufacturing and business, Narayanaswami stressed.
Unlike the public, permission-less blockchain used for cryptocurrencies, manufactures and businesses using blockchain technology generally allow only specific parties to access the data, he said. Even within a private blockchain, some data might be widely available to all involved parties and regulators while other data might be more restricted, he said.
“In the Bitcoin space, it’s called permission-less blockchain – so anybody can enter,” Narayanaswami said. “Now what’s going on with the business networks of blockchain, permission blockchain networks, is quite a different space. Because first, in a business sense, you want to do business parties that you know, parties that you might trust, parties that are accountable. Blockchains for business are permissioned, they’re private, they’re not free for all. They emphasize identity over anonymity.”
As part of the IBM Food Trust, Walmart is using blockchain to track leafy greens to ensure its spinach and other greens are safe and to be able to quickly track contaminated products to a specific farm so that only bad products must be discarded, he said.
Blockchain offers similar benefits to manufacturing, for example within the medical and electronics industries, he added.
“You can trace the products from the materials that were used, where they came from, who produced it, who implanted it, who manufactured it, who transported it, etc.,” Narayanaswami said.
In the future, new blockchain value-added service, yet to be conceived, will further multiply the value of blockchain networks, he said.