Supply Chain

FA L L E D I T I O N
Contents
3 — Global supply chain disruptions loom over
automation market

10 — Vision Detection

11 — Wearable technology can combat supply chain disruptions

16 — Four Technologies driving the future of Supply

Chain Traceability

26 — How blockchain, IIoT and AI make the global supply chain

more resilient

33 — Transparent asset tracking framework for supply

chain management

37 — How software in the supply chain is an insider threat

to ICS networks

2
Global supply chain disruptions loom
over automation market  Back to TOC

Supply chain challenges have been brought to the forefront due to recent
events such as COVID-19 and technology shortages, forcing manufacturers
to adjust to a new reality.

R ecent worldwide events and political strains, including tariffs and COVID-19, have
exposed the precarious vulnerability of the global supply chain. In the automation
space, the semiconductor chip shortage represents the elephant firmly entrenched in
the room when it comes to supply chain disruptions. How has the shortage impacted
component deliveries? How are companies reacting? When and how might the short-
age end?

Fortunate foresight, similar struggles

Advancing technologies — from machine vision and robotics to automobiles and
televisions — all require semiconductor chips, but demand has overtaken supply.
Fortunately, some companies made preemptive moves to position themselves against
significant losses due to component shortages, while others had a bit of luck on their
side. Machine vision LED lighting company Smart Vision Lights, for example, has been
only mildly impacted by supply chain shortages.

“About six to eight months ago we ordered a surplus of inventory because we added
onto our facility due to the launch of a new business unit (pictured), where we popu-
late our own electronic circuit boards,” said Dave Spaulding, president and CEO of
Smart Vision Lights. “When we did that, we upped our inventory in most areas by 50%
as a precaution to put our new business unit in a favorable position.”
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Global supply chain disruptions loom over automation market

 Back to TOC

At the new facility, Smart Vision

He added, “This has obviously helped us quite a bit with
Lights employees work on the new
electronics, and we really haven’t seen a lot of shortages surface mount technology (SMT)
yet from our suppliers on other components. While we’ve line, which allows the company to
build electrical sub-assemblies.
had some longer lead times, we are only starting to see
Courtesy: A3/Smart Vision Lights
the effects of this now. But it has not been drastic.”

Paul Powers, vice president for global sales and marketing at Smart Vision Lights,
explained further: “For a long time, it was extrusion-based lights for linear machine vi-
sion solutions, but with the introduction of our L300 legacy product — one of the first 4
Global supply chain disruptions loom over automation market

plastic injection–housed lights in the market — we now rely more on a stateside sup-  Back to TOC
ply chain to minimize the impact should tariffs or other circumstances cause ripples in
the global supply chain.”

“Some parts are even sourced here in Michigan,” he added. “While it is likely that we
will be impacted when it comes to sourcing higher-volume inventory, we are holding
strong.”

For machine vision software and component company Matrox Imaging, the experi-
ence has been similar. In the fall of 2020, the company’s operations team predicted
that supply chain shortages would become critical in 2021 and took steps to mitigate
the impact on production as much as possible, according to Sam Lopez, senior vice
president for sales and marketing at Matrox.

“These steps allowed us to keep up with customer demand during the first quarters
of 2021, but we are now reaching the point where continued shortages have made it
difficult,” he said. “In addition to shortages, customer demand has increased even
further than our most optimistic forecasts, which exacerbates the issue. This will make
the second half of 2021 even more challenging.”

Nobody anticipated that demand would surge to the level that it has in such a short
time frame and across so many industries, but companies must now react. For Matrox,
this involves increasing the planning horizon significantly, adding more frequent mate-
rial requirement planning runs, and tripling manufacturing capacity.

“Many suppliers think the situation will improve in the latter half of the year, but oth-
5
Global supply chain disruptions loom over automation market

ers think it will spill over into 2022,” said Lopez. “The only solution I see is increasing  Back to TOC
capacity, so we’ll see how soon this can happen.”

Systems integrators have been impacted by shortages as well, according to David

Dechow, principal vision systems architect with Integro Technologies. “From camer-
as to computers, we’ve felt the pinch in technology availability,” he said. “It has not
stopped business for us, but delays are inevitable, and the problem is compounded
by rising cost and increasing scarcity of steel and system-building materials.”

Short-term shortages leads to pragmatic positions

Israeli motion control and servo company STXI Motion has experienced disruptions
and delays in its supply chain due to component and raw material shortages. As a
result, the company has received notices from certain suppliers announcing a state of
force majeure (unforeseeable circumstances preventing fulfillment of a contract). This
has led to increased cost and lead time for key product components, according to
Markus Erlich, vice president for marketing and portfolio management at STXI Motion.

To mitigate the direct and short-term impact of such disruptions on confirmed de-
livers for the company’s customers, STXI Motion has focused on sourcing alternative
components, financing of price surcharges, and expedited shipping. Additionally, as
the delays, shortages, and cost increases continued, the company recently informed
customers that the situation may require changes to lead times and product pricing,
according to Erlich.

“Risk assessments of our suppliers and key components are being held regularly to
track impact and changes we may need to act upon,” he said. “Looking forward, we
6
Global supply chain disruptions loom over automation market

expect that it will take six to 12 months for the supply chain to adjust to the current  Back to TOC
demand caused by the reduction of production capacity of key components — semi-
conductors in particular.”

