Supply Chain Smart Contracts (WIP)
- sterzi
Description / Scope
This section is intended for gathering Supply Chain scenarios and study the Use Cases that derive from these scenarios in order to interpret them in Smart Contracts and implement them in pseudocode or other forms of description. After finalizing the scenario we will try to implement them in different Hyperledger frameworks as PoC and study them from a research point of view (speed, security etc.) We intend to combine Hyperledger Indy to implement the identity parts of the scenario(s).
Supply Chain Scenarios / Use Cases
Scenario 1 (source IBM https://github.com/IBM/PublicRegulationFabric-Food-IBPV20):
Food suppliers in the U.S. must comply with U.S. Food and Drug Administration (FDA) Foreign Supplier Verification Program regulatory requirements before they can ship their products to market. Regulatory compliance is a high-focus area in which developers are looking to build applications that automate and standardize processes used to enforce and execute compliance. Blockchain presents an opportunity to do just that. For this use case, imagine that a supplier is transferring the food products to an importer who verifies that the supplier, country, and food type all match the correct identifiers. At the port of entry, the supplier is again checked against a list of known suppliers in a database (managed by the regulator). If the supplier is of type exempt, then the products are transferred to the retailer. If the supplier is non-exempt, the products are checked against a list of known food products in a database (managed by the regulator). If the food is an exempt product, then it is transferred to the retailer. If the food is non-exempt, the importer must conduct the hazard analysis (either independently or by using a third party). The supplier provides the hazard analysis report to the regulator. The regulator reviews compliance and transfers the products to the retailer. This pattern captures the regulatory compliance logic for the FDA Foreign Supplier Verification Program in a smart contract that’s deployed on a business network. (code and implementation https://github.com/IBM/PublicRegulationFabric-Food-IBPV20)
Supply Chain Use Cases
(source blockchaintecnologies.com https://www.blockchaintechnologies.com/applications/supply-chain/)
Provenance Tracking
It is difficult for big companies to keep track of every record, especially when it is a multi-national operation. This demeans every aspect of the company’s reliability and reputation. Blockchain-based solutions for provenance tracking makes it easy to access product information on demand using embedded sensors and RFID tags. The product can be tracked all the way back to its origins and traced from every point on the chain.
Inventory management
Companies often lose track of their inventory, how much room they have for storage, how much of their product is for sale on what shelf. This opens the doors for fraudulent behavior and poor data analytics. The distributed ledger is an ideal environment to manage products in multiple locations and share that data across all involved parties.
Identity verification
Blockchain identity verification is a popular use case for the technology. With universal blockchain identity, we don’t need a third-party to handle global business interactions and enter contracts that rely on trust alone that someone is who they say they are. A big part of the supply chain is not only the verification of goods and services but the person behind the promise. The immutable ledger can help to authenticate identity.
Shipping logistics
To operate a global supply chain, shipments need to move on time, and all parties should be in the know about where the materials are in the chain. Blockchain brings real-time tracking to all supply chain participants to view that accurate, tamper-proof data as it is automatically realized by GPS trackers. More efficient shipping routes can be constructed the more data the blockchain is able to securely manage. Distributed ledger technology makes for an ideal platform for managing every aspect of shipping logistics.
Procure-to-pay gap reduction
It is expensive and time intensive to get customers to pay for products that have already arrived in many cases. Blockchains can use smart contract technology to connect delivery logistics and payment into digital contracts that act as a financial service. Smart contracts can be written so that terms are payable upon receipt. Proof of delivery from a carrier will trigger the contract to invoice the customer automatically. In many cases, smart contracts can be used to hold funds in escrow and then are automatically released once the goods have been verified. Smart contract escrow can eliminate the procure-to-pay gap and create more trustless interactions.
Food Supply Chain
Foodborne illness would be easier to stop in its tracks thanks to the blockchain as a traceability platform. It would be simple to identify where all of the food goods had been distributed and what communities have consumed the contaminated goods. Without data and traceability, there is a lack of accountability in current models and a lack of trust as a result. Food source traceability could be potentially lifesaving for some consumers.
