Blockchain in Supply Chain

Piyush Ingle 20810043

Pramendu Singh 20810044
Pranjal Kumar 20810045
What is Blockchain?

● Blockchain is an internet-based technology that is prized for its ability to

publicly validate, record, and distribute transactions in immutable,
encrypted ledgers.
● The technology was invented to support transactions in bitcoin, a digital
cryptocurrency that operates independently from a central bank.
● Blockchain technology provides the platform for creating and distributing
the ledger, or record, of every bitcoin transaction to number of computers
linked to networks around the world.
Understanding Blockchain

● Information, or data, in databases is typically structured in table format to allow for easier
searching and filtering for specific information.

Spreadsheet Database Blockchain

Spreadsheets are designed ● Significantly larger amounts ● Collects information together in

for one person, or a small of information groups known as block.
group of people, to store and ● These blocks are chained
● Large number of users
access limited amounts of together to form blockchain.
● Data stored on servers that ●
information. Forms Irreversible timeline of
are made of powerful data when implemented in a
computers. decentralized nature.
● Computational power and
storage capacity.
● Centralized ownership and
management
Why blockchain for supply chain?
● Blockchains in financial world Supply chains
Intragroup reconciliations
provide what is called “digital
Interorganizational reconciliations
continuity”. Industry Record Keeping
● In supply chain, most exchanges
bring together different parties that
have no reason to trust one another.
● Blockchains play a key role here
and can help eliminate duplicative
and error-prone transactions -
helping create a digital identity.
 Blockchain can provide a solution
Structural
features

...Whose entries are

Technology for ...which allows for ...forming a public
verified and
sharing information... multiple parties... record visible to all.
therefore, trusted...
supply chain
means for
What it

...such as origin and ...including manufacturers, ...meaning customers can ...so all parties have
authenticity of goods... customers and suppliers... trust third parties... access to data.

Trust through design and

Decentralized Multiple writers Not deletable
rules
Common
benefits

Verified through mutual Chronological chain of

Multiple owners Synchronized “real time”
consensus activity
Key benefits of Blockchain for SCM

● Replacing slow, manual processes - Many supply chain processes, especially those in the lower supply tiers, are slow
and rely almost entirely on paper—think of the logistics industry. Blockchain technology in the supply chain can replace these manual
processes with an end-to-end digital process that delivers new levels of visibility and transparency. However, this does involve a good deal
of work to create the 100% digitally-enabled supply chain necessary for blockchain to operate

● Strengthening traceability - Increasing regulatory and consumer demand for provenance information is already driving
change. For this reason companies are already turning to blockchain for supply chain transparency. The track and trace style application of
blockchain in the supply chain is one of the most popular. Supply chain transparency give greater visibility across supply chain operations
leading to better utilization of inventory, better delivery times, improved quality, and reduced loss of revenue from black or grey market
products.

● Accelerating supply chain processes - In theory, blockchain technology protects the integrity of both the information
and the transaction. There are fewer errors and disputes. The entire process is accelerated as there is less need for product recalls or re-
filling a missed order. In addition, the use of smart contracts means that, as noted above, you reduce the need for intermediaries or third
parties. For example, blockchain in the supply chain can reduce the need for banks or clearing houses in the payments process.
Key benefits of Blockchain for SCM

● Reducing supply chain transaction costs - At a base level, the ability of blockchain-based
cryptocurrencies to enable cross-border funds transfers without the need for banks and clearing means blockchain technology in
the supply chain can speed payments while reducing the incurred fees. However, the development of smart contracts–such as
through the Ethereum platform–means that many supply chain operations can be triggered automatically through the smart
contract. For example, a smart contract may set out the agreed delivery of product and what should happen if the delivery is late
or missed. The contract can monitor the delivery and automatically trigger actions where the terms are breached. This
significantly reduces costs, especially where third parties had been previously used to conduct part of the process.
● Creating the ethical supply chain - Consumers demand a greater understanding of where their products
come from and the operation of the company producing them. This has sparked a drive to create the ethical supply chain.
Blockchain helps supply chain companies in two ways, The first is provenance. Supply chain professionals can use blockchain
to establish where everything they use has come from and pass this information on to the customer. Secondly, you can use
blockchain for supply chain transparency so the customer knows exactly how their product was manufactured and shipped.
Uses