For optics, imaging, and photonics company Edmund Optics, supply chain shortag-
es have mainly affected cameras the company supplies, according to Nick Sischka,
manager of imaging sales operations. This has led to increased lead times, with some
suppliers impacted worse than others.

“Edmund Optics has begun cross-referencing cameras that we don’t have to those
we have in stock and has been leveraging our ability to hold inventory to continue to
service our customers,” Sischka said. “We are also being strategic on where we place
additional orders, since simply buying more will only make the problem worse.”

Looking at the machine vision market as whole, Sischka believes that in the short
term, the shortage will slow things down in terms of implementation. But due to the
tendency for people to panic buy, it could lead to a small contraction after larger or-
ders are filled. Looking beyond the machine vision market, he offers a pragmatic view.

“There needs to be more of an emphasis put on not just reacting to things when they
happen, because making decisions that are impactful in the mid- to long term based
on short-term demands is just incredible myopic,” he said. “Take a breath and think
about the impacts of a decision before just reacting.”

For frame grabber company BitFlow, the main shortage is with Altera’s field-program-
mable gate arrays (FPGAs), which integrate into the company’s cards. As a result,
7
Global supply chain disruptions loom over automation market

BitFlow has held strategy meetings to determine things such as our forecast and lead  Back to TOC
time while also purchasing a bit more than it normally would, according to Donal
Waide, director of sales for BitFlow.

“Typically, we have an idea of how many chips we’ll need to utilize over the next six to
12 months, but things are a bit different now,” he said. “We are working closely with
our customers in terms of their forecasts and alerting them to the fact that lead times
will be pushed out.” He continued, “The difficulty has been coupled with the fact that
people are emerging from a pandemic, and there is a bit of frenzy buying as compa-
nies are starting to reopen.”

Despite the chip shortage, business has been healthy for BitFlow, said Waide: “Inter-
estingly enough, orders are steadily coming through the door, but the challenge is
fulfilling them, of course. Where companies like ours may benefit is having boards on
hand and being able to go into projects that are just starting now. But as the backlog
grows, so too does the challenge of completing all orders. Hopefully, the shortage
subsides and we all soon benefit.”

Light at the end of the tunnel

While some think the shortage could end this year or trickle into next, others, such
as Glenn O’Donnell, vice president and research director at the advisory firm Forrest-
er, think it may last several years. “Because demand will remain high and supply will
remain constrained, we expect this shortage to last through 2022 and into 2023,” he
wrote.

He went on to suggest that tech buyers must be flexible, patient, and improvisational.
8
Global supply chain disruptions loom over automation market

He also laid out a list of eight things that buyers can do in the interim.  Back to TOC

Patience must be practiced, but now is not the time to slow down either, suggests
Spaulding.

“Written on the board in my office is a slogan that says, ‘The fast eat the slow,’ so
companies that can do things quickly are going to take market share,” he said. “Now
is the time to make investments in equipment and people so that when things kick
back into gear, the wheels can immediately start turning and components can be built
again. You’ve got to be ready, let’s eat.”

Jimmy Carroll
Jimmy Carroll, A3 contributing editor, Association for Advancing Automation (A3)

9
Vision Detection

 Back to TOC


Vision Detection
Today, you can buy just about anything online from small electronics
to large garden furniture and even tires. This inevitably requires
handling of large, non-conveyable items. The growth rate of non-
conveyable items is higher than parcels with standard dimensions.
A new vision detection technology called Mass Flow Detection
System automates data collection of non-conveyable items.

10
Wearable technology can combat
supply chain disruptions  Back to TOC

Wearable technology will make the human worker more valuable in the
long run

D espite fears that millions of workers will be displaced by technological advances

in robots and machine learning (ML), com panies are seeing the opposite. There
are more than 10 million job openings in the U.S. as of a recent Bureau of Labor Sta-
tistics report, making this one of the most prominent labor shortages in the country’s
history.

As witnessed in 2020, technology in the supply chain kept logistic lines functioning
despite severe stress on their functionality due to COVID-19 outbreaks and lockdowns.
With wearable technology such as barcode scanners and applications that track work-
er efficiency to help them improve their output, people are seeing a kind of worker
revolution within the industrial space. Companies also use more ergonomic solutions,
which provide the worker relief from physical stress. Workers connected to the Inter-
net of Things (IoT) are more important than ever to help keep warehouses and supply
chains running as smoothly as possible.

Companies are nowhere near the point of automating the whole industry. Despite
labor shortages, more efficient workers can help companies navigate the waters. With
the right suite of technology complementing workers, they can do more with less.
There are ways that plant managers and manufacturing leaders can learn from the
pandemic, so they are better prepared for the next disruption that will inevitably come
while reassuring workers their jobs will not be automated away. These two components
11
Wearable technology can combat supply chain disruptions

will bring the industry to  Back to TOC

the next level of using
automation technology
in manufacturing.

How smart tech

aids the workers’
experience
Using an historical
example, if blacksmiths
were more familiar with
Courtesy: Cincinnati Incorporated/Steve
the tools of their trade, they would have fewer is- Rourke, CFE Media and Technology
sues when they need to make considerably more
swords or horseshoes than usual. Like the world of manufacturing today, if workers
don’t feel completely comfortable with the tools or technology they are employing,
they will not be able to keep up — or catch back up — with demand. It is crucial to
familiarize workers with the machines they will be using. This can be accomplished in
three ways.

