Internet Supply Chain

B L O C K C H A I N & S U P P LY C H A I N S

S U N I L W A T T A L T E M P L E U N I V E R S I T Y

• To understand the power of blockchain systems, and the things they can do, it is important to distinguish between three things that are commonly muddled up, namely the bitcoin currency, the specific blockchain that underpins it and the idea of blockchains in general.

• Economist, 2015

WHAT IS BLOCKCHAIN?

• A technology that permits transactions to be recorded – Cryptographically chains blocks in order

– Allows resulting ledger accessed by different servers

– Information stored can never be deleted

• A digital distributed ledger that is stored and maintained on multiple systems belonging to multiple entities sharing identical information (Deloitte)

• Bitcoin was the first demonstrable use

HISTORY OF BLOCKCHAIN

T YPES OF BLOCKCHAINS

• public or permissionless blockchains – everyone who wants to engage in the network can openly see all transactions. The technology is

transparent, and all who want to engage in making transactions on the blockchain can do so.

• private or permissioned blockchains – closed and accessible only to a selected few who have permission to engage in the blockchain.

BLOCKCHAIN FEATURES

• A blockchain lets us agree on the state of the system, even if we don’t all trust each other!

• We don’t want a single trusted arbiter of the state of the world.

• A blockchain is a hash chain with some other stuff added – Validity conditions

– Way to resolve disagreements

• The spread of blockchains is bad for anyone in the “trust business”

WHAT IS BITCOIN

• A protocol that supports a decentralized, pseudo-anonymous, peer-to-peer digital currency

• A publicly disclosed linked ledger of transactions stored in a blockchain

• A reward driven system for achieving consensus (mining) based on “Proofs of Work” for helping to secure the network

• A “scare token” economy with an eventual cap of about 21M bitcoins

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OTHER USES OF BLOCKCHAIN

• Supply Chain • Online advertising • Smart Contracts • Voting

BENEFITS OF BLOCKCHAIN

• Consistent • Democratic • Secure and accurate • Segmented and private • Permanent and tamper resistant • Quickly updated • Intelligent – smart contracts

BARRIERS TO BLOCKCHAIN ADOPTION • Hype • Finding the right balance in regulation • Cybersecurity • Ease of use over shared databases • Lack of understanding and knowledge

SUPPLY CHAIN CHALLENGES

• Margin Erosion • Demand changes • Ripple Effect • Supply Chain Risk Management • Lack of end to end visibility • Obsolescence of Technology

APPLICATIONS IN SUPPLY CHAINS

• Traceability • International Trade • Continuity of Information • Data Analytics • Visibility • Digital contracts and payments • Check fraud and gaming

EX AMPLES OF BLOCKCHAIN IN SUPPLY CHAINS • 300 Cubits

– Blokcchain technology for the shipping industry

• BanQu – Payment for small businesses

• Bext360 – Social sustainability

• Walmart for food distribution

INCLASS EXERCISE

In small groups, research and discuss examples of blockchain use in supply chains. You can also explore where combinations of technologies such as Blockchain + IoT can be used in supply chains. Write a summary of your analysis, alongwith names of group members, on the course blog.

Questions / Comments