Permissioned Blockchain Model for End-to-End Trackability in Supply Chain Management

Permissioned Blockchain Model for End-to-End Trackability in Supply Chain Management

Tejaswi Khanna, Parma Nand, Vikram Bali
Copyright: © 2020 |Pages: 14
DOI: 10.4018/IJeC.2020010104
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Supply chain management or logistics is a crucial aspect of any business, be it agriculture, food, healthcare, and more. However, it also involves a communication among a host of actors performing different roles in the chain. Integration of these actors in a transparent yet secure way is needed, which blockchain technology has the potential to do so. In this article, different models of blockchain application in logistics are discussed and how the permissioned blockchains can be used in realizing the business case. An overview of different frameworks which enable permissioned blockchains are discussed in this article. Based on this, the authors propose an asset transfer model which can be employed to enhance supply chain trackability using permissioned blockchain.
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According to Dobrovnik et al., (2018), application of blockchain in logistics and supply chain management can provide an edge over conventional systems. These relative advantages are based on the inherent features of the blockchain technology, namely, immutability, transparency, and decentralisation.

Blockchain as an amalgamation of different fields of Computer Science and Information Technology provides immutable records of transactions called as blocks which are chained together using hash algorithms. These chains of blocks represent the public ledger which is transparently shared over the network. Since the data and the business logic using smart contracts is shared to all the participants of a peer-to-peer network, it enables the system to have a higher order of decentralization. Each of the participant in the network shares the same data and the changes are also reflected in real time, which was not possible in local copies of centralized data being fetched from the conventional centralized server. Being a single point of failure, relying on the centralized server for storage and management of sensitive data questions the trust of the whole system.

Supply chain management, as a vital pillar of businesses, involves multiple parties for the product to travel from manufacturer to the end consumer. In case of food supply chain, visibility and transparency can help create a different flow of food, starting from the farmers to the end customer, via the whole chain of intermediaries. All actors in the conventional supply chain, like, farmer, distributors, wholesalers, retailers and consumers become the participants of the blockchain network, all of which have access to the public ledger at all times.

This end-to-end supply chain functions because of transactions between any two participants at any stage. For example, when a wholesaler transports the goods to distributor, both of them must come to an agreement over the price and the quantity. This agreement is enforced using a contract in the conventional supply chain. Now, this creates a point of vulnerability in the whole supply chain, as one of the two parties of the transaction might not adhere what is written in the contract, and the contract is also verified by another third party. If the contract is digitized using smart contract capability of blockchain, the code governs the data and the principles among the participants. All these transactions are stored in form of chain of blocks, which are not owned, controlled or governed by any single entity. In this way, all the supply chain actors can view the real time data regarding any product.

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