The first is simplification of the process itself. The workers on the shop floor do not
need to necessarily comprehend the technology behind, say, a wearable device, but
they should understand the benefit of the data it collects because the data has the
potential to relieve them of a superfluous burden while improving their day-to-day
actions. Wearables, such as ProGlove’s connected barcode scanners, aid the worker by
connecting them to the IoT. Connected devices can feed relevant information to plant
managers that helps them create actionable insights about processes and workflow.
12
Wearable technology can combat supply chain disruptions

Digitalizing the manufacturing industry with the right blend of wearables and integrat-  Back to TOC
ed software builds a kind of human-digital twin in the sense that workers’ capabilities
are augmented. Moreover, and the metadata collected from the tasks they perform can
help management refine processes and lead to a more efficient environment.

Last, putting emphasis on safety helps workers feel more at ease on the job. Tech-
nology that puts workers first is designed with them at the center. It should promote
worker safety because it’s designed with the person top of mind. One example of this
is technology that focuses on ergonomics for the workers using it. This has become
increasingly necessary to cushion the future shortage of skilled workers and should be
embraced by plant managers.

Combatting the ostensible fear: Job loss due to automation

Warehouse and manufacturing workers are becoming human-digital twins with aug-
mented, connected devices that help them increase their efficiency. These devices are
centered around amplifying the capabilities of the human worker. In a sense, it empow-
ers the employee by making their work more efficient and streamlined. It also helps
plant managers collect data to recognize successful tactics and address areas ready for
increased efficiency or improvement.

The fear that machines or robots will replace millions of people in manufacturing work
is not accurate. The bar has been raised; a new industry standard has been set. Aug-
mented tech and artificial intelligence (AI) open the door for new opportunities for
workers by expanding their roles. They can do more with the time they’ve saved. As a
result, the worker becomes more valuable when there is a labor shortage.

13
Wearable technology can combat supply chain disruptions

The future of wearable technology in manufacturing  Back to TOC

Wearable technologies that work in concert with the software and technology in the
plant can help empower workers and lead management to improve systems already in
place. It frees up the worker to accomplish more tasks and promotes worker safety and
well-being. Former industrial revolutions left workers behind. However, this new digital
age provides us an opportunity to put humans at the center of it.

Axel Schmidt
Axel Schmidt is the senior communications manager for ProGlove, which develops
industrial wearables used by more than 500 renowned organizations in manufacturing,
production, logistics and retail. ProGlove was founded in December 2014, after winning
the Intel “Make it Wearable” Challenge in Silicon Valley. ProGlove is backed by growth
focused investors Summit Partners, DICP and Bayern Capital. ProGlove employs 200
people from more than 30 countries from its two sites in Munich and Chicago.

14
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Four Technologies How AI, Machine Vision, Smart devices, and
Optimized Pixel Density can reduce traceability
costs and manual labor expenses
driving the future
of Supply Chain R ecent world events, including the COVID-19 outbreak
and international political tensions, have highlighted
vulnerabilities in the global supply chain. In most cases

Traceability
these vulnerabilities manifested themselves as tighter
labor pools coupled with increased demand. This combi-
nation of increased work and decreased labor created the
perfect storm for many supply chains leaving them crip-
pled and unable to deliver for their customers.

Advanced automation technologies can help mitigate

these vulnerabilities for warehouses and distribution cen-
ters working to keep up with demand. Specifically, four
technologies can improve supply chains by reducing the
labor, labor costs, and costs associated with traceability.

Advancing Technologies
In the last two years, the pandemic has driven many of the
trends in supply chain, e-commerce, and the labor force.
In short, there has been an enormous increase in online
purchasing; likewise, the expectation for end-to-end and
last mile traceability has also increased enormously. Unfor-
tunately, the available labor force to meet these expecta-
Four Technologies driving the future of Supply Chain Traceability

 Back to TOC

tions has dramatically decreased. These challenges drive incorporation of automation

into production, packaging, and the supply chain. While this is not a new phenome-
non, four new technologies deliver greater benefits to supply chains significantly re-
ducing the cost of labor and traceabil-
ity:

• Machine Learning
“ Camera technology in traceability
devices provides plenty of images for
every Read and No Read. When a No
• Vision Detection Read event occurs, vision algorithms and
artificial intelligence can extract value
• Smart Scanning from these images. Using these tools, AI
can pinpoint the No Read root cause in an
• Optimized Aspect Ratio automated way.
” 17
Four Technologies driving the future of Supply Chain Traceability

 Back to TOC
AI Prevents Problems
Almost every parcel traveling in supply chains is tracked and traced using barcodes.
Driven by regulatory requirements, customer expectations, or needs within the enter-
prise, traceability is crucial to supply chains. Therefore, maintaining a contiguous track-
ing history is important. In most cases a tracking history is interrupted by a barcode No
Read. No Reads kill the efficiency of traceability systems and wreak havoc on sorting
processes. No Reads result in automated systems becoming manual, so how do you
prevent this?

Camera technology in
traceability devices pro-
vides plenty of images for
every Read and No Read.
When a No Read event
occurs, vision algorithms
and artificial intelligence
can extract value from
these images. Using
these tools, AI can pin-
point the No Read root
cause in an automated way. For example, the label Parcel with broken barcode classification
shown here should be recognized as a broken bar-
code classification.