While blockchain supply chain use cases are still emerging, a number of
successful pilots suggest that managers can realize big benefits from blockchain,
ranging from cost-savings and increased efficiencies to new operational models,
specifically in the following areas of supply chain management-
● Procurement
● Provenance and traceability
● Digital payments and contracts
● Logistics
● Manufacturing
Procurement
● Blockchain can act as a “single source of truth” for all the entities
(subsidiaries, partners, etc.) doing purchases on our behalf and negotiating
different terms with suppliers.
● A blockchain-based database can store relevant data from all our partners,
giving the company a 360-view of the total volume of purchases, regardless of
who managed the purchase activity.
● There will be no need for individual users to constantly share operational data
and someone else to cross-check it – the audits will be conducted
automatically, eliminating the resource-heavy processes such as extra price
verification.
Provenance and Traceability

● The food supply chain will likely be the first one to undergo major
blockchainization, especially when it comes to the distribution of fresh
produce.
● Consumers are putting pressure on businesses to provide more insights
about the goods’ provenance, authenticity and “life before reaching the
shelves”.
● Most consumers are ready to pay a premium for sustainable and ethically
made goods. According to Nielsen, 49% of shoppers will pay extra for
products that have top high quality/safety standards.
Provenance and Traceability
● Walmart is a pioneer in this domain, partnering with IBM since 2016 on a
blockchain-based traceability solution that would be applied across the
company’s food supply chain. The tested system allowed the retailer to track
incoming food supplies from “farm to store” in near real-time.
● Aside from increased visibility, the company also explores how blockchain
technology can be extended towards monitoring and controlling the spread of
foodborne illnesses and help minimize costly recalls.
● Other businesses are exploring how blockchain can be used to certify the
origin and paths of goods sold and provide data on the authenticity of those.
Provenance and Traceability
● In China, nearly 30,000 counterfeit wine bottles are sold every hour. Some of
them contain hazardous additives that can cause serious health problems
among consumers.
● The companies’ blockchain-based protocol allows tracking every wine bottle
from the vineyard to the stores. Its anti-counterfeit technology that utilizes
photochromic ink together with unique QR codes helps to verify the
provenance and authenticity of every bottle.
● Gartner predicts 20% of top global grocers will use Blockchain for food safety
and traceability by 2025.
Digital Contracts and Payments
● Even the most successful companies have to deal with days sales
outstanding (or even payment upon receipt). This issue partially stems from
the fact that the current invoicing processes are largely inefficient.
● Smart contracts devised on the blockchain can automate the invoicing
process and “patch” the expensive procure-to-pay gaps. Payment terms can
be codified and cash can be obtained immediately after the trade has been
executed and proof of delivery has been provided by a logistics company.
● Smart contracts in supply chain management can help reduce data
redundancy across trading partners and eliminate costly mistakes.
Digital Contracts and Payments
● In essence, smart contracts on blockchain act as an independent third party, which
reviews all the contract aspects and clauses, only accepting entries that match all
the pre-programmed values. This means, no errors, dubious or “lost” invoices can
creep into your records.

To sum up, smart contracts can-

● Help ensure data consistency between all actors of the supply chain and enforce
complete contract term execution;
● Automatically maintain consistency across all participating entities and streamline
the process of managing trading relationships;
● Provide better security levels than most existing approaches.
Logistics
● The logistics industry still relies on a massive paper trail of documents, especially when
it comes to the customs’ process. This majorly reduces the visibility companies have
regarding the status of shipments as they travel along the supply chain.

