Blockchain technology and it's impact

on Supply Chain Management

ENGR. MD. ENAMUL HUQUE, MCIPS

Procurement Consultant, CASE Project, DoE.
(Deputy Secretary, GoB)
MBA (Marketing), Dhaka University;
MPSM, BRAC University;
B. Sc. (Civil Eng.), BUET.
Sun Certified Java Programmer.
November 03, 2018
 Contents
1. What is blockchain? 8. Advantages of
2. How does blockchain blockchain in SCM
work? 9. Recent developments
3. Use of blockchain
10. Blockchain and IoT
4. Why blockchain?
11. Thrust sector
5. Distributed Ledger
Technology (DLT) 12. Blockchain challenges
6. Smart Contracts 13. The bottom line
7. Why blockchain in
SCM?
 What is Blockchain?
A blockchain is a growing list of records,
called blocks, which are linked using
cryptographic hash.
 Each block contains a cryptographic hash of
the previous block, a timestamp, and
transaction data (generally represented as a
Merkle tree root hash).
 Blockchain was invented by Satoshi
Nakamoto in 2008 to serve as the public
transaction ledger of the cryptocurrency
bitcoin.
 Cryptographic Hash
A cryptographic hash function is a hash
function which takes an input (or
'message') and returns a fixed-size
alphanumeric string.
 The string is called the 'hash value',
'message digest', 'digital fingerprint',
'digest' or 'checksum'.
 Pictorial
presentation
of Blockchain
data storage
 Use of blockchain

 Beside crypto currencies, blockchains

offer the potential to record –
 asset ownership,
 asset transfers,
 document links,
 provide identity management
… and so much more.
 Why Blockchain?

 Immutable records
 Very secure
 Distributed and decentralized database
 transparency and end-to-end visibility
Distributed Ledger Technology (DLT)
 The terms Distributed Ledger Technology
(DLT) and Blockchain are often used
interchangeably.
 DLTmeans that instead of everybody
having their own ledger, which is
separately maintained, reconciled, etc. a
single ledger is created and everybody
has an automatically synchronised copy.
Types of Ledgers/Databases
Distributed Ledger Technology (DLT)
Properties of Distributed Ledger Technology (DLT)
 Smart Contract
 A smart contract is a computer protocol
intended to digitally facilitate, verify, or enforce
the negotiation or performance of a contract.
 Smart contracts allow the performance of
credible transactions without third parties.
 These transactions are trackable and irreversible.
 Smart contracts were first proposed by Nick
Szabo, who coined the term, in 1994.
Blockchain, DLT & Smart Contract
 Use of DLT
 There
are currently around eight major
themes developing around DLT Use Cases:
 Financial Transactions – such as Bitcoin,
Cashaa (Remittance payments) and BTL
 Asset Register – Honduran Land Registry
(through Factom, a US company)
 Provenance – High value goods such as
Diamonds, (Everledger), Fine Art (Trace.io)
and ethical goods (Provenance.org)
 Use of DLT
 Identity Management – Estonia e-Registry
 Public Services – UK Benefits Agency
 Smart Contracts – The DAO, Etherisk
 Voting Systems – Follow My Vote, Augur
 Decentralized Markets – Open Bazaar,
slock.it
 Digital currencies
 eGold– 1st successful e-currency. Shut
down on regulatory issues.
 Liberty
Reserve – Another successful e-
currency. Shut down on regulatory issues.
 Bitcoin
– Most popular crypto-currency
based on blockchain. Unknown Satoshi
Nakamoto started this.
 Ethereum – Another popular crypto-
currency based on blockchain.
Why blockchain in SCM?
Advantages of blockchain in SCM
 Securing the supply chain
 Ensuring integral traceability
 Increase visibility and transparency of SC
 Automating the purchase process
 Improving transaction flow
 Validationtimes for transactions between
providers and clients (contracts, signatures,
orders, payments, etc.) are drastically
reduced.
Advantages of blockchain in SCM
 End consumers can view the entire lifecycle of a
product before it hits the shelf
 Improved efficiency of global trade
 Minimized fraud/counterfeiting due to quality assurance
sensors tracking location of materials in a supply chain
 Customer’s perspective
 Through blockchain technology,
consumers can verify the product they
purchased
 Recent developments
 VeChain:

 VeChain makes it easy and safe for

manufacturers to share product data with
vendors and consumers. This “360-degree
view” of the supply chain both informs the
parties responsible for bringing the product
to market and guarantees consumers are
receiving what they paid for.
 Recent developments
 Waltonchain:
 Waltonchain is a genuine, trustworthy and
traceable business ecosystem with
complete data sharing and absolute
information transparency. It is created
through a combination of the RFID and
blockchain technologies, which pushes
forward the blockchain + the Internet of
Things integration.
 Recent developments
 Ambrosus (AMB):
 Decentralised IoT Networks for Next-
Generation Supply Chains
 Ambrosus is a blockchain-powered IoT
network for food and pharmaceutical
enterprises, enabling secure and frictionless
dialogue between sensors, distributed ledgers
and databases to optimise supply chain
visibility and quality assurance.
 https://ambrosus.com/
 Recent developments
 Oracle Blockchain Cloud Platform:
Oracle Blockchain Applications are built
with Oracle Blockchain Cloud Service and
seamlessly connect with Oracle Supply
Chain Management (SCM) Cloud, Oracle
Enterprise Resource Management (ERP)
Cloud and other Oracle Cloud
Applications.
 Recent developments
 IBM Blockchain: IBM Blockchain optimizes
business transactions and trading
relationships with robustly secure business
networks on blockchain—both at scale
and globally.
 Recent developments
 Europe’s largest retailer, Carrefour, has
announced that it will use blockchain
technology to track and trace produce
from farms to stores.
 The blockchain-based cloud network,
known as IBM Food Trust, aims to enable
greater traceability, transparency and
efficiency in the food industry.
 Recent developments
 Microsoft has partnered with Ardents to create a
new blockchain technology-based system,
including artificial intelligence (AI), to offer end-to-
end traceability and visibility into supply chains.
 The system is known as Ardents NovaTrack
 It was originally created for the pharmaceutical
industry, aimed at reducing illicit pharmaceutical
availability and reducing the number of
counterfeit drugs on the market.
 US government
Several US government agencies with a view to improve
transparency, efficiency and trust in information sharing testing
blockchain in following fields:
Financial management Government-issued
Procurement credentials like visas,
IT asset and supply chain passports, SSN and birth
management certificates
Smart contracts Federal personnel
Patents, Trademarks workforce data
Copyrights, Royalties Appropriated funds
Federal assistance and
foreign aid delivery
 Blockchain and IoT
 IoT (Internet of Things) is a system of
interrelated computing devices,
mechanical and digital machines, objects,
animals or people that are provided with
unique identifiers (UIDs) and the ability to
transfer data over a network without
requiring human-to-human or human-to-
computer interaction.
 Blockchain and IoT
 Both blockchain and Internet of Things (IoT)
are considered to be world changing
technologies
 The security issue is one of the most
compelling reasons for integrating
blockchain with IoT.
 Oversight is another vital component that
blockchain adds to the IoT equation.
 Smart contracts are a real game-changer
for IoT applications.
 Thrust sectors
 The coffee supply chain
 Seafood verification
 Food Safety
 Pharmaceuticals / Healthcare
 Automotive Supply Chain
 Diamond Trade
 Logistics / Transportation
 Insurance
 voting
 Blockchain Challenges
 Requirement of huge computing resources
 Huge storage requirement
 Slow settlement of transactions
 Scarcity of expert programmers for
blockchain - Blockchain programming is
complex and challenging
 Blockchain Challenges
 Absence of the off-the-shelf software
modules
 Lack of confidentiality
 Scalability issues
 Governance and legal issues
 The Bottom Line
 Blockchain technology improves business
operations and customer relationships.
 If you are moving a product from one entity to
another, blockchain can ensure a secure,
streamlined transfer.
 Blockchain technology is only still in its nascent
form and hopefully, its expansion will be
significant in the coming years.
 References
 “An introduction to Blockchain and Distributed Ledger Technology” - CIPS Knowledge
 “An Introduction To Blockchain And Its Potential Benefits And Drawbacks In Supply
Chain Management & Logistics” – Cerasis
 https://www.hyperledger.org/
 https://www.scantrust.com/
 https://www.oracle.com/cloud/blockchain/
 https://cointelegraph.com/news/us-government-implements-blockchain-programs-to-
improve-transparency-and-efficiency-expert-blog
 https://hackernoon.com/5-governments-backing-blockchain-projects-401afa49d412
 https://blockgeeks.com/guides/what-is-blockchain-technology/
 https://www.g2crowd.com/categories/blockchain
 https://www.lpea.lu/2017/11/30/blockchain-unlocking-the-value-of-distributed-ledger-
technology-in-private-equity/
 https://www.bis.org/publ/qtrpdf/r_qt1709y.htm
 https://www.forbes.com/sites/bernardmarr/2018/02/16/a-very-brief-history-of-
blockchain-technology-everyone-should-read/
 References
 https://www.waltonchain.org/
 https://origintrail.io/use-cases
 https://www.supplychaindigital.com/blockchain-0
 https://www.ibm.com/blockchain/industries/supply-chain
 https://www-01.ibm.com/common/ssi/cgi-bin/ssialias?htmlfid=93014193USEN
 https://www.forbes.com/sites/bernardmarr/2018/03/23/how-blockchain-will-transform-the-supply-
chain-and-logistics-industry/#6783a6935fec
 https://www.reddit.com/r/waltonchain/comments/98jgtq/how_can_a_blockchain_help_with_su
pply_chains/
 https://www.investinblockchain.com/supply-chain-blockchain-projects/
 https://www.verypossible.com/blog/top-blockchain-use-cases-for-supply-chain-management
 https://medium.com/trivial-co/blockchain-of-things-cool-things-happen-when-iot-distributed-
ledger-tech-collide-3784dc62cc7b
 https://www.fdfworld.com/food/carrefour-use-blockchain-technology-trace-food-through-
supply-chain
 https://www.ey.com/Publication/vwLUAssets/ey-blockchain-and-the-supply-chain-
three/$FILE/ey-blockchain-and-the-supply-chain-three.pdf