AI can automatically do this classification along with aggregation and reporting. This
18
Four Technologies driving the future of Supply Chain Traceability

is the key to quickly helping understand major No Read causes and promptly define  Back to TOC
corrective action. One example of implementing AI to prevent No Read is the No Read
Classifier Engine. This is software Datalogic has added to the Web Sentinel™ Plus
platform. This engine automatically processes images related to No Read, classifying
them into different categories. Using this information, reports and queries can be run
on the database. For example, a trend report can show the hourly trend of No Reads
on a certain day.

Drilling down into the report could show several parcels of the same shape, from the
same customer with labels placed across the seam. Rather than have this continue, a
corrective action with that customer can be issued. Without the automated classifica-
tion, this issue may not have ever been identified and the manual work from No Reads
would have continued.

There are many ways AI can be used to prevent No Reads. Corrective action, preventa-
tive maintenance and other activities can be done as the AI system sees No Reads and
categorizes them. All of this is done in real-time.

AI analysis makes improvements possible without spending large amounts of time to

manually check parcel by parcel, image by image. Even at a very low throughput of 4,000
parcels per day, you would need to spend multiple hours per day for manual classifica-
tion to get to the root of a problem. This technology has a great benefit keeping auto-
mation running and workers focused on real high value tasks instead of manual rework.

Vision Detection
Supply chain applications have become more complex as items of varying shape,
19
Four Technologies driving the future of Supply Chain Traceability

size, and type are being  Back to TOC

purchased and fulfilled
through e-commerce.
The cardboard box and
poly bag are not the only
type of packaging moving
through supply chains. As
e-commerce grows, so do
the shapes and sizes of
parcels. Large or irregularly
shaped, non-conveyable
items require manual mea-
surement, sorting, and Mass Flow Detection of items
data collection. A new data collection system based on using on a conveyor
dynamic vision detection called Mass Flow Detection can
automate and eliminate the need for manual sorting for these large, irregularly shaped,
non-conveyable items. Vision systems deliver the ability to collect and do more with
data. For example, a parcel with a miss-
ing label may still be identified through
its shape, color, or optical characteristics. “ Vision systems deliver the ability
to collect and do more with data. For
Vision systems can process data applying example, a parcel with a missing label
algorithms that allow them to detect and
may still be identified through its shape,
decipher items in 3D.
color, or optical characteristics. Vision
systems can process data applying
The Mass Flow Detection System can
algorithms that allow them to detect and

” 20
determine if an image shows one irreg-
decipher items in 3D.
Four Technologies driving the future of Supply Chain Traceability

ularly shaped item or multiple parcels touching. The system provides volume data for  Back to TOC
each item, using advanced real-time image analysis to recognize and separate items.
Multiple scanners generate hundreds of images, which are stitched together to pro-
vide a high-resolution top view. Scanners collect barcode data from each item, and a
color camera takes a multi-sided view of each item running over the belt. The color
JPEG image is saved with a bounding box, created by 3D measurement data. The im-
age and the bounding box provide proof of the object’s condition. All the data is ag-
gregated creating a complete picture of the item’s physical characteristics (size, shape,
weight), traceability data (barcode), and condition.

The Mass Flow Detection System is revolutionary. The system eliminates the need for
manual work that is currently performed to properly size items that do not fit or travel
on traditional conveyor systems. Moreover, its high accuracy certifies it for Legal for
Trade applications. In applications where clients provide dimensional data for their
non-conveyable shipments, the Mass Flow Detection System can audit shipments to
endure accuracy of the shipment and facilitate revenue recovery when shipment data is
incorrect.

Getting Smart with Barcode Detection

Technology advances are driving the creation of smarter devices. This is particularly
true for data capture devices, specifically barcode imaging scanners. Most scanners are
considered dumb devices, they have one function which they are specifically designed
to do. To do this function they require other ancillary devices such as power supplies,
proximity sensors, cabling, switches, and programmable logic controllers (PLCs).

A new generation of Smart Scanners is emerging. One example is the AV900 from
21
Four Technologies driving the future of Supply Chain Traceability

Datalogic, a Smart Scanner that can  Back to TOC

be programmed directly and can oper-
ate autonomously without much of the
ancillary devices traditional scanners
require. Smart Scanners reduce the
system cost of traceability systems in
two ways. First, their built-in intelligence
reduces the components required to
operate. Second, this same intelligence
when coupled with higher resolution im-
agers reduces the number of scanners
required and makes the solution more effective with enhanced features.
“ Smart Scanners reduce the system
cost of traceability systems in two ways.
First, their built-in intelligence reduces
the componentry required to operate.
Second, this same intelligence when
coupled with higher resolution imagers
reduces the number of scanners required
and makes the solution more effective
with enhanced features.
”

For example, fast and wide conveyor systems would require two standard barcode
scanners with 5 megapixels of resolution. These devices would need dimensioners,
power supplies, proximity sensors, cabling, switches, or Programmable Logic Control-
lers (PLCs) to ensure that the right parcel gets to the correct location. A Smart Scanner
such as the AV900 delivers 9 megapixels of resolution allowing one device to replace
the traditional units. Importantly, the intelligence within the Smart Scanner directly
increases its functionality and effectiveness with new features such as three different
focusing modes:

• Fixed focus

• Dynamic focus

• Sequential focus 22
Four Technologies driving the future of Supply Chain Traceability

Sequential focus is the most powerful mode in the Smart Scanner. In this mode the  Back to TOC
scanner can be programmed to look for barcodes at different positions, with different
frame rates. The information for sequential focus is sent directly to the Smart Scanner
and stored locally. The sequence is executed directly without the need of a computer
or PLC. This type of intelligence illustrates how smart scanners do more than just scan
barcodes; they cut the cost of traceability systems.