Blockchain can do several things to solve this issue -

● Increase the volume of seamless data exchanges between all stakeholders to achieve
greater transparency and predictability of logistics operations.
● Generate cost savings by powering more automated, error-prone and secure processes.
● Help establish more sustainable and responsible supply chains at scale. Pairing
blockchain with IoT can help logistics companies gain more insights about the
transportation conditions and add additional preventive measures against counterfeiting.
Logistics
● In particular, the ocean freight industry can massively benefit from the
adoption of blockchain. Specifically, it can enhance all the trade
documentation and administrative processing for ocean freight shipments.
● At present, a sample of refrigerated goods from East Africa to Europe can
pass through nearly 30 people and organizations, with more than 200
different interactions and communications happening between these parties.
● A blockchain-based system can effectively replace the current means of
communication, acting as a “single source of truth”. All entities will be able to
seamlessly add the necessary data, resulting in fewer delays and higher
visibility.
Manufacturing
● IoT and blockchain are arguably the most promising business opportunities in
supply chain management. The two technologies combined offer several
major benefits for the supply chain in the manufacturing industry -
○ Improved information continuity. IoT sensors can capture a variety of data at manufacturing
facilities and beyond them and transmit all the information to a centralized repository.
Managers, in turn, can gain a multitude of new insights about material usage, transportation
conditions, etc., and apply them in planning/optimization.
○ Robust fraud detection. Blockchain-based systems are impossible to tamper with. Any bait
and switch or other mishaps in the factories can be instantly spotted and acted upon.
Companies who put their reputation first will be able to reduce reputational and business risks
by being fully transparent about their supply and manufacturing processes.
Manufacturing
● Producers, responsible for transforming the raw materials into final products,
can attain greater control over the flows incoming from suppliers, automate
compliance to a certain extent and gain better control over production.
● Freight forwarders can automatically ensure that the products are being
transported under the right conditions, as IoT sensors can be programmed to
capture data regarding temperature, moisture levels, etc. during
transportation. They can also attain better visibility into the overall logistics.
IBM Solutions
● Vaccine distribution - To be effective, new vaccines need to be widely trusted.
From inception to injection, a new network powered by IBM Blockchain can
help build that trust. Vaccine distribution can be traced every step of the way
to help assure manufacturers, distributors, dispensers, and the public.
● Supply chain transparency - Build on the foundation of leading networks to
create your own blockchain ecosystem to share data with trusted supply chain
partners using IBM Blockchain Transparent Supply. Transact faster with an
immutable, shared ledger that gives you end-to-end and real-time visibility.
IBM Solutions
● Blockchain for food - To help increase food safety and freshness – and unlock
supply chain efficiencies – IBM Food Trust™ is bringing together a diverse
group of growers, distributors and retailers. Their collaboration is delivering
real business results and boosting confidence in the world’s food supply.
● Container logistics - To oversee container logistics worldwide, more than 150
exporters, importers, freight forwarders, customs authorities and more now
work collaboratively through TradeLens, the open and neutral supply chain
platform underpinned by blockchain technology.
IBM Solutions
● Supplier management - To help accelerate supplier onboarding and lifecycle
management, Trust Your Supplier creates a trusted, digital identity for
suppliers that can be used to begin relationships with multiple buyers. This
helps them avoid redundant submission of the same information, reducing the
time to first transaction.
● Counterfeit prevention in pharmaceuticals - In some countries, counterfeit
pharmaceuticals account for 70% of all drugs in the supply chain. A recent
pilot by KPMG, Merck, Walmart and IBM using blockchain injects new trust
into the system by reducing the time it takes to trace prescription drugs from
16 weeks to just two seconds.
IBM Solutions
● Advancing global trade with blockchain - To succeed in the global marketplace during
the Covid-19 crisis, organizations need to know when and how to share data.
● Responsible sourcing of minerals - Bringing together leading OEMs, miners and
smelters, the Responsible Sourcing Blockchain Network provides much-needed
transparency into the origin of battery metals like cobalt. This reduces many of the
legal, reputational and commercial risks participants have previously faced.
● Visibility in the oil and gas industry - Unexpected events often throw supply chains into
turmoil. The Vertrax Blockchain provides new transparency to oil and gas supply chain
participants so they can respond to demand spikes due to severe weather and other
unforeseen events — all in the computing environments of their choice.
Thank You!