Automotive Supply Chain
An entire vehicle history could be stored on the immutable, tamper-proof blockchain to make purchasing a used vehicle trustless or preserve the resale value of your new vehicle. Being able to document all repairs on a car via public ledger helps future buyers know the value and for owners to receive the exact value of the vehicle. Counterfeiting is also a significant issue in the automotive industry. Counterfeit spare parts are a costly occurrence that ruins brand reputations and can put drivers in dangerous situations. Digital identification for spare parts can up the transparency ante.
W3C Workshop "Provenance Topic"
Reference: https://www.w3.org/2016/04/blockchain-workshop/report.html#provenance
Deloit: Continuous interconnected supply chainUsing Blockchain & Internet-of-Things in supply chain traceability
Using analytics on the gathered data through these intelligent devices gives systems the possibility to aggregate data, analyze trends, and perform predictive monitoring.
Today’s supply chain challenges
Margin erosion and sudden demand changes: Rapidly changing environments requires businesses to quickly react to sudden demand changes on an increasing frequency. With globalization came fiercer competition that put pressure on margins.•Ripple effect due to extended value chain: Due to extensive supply chains, companies are facing significant variability risks. Several layers of stakeholders, including suppliers, distributors, and customers, significantly increase the supply chain risk. •Ineffective supply chain risk management:Building effective supply chain risk management programs are key to accurately monitor and predict risk in order to react properly.•Lack of end-to-end visibility:Companies are struggling to have a clear overview on their supply chains—both internally and externally. This exposes them to different kinds of risks such as fraud, code of conduct violations, and more.•Obsolescence of technologies: Advanced supply chain management tools require significant and continuous investment. This also goes with inherent implementation risks that pose a major challenge for most businesses.
How can blockchain and IoT assist?
Continuity of information: Through the immutable and irrevocable properties of blockchain, sharing information effectively between the different stakeholders involved in the global supply chain will be key to ensure traceability and reduce inherent risks.•Accessibility to information: Fast and transparent blockchains will provide the necessary access to information in the future to effectively leverage on the massive amount of data produced along the supply chain.• Link between physical and information flows: Thanks to IoT, the data will be linked to the materials and products on the stages of the supply chain where matter is transformed physically.•Code of conduct violations and fraud detection: The need to ensure human rights and codes of conduct are respected along the chain is necessary to lower reputation risk. Effective fraud detection processes supported by appropriate technologies will be increasingly important to lower business risk. This will be enabled by the transparent and auditable features of blockchain.
Research
- Promote the secure and efficient movement of goods by resolving threats early, improving verification and detection capabilities, and enhancing the security of infrastructure and conveyances in order to protect the supply chain, and maximizing the flow of legitimate trade.
- Foster a resilient supply chain by mitigating the systemic vulnerability of supply chains and promoting trade resumption policies and practices.
- How can stakeholders provide assurance that my product is safe without revealing intellectual property (e.g., source code)?
- Is there a formal certification process and authority that can certify certain security properties exist in the product?
- What would constitute a trusted third party (TTP) certification body (e.g., charter, COI, goals, membership, participants, industry)?
- What would be the focus and benefits of the TTP (incentives, methods, technologies) and key outcomes (especially sponsors)?
- How would the TTP get industry buy-in and be distinguished from other (e.g., TCB, OWASP, etc.) existing bodies?
- Better precision in understanding existing and emerging vulnerabilities and threats.
- Advances in insider threat detection, deterrence, mitigation and elimination.
- Assuring security, survivability and dependability of our critical infrastructures.
- Assuring the availability of time-critical scalable secure systems, information provenance and security with privacy.
- Observable/ measurable/ certifiable security claims, rather than hypothesized causes.
- Methods that enable us to specify security requirements, formulate security claims and certify security properties.
- Assurance against known and unknown (though perhaps pre-modelled) threats.
- Mission fulfilment, whether or not security violations have taken place (rather than chasing all violations indiscriminately).
Sources
Hyperledger Grid project https://www.hyperledger.org/projects/grid
Research Topics source http://faculty.washington.edu/jscholl/hicss50/supply-chain.php