Higher Accuracy with Barcode Scanners

While high resolution
remains an important
specification in many
industrial applications,
how that resolution is
utilized can be even
more important. Most
barcode scanners have
a 4:3 aspect ratio, creat-
ing a field of view that
resembles a square. If
one of these scanners
is positioned to scan a 2-foot conveyor covering the full width, Parcels travelling on a
the field of view is 2 feet x 1.5 feet, with pixels evenly spaced conveyor with a 4:3 FOV
barcode scanner
over that area. Most barcodes are detected close to the starting
edge of the field of the view, meaning that many of the avail-
able pixels go unused, creating serious system inefficiency and problems for barcode
detection.
23
Four Technologies driving the future of Supply Chain Traceability

If an application requires  Back to TOC

an increased field of
view, the scanner must
be raised to cover the
width of the conveyor.
Increasing the scanning
area reduces pixel densi-
ty in the field of view and
impacts how well the
scanner can detect and
decode barcodes. Poorly
printed, damaged, or low-contrast barcodes can become difficult Parcels travelling on a
conveyor with a 16:9
or impossible to read. A common solution is to add more scan-
FOV barcode scanner
ners, but this increases cost and complexity.

Optimizing the aspect ratio is a better way to solve this challenge and it provides
a better fit for industrial applications. For example, the Matrix™ 320 from Datalog-
ic delivers a 16:9 aspect ratio, a flatter rectangle than the 4:3 aspect. Changing the
aspect ratio provides a wider field of view making it more effective to cover conveyor
applications while maintaining high pixel density. The real benefit comes when read-
ing poorly printed, damaged, low-contrast, or multicolor barcodes. The 16:9 aspect
has more pixels in the read zone enabling higher often, when a barcode scan fails,
a person must intervene to make sure the package continues to its destination. This
human involvement is required to ensure the accuracy of a parcel’s traceability data.
An optimized aspect ratio provides more pixels in a rectangular field of view, which
greatly increases the number of readable labels. Reducing barcode scan failures
24
Four Technologies driving the future of Supply Chain Traceability

reduces labor costs. While aspect ratio might seem basic, optimizing it for better  Back to TOC
detection plays a critical role in reducing labor costs and increasing traceability effec-
tiveness.

Technology to Stay Competitive

Optimizing aspect ratio, smart scanning, vision detection, and machine learning pro-
vide tangible, quantifiable advantages for traceability improvement. Moreover, they
deliver real business benefits that increase the enterprise bottom line. Companies not
utilizing these technologies will find it increasingly difficult to stay competitive. Tech-
nology is not stagnant, improvements in traceability systems will continue to bring
benefits to enterprises willing to adapt while laggards fall farther behind. To see how
these technologies can benefit your enterprise, contact your local Datalogic represen-
tative or visit: www.datalogic.com.

25
How blockchain, IIoT and AI make
the global supply chain more resilient  Back to TOC

Safeguards could be established to develop warning signs and by creating

thresholds that would automatically trigger contingency plans to avoid supply
chain disruptions.

T he Suez Canal blockage in March 2021 pointed out a major pinch point — for lack
of a better term — within the global supply chain. One ship getting blown off
course during a predictable sandstorm halted 12% of global trade — an estimated $9.6
billion per day. While the Ever Given was freed after six days, the ripple effects of the
event will be felt for months due to the thousands of ships delayed in those six days.

Witnessing the magnitude of what a single ship mishap can do to interrupt global
trade makes it obvious that safeguards need to be put in place to prevent such events
in the future. If an accident put a stop to 12% of global trade, what kind of damage
could an intentional act inflict?

Was the Suez Canal blockage preventable?

Safeguards could be established by identifying the preceding conditions in order to
develop warning signs and by creating thresholds that would automatically trigger
contingency plans to avoid supply chain disruptions.

Using this formula, the Suez Canal blockage could have been avoided if historical
weather patterns were compared against the conditions on March 23, 2021 to predict
the sandstorm that blew the Ever Given off course. The historical weather patterns
could have been analyzed against the ship’s dimensions and previous canal blockages
26
How blockchain, IIoT and AI make the global supply chain more resilient

to develop threshold triggers that, when reached, could have sent warning signs to the  Back to TOC
port authority. The port authority could have then taken precautionary measures by
halting movement through the canal or sending ships through that would be less sus-
ceptible to being blown off course.

It seems like a simple enough event to avert, yet it still happened. Therefore, we must
redesign the global supply chain with an aim for instilling resilience, transparency and
interoperability.

The buzzwords in the title of this post could make up the infrastructure of a resilient
supply chain: blockchain technology, industrial internet of things (IIoT) and artificial
intelligence (AI).

Blockchain technology has the capability to form the historical record-keeping part of
the supply chain. IIoT is the finger on the pulse — capturing accurate, real-time data
automatically, as it happens. AI is the eye into the future, aggregating the mass of
information to make sense of it all, and in turn, identifying the factors that coincide to
cause disruptions and the thresholds where intervention must take place to minimize
or avoid impacts on the supply chain.

These three futuristic technologies have the capability to create a more resilient global
supply chain and remove countless redundancies and inefficiencies in the process.

