Blockchain technology and supply chain--What are the challenges and solutions?

LI FANGZHOU, Assistant Manager,  NTT DATA CorporationLI FANGZHOU, Assistant Manager, NTT DATA Corporation
1. Supply Chains – Issues beyond Traceability

The ancient business of trading has now transformed into the global and inter-connected supply chain management. Global supply chains are made possible due to rapid advents in faster transportation means, and information and communication systems spanning the globe.

The management of these supply chains has been a tedious and time-consuming process due to its complex and multi-layered workflows. This situation deteriorated further when trust issues among global parties separated geographically and culturally, started affecting the efficiency.

Blockchain is one of the most disruptive technologies introduced in last decade. Since early days, it was considered to have potential to radically transform supply chain management. It provided a platform for near real-time dissemination of information, at the same time, acting as immutable and permanent record of shared information. It enabled easy ways to track latest status of products on supply chain, with additional guarantee that the information is exactly same as that stored on blockchain. Thus, it was possible for stakeholders to trust data.

Many POCs and initial production grade offerings of blockchain in supply chain management were developed focusing on three major benefits:

1. Track and Trace information about various assets
2. Near real-time information sharing with all stakeholders
3. Notarization of shared information establishing data authenticity

Unfortunately, there was much curiosity and excitement around these blockchain-based track and trace solutions initially, but soon the euphoria around them waned due to different challenges faced.

For one, the blockchain offered proof that the data has not been tampered once it was stored on it. But the problem of sanctity of data input to blockchain remained unsolved. If a faulty data is put on blockchain in the first place, it convinces observers about authenticity of that faulty data. Therefore, it becomes unavoidable that the input data should also be generated automatically, for example by means of IoT-based smart sensors. However, such solutions do bring their own set of operational challenges.

These challenges can be classified by relevance of their impact as:

Automation and Reconciliation Issues – Modern supply chain involves numerous actors and stakeholders. The internal data structures, formats and standards followed by every organization may altogether be different. This causes issues in automation of workflows and reconciliation of information across systems of multiple stakeholders.

Scaling and Operational Issues – Blockchain is inherently an infrastructure-heavy solution. Each stakeholder needs to set up its own blockchain node with sufficient security, storage, and access control. It is also important to make provisions for high availability, backup, and recovery etc. Additionally, the IoT devices for generating ‘correct input data’ bring in their own infrastructure challenges. The sanctity of data generated by these sensors depends on their operational security and maintenance. Therefore, it becomes necessary to build highly available, fault tolerant administrative module to monitor sensors.
It is complex to add new stakeholder in an already operational network since the entire setup needs to be repeated for each independent party. Similarly, each new IoT sensor means a whole new bunch of telemetric data transactions for blockchain network to process. And so far, blockchain do not fare well in handling huge amount of information.

These scalability challenges and associates operational costs may become major deterrent for investing in blockchain based solutions.

Privacy and Security Issues – As the data is replicated on all nodes in network, smart contracts need to be carefully designed to capture and share only relevant information. A combination of off-chain and on-chain information is required in case of storing huge multimedia files and managing related access control mechanism.

For security against frauds and malicious activities, it is utmost important for users to securely manage the credentials, certificates, keys, and wallets.

On the other hand, it will be equally difficult to address all of these issues in one go. One needs to take heuristic approach to design a solution to solve some of the operational issues, improve operational efficiency, and simplify and automate processes.

For security against frauds and malicious activities, it is utmost important for users to securely manage the credentials, certificates, keys, and wallets

2. The Solutions

In the recent past, we, at NTT DATA’s Blockchain Center of Excellence, have already designed and implemented various blockchain-based solutions to address many of the operational issues faced by track and trace solutions.

One of them is, Blockchain based Document Management Platform (TradeWaltz®) which is a blockchain-linked distributed storage control software for managing shared documents and files. NTT DATA's blockchain technology and know-how are adapted to TradeWatlz®. Blockchain based smart contracts provide for authenticity and notarization of these documents and also help to manage and control the access.

The "BlockTrace® DMP (Blockchain-based Document Management Platform)" is being deployed, including the knowledge gained in the development of TradeWaltz® and other case studies.This solution is designed by NTT Service Evolution Laboratories and developed by NTT DATA. It is an off-chain data management platform for storing large files and documents. It facilitates secure sharing of files with intended parties only on ‘need-to-know’ basis. It enables blockchain network to store huge amount of information by storing actual information on BlockTrace®DMP platform and its references in supply chain network. Thus, it solves security and privacy issues along with scalability issues up to certain extent.

TradeWaltz® and BlockTrace® is blockchain-based supply chain traceability platform, that captures track and trace information throughout the product’s journey on supply chain. BlockTrace® is compatible with global supply chain standards such as GS1, EPCIS etc. This solution addresses traceability, transparency, and information sharing challenges.

These solutions enable businesses to efficiently manage and optimize supply chain operations, while providing major cost benefits.

Business areas dealing with use cases like food safety, drug safety etc. have seen immediate benefits of availability of traceability information alone. However, the more complex use cases dealing with supplying consumer products and managing associated payment workflows need holistic solutions. For example, payments for Logistics Company can be released immediately after the shipments are delivered to destination. Smart contracts can automatically release funds once certain conditions like goods inspection and acceptance etc. are fulfilled.
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TradeWaltz: Creating the Future of International Trade