Many in the supply chain may by now have heard the term "blockchain," but few have any detailed knowledge, it seems safe to say.
Even more have probably heard of the digital currency Bitcoin, which uses blockchain technology to manage its exchange.
An increasing number of companies are now looking at blockchains to bring transparency and validation across complex extended supply chains, especially those where authenticity or social issues such as slave labor are known issues. That is in fact what is happening right now in the problematic tuna fishing sector.
Supply Chain Digest Says... |
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| During the pilot, fishermen registered each catch using a simple SMS message, creating a permanent, digital record of who caught the fish, where it was caught, its material attributes and other audit information. |
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What is a Blockchain?
A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of users. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central managing authority, even across say disparate companies.
Once a block of data is recorded on the blockchain ledger, it's extremely difficult to change or remove. When someone wants to add to it, participants in the network - all of which have copies of the existing blockchain - run special algorithms to evaluate and verify the proposed transaction. If a majority of nodes agree that the transaction looks valid - for example, that identifying information matches the blockchain's history - then the new transaction will be approved and a new block added to the chain.
This setup means the entire network, rather than a central authority, is responsible for ensuring the validity of each transaction.
Each computer or node in a particular network generally maintains a copy of the entire ledger, and works with other nodes to maintain the ledger's consistency. That creates fault tolerance, so if one node disappears or goes down, all is not lost. The network protocol governs how those nodes communicate with one another.
After a transaction is executed on a node, the result is a proposed modification of the ledger's data. Before committing the answers to a node's ledger, the answer is validated locally with other nodes in the network. Approved transactions are packaged into a block and re-distributed to all the nodes in the network, which re-validate to ensure their records match. Typical transactions can execute in milliseconds.
All that said, there are many different approaches to blockchaining that vary by application. For example, many companies are exploring private or "permissioned" blockchains whose network is made up only of known participants, while other blockchains allow unknown participants (such as Bitcoin).
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Each transaction in a blockchain receives its own digital signature. Using a tree structure, those signatures for some period are combined and given a single digital fingerprint - a unique representation of those transactions at a specific time. That fingerprint is sent up the tree to the next layer of infrastructure, such as a service provider or telecom company.
This process happens for every organization in the network until there is a single digital fingerprint that encompasses all the transactions as they existed during say a particular second, sort of like serialized bar codes on products that go into a serialized carton on a serialized pallet into a serialized container, to use a supply chain analogy.
Tuna Industry Gives it a Try
 The tuna fishing industry in Asia has come under much fire for use of modern day slave labor in some fishing operations - something very difficult for Western companies buying the tuna to discover and stamp out. There are also concerns about non-sustainable practices in tuna fishing.
Now, an organization call Provenance, which offers what it says are "tools to build trust with transparency and traceability" in supply chains, has conducted a trial that involved following the supply chains of two types of tuna fished in Indonesia using blockchain technology.
During the pilot, fishermen registered each catch using a simple SMS message, creating a permanent, digital record of who caught the fish, where it was caught, its material attributes and other audit information or accreditations.
Using a physical RDIF tag or QR bar code, this digital record followed the product through the supply chain. Any new information, including where the product was processed, or whether a fish was split up in the factory, was added to the original entry on the same blockchain.
By feeding information collected by existing audit systems into the blockchain, data can easily be shared across steps in the supply chain.
"The blockchain provides an audit layer sitting on top of an existing ERP or other data management system, providing a true end-to-end record without the need to change existing interfaces to data capture," said Provenance.
Provenance said it is also conducted in-store prototyping to establish the best way of allowing consumers to access the information on the blockchain.
The pilot was not without its problems, Provenance said. For example, the physical bar codes used to tag products are vulnerable to being copied "at any stage of the supply chain, which would undermine the validity of the physical product associated to the blockchain". However, the organization said it was working on developing more secure physical tagging methods.
SCDigest notes such bar code duplication should be recognized by the blockchain and the associated transaction not accepted.
"The blockchain won't solve traceability alone," Provenance sys. "However, it does provide an ideal base layer upon which architectures for robust traceability systems can be built and participated in without ownership by the biggest or richest actor."
Blockchaining would certainly seem to have much potential in the supply chain.
Do you see much promise for this blockchain technology to provide visibility across extended supply chains? Let us know your thoughts at the Feedback section below.
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