The case for a supply blockchain

Blockchain might be the king of tech buzzwords right now, but many people that drop
the term in conversation don’t know how a blockchain really works. The technology
27
How blockchain, IIoT and AI make the global supply chain more resilient

was first utilized as the backbone of the Bitcoin network, but its usability is far beyond  Back to TOC
the cryptocurrency realm. In short, a blockchain is a shared ledger of transactions kept
by a decentralized network of computers.

All transactions made on a particular blockchain are immutably recorded in “blocks,”

which contain information (groups of transactions) and generate unique signatures
called “hashes.” Blocks also contain the hash of the previous block — since each block
contains its own hash (signature) and the previous block’s hash, all of the blocks are
linked in a chronological order, creating the blockchain.

The infrastructure of the blockchain is made up of a decentralized network of many

separate computers, which record transaction data and verify the data within, and the
order of, each block by agreeing to consensus with the other computers on the net-
work every time a block is added, which is about every ten minutes. On the Bitcoin
network, the operators of these computers are called “miners” and their participation
is incentivized by receiving portions of transaction fees. This is how the network stays
decentralized and is essentially impossible for institutions to stamp out — there are an
estimated 1 million Bitcoin miners across the world, ranging in size from single com-
puters to industrial operations with thousands of computers chained together.

As long as the internet exists, the blockchain network will exist.

How does blockchain fit into the supply chain?

In essence, a blockchain could be used to track any point in the supply chain, creating
a comprehensive, instantly-available permanent record of the entire journey of a food
item — from harvest to sale.
28
How blockchain, IIoT and AI make the global supply chain more resilient

The ideal supply blockchain, as we will call it, would allow producers to record infor-  Back to TOC
mation about a harvested product at every stage of its journey. These recorded events
could include:

• Harvest: Where it was harvested, who it was harvested by and the type of harvest
(organic or conventional)?

• Packing: Batch numbers, environmental conditions (temperature, humidity, etc.)

• Transport: Shipment origination and destination, carrier information down to li-

cense plates and other identifying information

• Production: Production date and time, location, batch numbers, machinery used

• Storage: Storage location, duration and method (refrigeration, dry storage, etc.)

• Shelving: Store location, shelving date

• Point-of-sale: Sale date, price and location.

In this ideal hypothetical, the supply blockchain would be decentralized, hosting infor-
mation from all companies who participate in the supply chain since many products are
made with ingredients bought from third-party producers or are manufactured via an-
cillary services and products. Its infrastructure would need to be decentralized so that
no single entity controls the blockchain, similar to Bitcoin. Companies that utilize the
supply blockchain could pay marginal fees that would be paid to the miners for hosting
the blockchain. 29
How blockchain, IIoT and AI make the global supply chain more resilient

Such a system would yield numerous benefits for consumers, producers and regulators.  Back to TOC
It could be used to track recalls and outbreaks by aiding in the speed and accuracy of
tracing batches, identifying which foodstuffs and equipment the recalled batches may
have come into contact with, and the recalled items’ final retail destinations. This could
greatly reduce the harm from e. Coli and listeria outbreaks, and reduce waste since
it can sometimes take days to track down the origins of outbreaks through disjointed
paper records.

The data on the supply blockchain could be analyzed to examine conditions where
supply chain disruptions occur and identify warning signs and threshold levels as a
safety measure to avoid these events. Using the Suez Canal blockage as an example,
if historical weather data had been analyzed against previous ships running off course
and adverse weather conditions, a warning system could have been developed to
identify trigger points and create contingency plans.

There are a few areas that could hinder the ability of the supply blockchain to work
properly, however:

• Reliability and candor of data input: The concept places trust that all parties
who enter data will be truthful. Once a piece of information is on the blockchain, it
will stay there permanently — incorrect information could create incongruences in
the chain of information.

• Interoperability relies on cooperation: In order for the blockchain concept to

be applied to the global food system, companies would have to agree to use the
same blockchain network, sharing data with each other in the process. It would
30
How blockchain, IIoT and AI make the global supply chain more resilient

be possible for companies to use the shared data on the block chain against their  Back to TOC
competition. This could discourage some from participating or lead companies
to use private blockchains, which would be useful for internal tracking and re-
cord-keeping, but would not contribute to the ability of analysts to access the data
for global food supply resilience and outbreak-tracking.

Blockchain technology could form the supply chain’s record-keeping and accountabili-
ty wing, providing a universe of information to be compared against supply chain inter-
ruptions to identify warning signs and threshold levels where action should be taken to
maintain the stability and security of the supply chain.

IIoT for fast, accurate data input

If blockchain serves as the record-keeping infrastructure in the supply chain, IIoT
serves as the real-time data-collection wing of the ecosystem. IIoT has the potential to
streamline the data entry process through the use of wisely placed sensors that track
key metrics and events in the supply chain, logging the times and dates of events like
packing, shipping and cooking.

A robust IIoT infrastructure significantly speeds up the data entry process when com-
pared to manual entry. It also effectively eliminates human error, as long as sensors are
properly programmed and systems maintained.

IIoT represents the real-time snapshot and data input wing of the supply chain ecosys-
tem. It could constantly record and upload production data to the blockchain to create
a multi-faceted data set that displays all of the different pieces of information connect-
ed to a particular product.
31
How blockchain, IIoT and AI make the global supply chain more resilient

AI pulls it all together by looking toward the future  Back to TOC

With IIoT infrastructure pumping mountains of data into the supply blockchain every
second, all of that information will need to be analyzed and applied toward making
the global system more resilient. Artificial intelligence technology has the potential
to efficiently and effectively accomplish this task, which would lead to the identifi-
cation of warning signs and threshold levels that are presented before supply chain
disruptions occur.

