Blockchain: A Game Changer for Supply Chain Management

Philip Patton CA(SA), CPIM, CDDP

Past President – APICS Vancouver

High level overview

Block Chain

• A cryptography (secure) based, distributed record technology

Crypto currencies

• A digital currency that uses block chain to record and secure transaction

Block chain mining

• Solving the puzzle and recording the transaction for a commission

Smart Contracts

• Block Chain contracts that are actionable

Block Chain

Blockchain is a distributed database that holds records of digital data or events in a way that makes them tamper-resistant.

The original information stays put, leaving a permanent and public information trail, or chain, of transactions (Investopedia).

Crypto Currencies

Cryptocurrencies are digital money that exist only in the online world, with no actual physical form.

They were created as an alternative to traditional money, and gained popularity for their forward-looking design, growth potential, and anonymity.

One of the earliest, most successful forms of cryptocurrency is Bitcoin

Crypto Currencies

• Fact, there are over 1,300 coins trading on cryptocurrency exchanges right now

• Tread carefully – this chart that shows how volatile Cryptos are right now, the example is Bitcoin

Block Chain Mining

• Mining is the process of adding transaction records to public ledger of transactions or blockchain.

• This ledger of past transactions is called the block chain as it is a chain of blocks.

• The block chain serves to confirm transactions to the rest of the network as having taken place.

A Block Chain

Block Chain Security

Block Chain Mining

Smart Contracts

Challenges

• Previous lack of standards

• Security issues

• Who is behind each block chain?

• Who is behind each crypto?

Crypto Jacking

• Crypto jacking is a scheme to use people’s devices (computers, smartphones, tablets, or even servers), without their consent or knowledge, to secretly mine cryptocurrency on the victim’s dime.

Block Chain in the Supply Chain

• If blockchain technology allows us to more securely and transparently track all types of transactions, imagine the possibilities it presents across the supply chain.

• Every time a product changes hands, the transaction could be documented, creating a permanent history of a product, from manufacture to sale. This could dramatically reduce time delays, added costs, and human error that plague transactions today.

Example of industries that will be affected

• Banking

• Healthcare

• Politics

• Real Estate

• Legal

• Security

• Government

• Rentals and Ride share

• Charities

• Education

Examples – Real World Usage of Block Chain

Paying suppliers

• Since blockchains allow for transfer of funds anywhere in the world without the use of a traditional bank, it’s very convenient for a supply chain that is globalized.

• Australian vehicle manufacturer Tomcar paid its suppliers using Bitcoin.

Lot traceability in the food industry

• It’s imperative to have solid records to trace each product to its source. So, Walmart uses blockchain to keep track of its pork it sources from China and the blockchain records where each piece of meat came from, processed, stored and its sell-by-date. Unilever, Nestle, Tyson and Dole also use blockchain for similar purposes.

DiamondsChain of Custody

• Diamond-giant De Beers uses blockchain technology to track stones from the point they are minded right up to the point when they are sold to consumers. This ensures the company avoids ‘conflict’ or ‘blood diamonds’ and assures the consumers that they are buying the genuine article.

Everledger - Diamonds

Cybersecurity

Guardtime – This company is creating “keyless” signature systems using blockchain which is currently used to secure the health records of one million Estonian citizens.

REMME is a decentralized authentication system which aims to replace logins and passwords with SSL certificates stored on a blockchain.

Healthcare

Gem – This startup is working with the Centre for Disease Control to put disease outbreak data onto a blockchain which it says will increase the effectiveness of disaster relief and response.

SimplyVital Health – Has two health-related blockchain products in development, ConnectingCarewhich tracks the progress of patients after they leave the hospital, and Health Nexus, which aims to provide decentralized blockchain patient records.

MedRec – An MIT project involving blockchain electronic medical records designed to manage authentication, confidentiality and data sharing.

Financial Services

Barclays Bank – Barclays has launched a number of blockchain initiatives involving tracking financial transactions, compliance and combating fraud. It states that “Our belief ...is that blockchain is a fundamental part of the new operating system for the planet.”

High charges to transfer money around the world say using Western Union. Now you can buy Cryptocurrency and send it to a relative who if they have an APP can exchange the crypto for cash from a dealer. Result is a way lower cost of the transaction

Government

Dubai – Dubai has set sights on becoming the world's first blockchain-powered state. In 2016 representatives of 30 government departments formed a committee dedicated to investigating opportunities across health records, shipping, business registration and preventing the spread of conflict diamonds.

South Korea – Samsung is creating blockchain solutions for the South Korean government which will be put to use in public safety and transport applications.

Patents

Blockchain is very good at indicating when something happened, making it perfect for registering patent applications

Further examples

• Recording the quantity and transfer of assets -like pallets, trailers, containers, etc. - as they move between supply chain nodes

• Tracking purchase orders, change orders, receipts, shipment notifications, or other trade-related documents

• Assigning or verifying certifications or certain properties of physical products; for example determining if a food product is organic or fair trade

• Linking physical goods to serial numbers, bar codes, digital tags like RFID, etc.

• Sharing information about manufacturing process, assembly, delivery, and maintenance of products with suppliers and vendors

IBM and Maersk

Block Chain video

Questions?