In other words, AI forms the prediction wing of the resilient supply chain, report-
ing possible events before they happen and setting up threshold levels that, when
crossed, trigger contingency plans to thwart disruptions. These disruptions could in-
clude ingredient shortages, port interruptions, legal/political events, or conditions that
threaten crop survival (adverse weather, drought, viruses).

Though this reimagined supply chain would require a huge overhaul of the status quo
— including cooperation among competitors — the resulting system would be one in
which transparency and accountability are at the forefront. No party would have to rely
on the blind trust of the previous holder of their product.

While some companies might look for financial incentives to share data with compet-
itors who could use it against them, the payoff is the ability to remain resilient in the
face of an uncertain future and the social capital they generate through accountability,
transparency and reliability.

Brad Blocker
Brad Blocker, Operations manager for Food Logistics at Stellar
32
Transparent asset tracking
framework for supply chain  Back to TOC

management
The COVID-19 pandemic has further exposed the fragility of the current
supply chains and highlighted the need for improving the existing supply
chain infrastructure through digital transformation.

A typical multi-party asset tracking application involves shippers, receivers and a

freight-carrier network with multiple stakeholders (e.g., manufacturer, distributor,
provider, carrier) that have mutual obligations to deliver assets in time.

Unfortunately, the traditional asset-tracking solutions have posed a multitude of con-

cerns due to the lack of trustworthy and transparent information across the supply chain.

The COVID-19 pandemic has further exposed the fragility of the current supply
chains and highlighted the need for improving the existing supply chain infrastructure
through digital transformation. To tackle the industry-wide challenges for global supply
chains, we describe a trusted and transparent asset tracking framework called Auth-
Trail. The proposed framework establishes a trusted data-sharing fabric for streamlin-
ing workflow and increasing supply chain visibility among all the stakeholders.

As shown in the figure, AuthTrail leverages a consortium blockchain to store and ex-
change all the information related to freight contracts, real-time locations, climatic
conditions, transportation and handling of physical assets, thereby creating a single
source of truth available to all stakeholders in the system and eliminating potential
33
Transparent asset tracking framework for supply chain management

 Back to TOC

issues like late reconciliation, improper handling of A high-level system architecture for
assets, etc. AuthTrail. Image: IIC

Moreover, secure edge devices ensure trustworthiness of the data collection for the
status of the attached physical assets. In particular, trusted real-time IoT data will be
fed into smart contracts, which specify the service-level agreements (SLAs) negotiated
among stakeholders, for evaluation periodically and the penalty settlement will be trig-
gered automatically in the event that an SLA is breached.
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Transparent asset tracking framework for supply chain management

 Back to TOC
Finally, to create the chain of custody when assets are moving in the supply chain,
AuthTrail requires the stakeholders to record standardized EPCIS events on the block-
chain whenever the status of assets changes.

The framework has these six major steps:

1. Asset tracking stakeholders onboarding. A consortium blockchain is provi-

sioned and an administrator sends invitations to stakeholders of the freight-car-
rier network for joining the system. Upon creating an account and logging in the
system, each stakeholder generates a decentralized identifier (DID) and stores
the corresponding DID document on the blockchain.

2. Freight contracts negotiation and archiving. All the freight contracts (e.g., bro-
ker carrier agreements, load tenders, rate conformations, bill of lading) are nego-
tiated offline among stakeholders and the hashes of the digital versions of those
freight contracts are committed to the blockchain for secure logging and auditing
purposes. In particular, service-level agreements between stakeholders are writ-
ten into smart contracts and deployed on the blockchain.

3. Secure edge device onboarding. Once a secure edge device is powered on for
the first time, it generates a private/public key pair within the secure hardware
and registers the public key on the blockchain via a decentralized secure device
onboarding process. The registered public key is then used to perform the on-
chain sensor data verification by the smart contracts.

35
Transparent asset tracking framework for supply chain management

4. Real-time asset tracking. When an asset is being moved by the freight carrier  Back to TOC
network, the secure edge device captures its real-time status (e.g., location, tem-
perature, humidity) and signs it using the private key. Based on the location of
the asset, the signed asset status is then sent to a specific smart contract for the
SLA validation.

5. Automatic penalty settlement. In the case that an SLA is breached, a special

event is emitted on the blockchain by the smart contract. Once the event is cap-
tured by the corresponding stakeholders’ enterprise networks, the penalties will
be automatically settled among stakeholders involved in the SLA.

6. Chain-of-custody creation. The stakeholders send transactions to the blockchain

when the asset is in their custody. Each transaction encapsulates a standardized
EPCIS event describing what has happened to the asset. All the EPCIS events,
which are recorded on the blockchain and shared among all the stakeholders,
establish the chain of custody of the asset in the supply chain.

The IIC technical brief “Trusted and Transparent Asset Tracking on the Edge describes
how to build a trusted and transparent asset-tracking solution by combining three
technical components: secure edge devices, consortium blockchain and standard-
ized supply chain data formats. The resulting solution facilitates collaboration among
supply chain stakeholders, improves supply chain efficiency and user experience, and
achieves substantial cost savings.

Xinxin Fan and Raullen (Qi) Chai

Xinxin Fan and Raullen (Qi) Chai, IoTex
36
How software in the supply
chain is an insider threat to  Back to TOC

ICS networks
A focus on the spectrum of insider threats against industrial control systems
(ICS) and how they specifically relate to industrial environments

T he media focuses most of its attention on information security threats that orig-
inate outside of an organization. Whether it is the discovery of a new advanced
persistent threat (APT) or a company breach, generally one considers this to be a
threat from someone from outside of the company, an outsider. And it is true, there
are many outsider threats in any secured environment – natural disasters, hackers,
terrorists, hacktivists, organized crime groups, etc. However, insider threats play a
much larger role than most people realize.

Security experts consider insider threat to be a well-known phenomenon, and one that
many regard as the greatest threat to any security environment. Edward Snowden,
WikiLeaks, and Vault7 are prime examples of insider threats. Employees intentionally
or unintentionally account for a significant portion of the threats to information assets
in organizations.

It is not easy to profile insider threat adversaries. They may or may not have financial
motivation. They may conduct their malicious activities out of anger, frustration, or
whim. Employers may use polygraph examinations and many mathematical modeling
techniques for insider threat detection, with varying degrees of success.

37
How software in the supply chain is an insider threat to ICS networks

Three industrial control system (ICS) environments and  Back to TOC

cybersecurity trends
Some recent trends are adding fuel to the insider threat fire.

1. Digital transformation and the Purdue Model: Industrial control system envi-
ronments comprise operational technology (OT) and information technology (IT).
The digitization of once analog devices and the integration of those devices into
existing OT frameworks has created advances in automation and efficiency. The
explosive growth of smart objects and their dependency on wireless technologies
for communication increases the vulnerability to cyber attacks. The integration of
physical devices (part of the ICS) with business functions (part of IT) through multi-
ple layers of OT and IT technology is frequently described using the Purdue Model.
The Purdue Model describes the logical sections of a physically divided and inte-
grated IT and OT network. Of particular interest to this analysis are those insiders
(employees) who understand the intricacies of Levels 0-3 of the Purdue Model.

2. The work-from-home model: Prior to work-from-home arrangements becom-

ing the dominant pattern of employment since the COVID-19 outbreak in March
2020, employees reported to work and monitored and managed processes and
controls from inside the plant. The work from home modality has enabled many
employees to connect through the IT portions of the Purdue Model Levels 4 and
5 through to the lowest control layers (Levels 0-3).

3. The increasing prevalence of data leaks: Data leaking during the last 10 years
has become a major issue for U.S. intelligence organizations. Revelations from
WikiLeaks and the Vault7 leaks are just a few examples. Even today so-called dark
38
How software in the supply chain is an insider threat to ICS networks

websites pose a serious threat to the security of any organization. Recently, per-  Back to TOC
sonally identifiable information (PII) and other confidential corporate data have
been dumped to dark websites as part of ransomware campaigns.

Why software and supply chain dependencies are a

potential threat
Software and supply chain dependencies pose a different kind of threat. Software is
designed, marketed, sold, and trusted to do things like secure networks or keep track
of secured assets. In some instances, it is the software that becomes an “insider” in
that it is installed on systems. It is arguable whether software in critical organizational
functions or in a supply chain that makes up some of the components of critical in-
frastructure control systems – such as programmable logic controllers (PLCs), diodes,
or IED (independent electronic devices) – can be considered an “insider threat.” This
supply chain software can be a pernicious type of insider threat that has yet to be fully
considered. The SolarWinds incident is a prime example of this.

According to Business Insider, the SolarWinds breach was perpetrated through a soft-
ware update. This type of supply chain attack is pernicious, and it exploits best practices
by compromising an “insider,” in this case the software and vendor, to infect a company.

Manufacturing supply chain threats have access to extensive, in-depth knowledge of the
operational technology in the plant, understand how processes should look, and knows the
assets in the organization. This type of threat is unique because it represents a level of de-
tailed knowledge that would otherwise be difficult to obtain from an outside perspective.

Supply chain espionage is much more complex and is sometimes governed by dis-
parate manufacturing facilities and operations, sometimes spanning the globe, and
39
How software in the supply chain is an insider threat to ICS networks

multiple geo-political boundaries. Furthermore, malicious software may not have a  Back to TOC
discernible pattern of unusual behavior. Yet, its existence deep in organizations poses
a serious threat to their operations.

Cyber threat intelligence and insider threat detection

It is very complicated for cyber threat intelligence (CTI) mechanisms to detect insider
threat or intent to commit fraud within an organization. For this, it’s best to consider
the work of Caltagirone, Pendergast, and Betz (2013) regarding insider threats in the
context of the Diamond Model of Intrusion Analysis, and the work of Wolfe and Her-
manson (2004). This model can also help with the understanding of motivation and
the various hidden elements such as victimology of the attacks, which is very useful for
understanding intent and the predictive nature of how the attacks will evolve.

Conclusion
ICS environments provide fertile ground for insider attacks. Unlike IT environments, OT
environments have specific hardware and software and can suffer catastrophic damage
from endogenous or exogenous, insider-enabled attack vectors. Attacks on industrial
control system environments require dedicated efforts in research, time, and access;
thus, insiders play a unique role in the spectrum of espionage threats.

Insiders understand the processes, setpoints, controllers, and supervisory control and data
acquisiton (SCADA) software as well as where the physical assets are located and the roles
they play in the OT environment. This makes them excellent targets for exploitation.

Dr. Tom Winston

Dr. Tom Winston, Director of Intelligent Content, Dragos
40
 Supply Chain

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