Supply Chain on Blockchain – conference review

On Monday, I attended the Supply Chain on Blockchain conference (https://scobc.net/), usually held in Brisbane, but this year run online.

Here are my impressions of the different sessions I attended. My highlight of the conference was the second keynote from John Wolpert, on the Baseline Protocol project.

Key Note

John Blackburn, Institute for Integrated Economic Research

Not specifically on blockchain, but John spoke about supply chain resilience to shocks such as Covid-19. I found his talk very government-centric regarding response/control of the supply chain, which, to me, is the opposite of a distributed blockchain solution.

e.g. For minimum stock levels of critical medicines, a blockchain solution would have each importer/distributor publish incoming & outgoing stocks, traced through to retail points, and let customers decide if their stock level is high enough (by choosing who to buy from and voting with their wallet).

In this solution, consumers are trusting the blockchain solution – a retailer can’t claim to have more stock then the distributor sent them, who can’t claim to have more than the manufacturer sent them.

In contrast, if the government wanted to ensure minimum stock levels they would simply legislate that, there is no need for a blockchain, they would just use a regular database. They would still publish the same information: amount from the manufacturer, from the distributor, and at the retailer; and you could even have digital signatures to match the amount with who has claimed it.

You need to trust the government, who is running the system, that records haven’t been omitted, totals add up, etc, but they don’t need a blockchain to trust themselves to make sure their legislation is followed.

Still, some interesting perspectives on supply chains as a whole

The Future of Responsible Investing: Blockchain Due Dilligence

Alessia Falsarone

Despite recent market volatility leading to negative supply chain effects, the responsible investment segment has seen record capital inflows, despite the environment. Blockchain can be used as a tool for establishing provenance and meeting consumer and investor demand for responsbile investment, moving to a broader picture of both enviromental and social footprint of companies.

A decent talk on how provenance, and related responsible investment criteria, is becoming more important, and may be a good use case for blockchain, although Alessia didn’t have the answers yet… with a nice segue at the end to Tyler’s talk.

How to build a sustainable supply chain for the luxury industry

Tyler Mulvihill, Treum

A good mix of focus on their product, Treum (https://treum.io/), and the broader topic of consumer shift to more sustainability. Usually I dislike product-focused talks, but this had enough other information to actually be interesting. It was also a good follow on from Alessia’s talk.

Rather than look at the investing side, Tyler looked at the consumer demand side, where there is an increasing consumer interest in sustainability, particularly from younger rising generations, yet many companies have very little insight into their supply chains.

In particulary for luxury brands, he talked about the secondary market growing at 4x the traditional market — something I have seen with things like brand-based “buy-sell-swap” groups on digital platforms. i.e. a well developed circular economy with luxury brands having high resale value.

Due to the high risk of fakes and similar, this is an area where blockchain could be useful not just in the initial supply chain provenance, but from luxury brands providing digital certificates of ownership (titles), that could then be traded to ensure the second hand Gucci you are buying really is a Gucci.

This becomes a win-win solution with the primary brand high resale value helping maintain a high price for new items and eliminating/reducing fakes (reducing supply also supporting high prices).

It is a similar use case to the digital title scenario for high value goods like diamonds, or other goods that are below the threshold for governments (land & vehicles), but still high value.

Such a solution would be easily implemented with ERC721 based contracts, possibly with an associated trustee implementation from the initial vendor for owners who don’t have a blockchain address.

Most current purchases might be happy with an initial trustee solution, e.g. where Gucci records their owner details and they can sign in to transfer the certificate of ownership in a secondary market, but having the option to transfer the token directly to your own account, with an associated dApp to manage, would make the system truely open, and allow future secondary sales to be done as an atomic swap (exhange the title for Ether), possibly even with a commission to the original brand built into the smart contract.

(The commission/swap would be for the title, not the actual product, with the premise being that an item with a genuine title is more valuable than one without.)

Second Keynote – Baseline Protocol

John Wolpert, ConsenSys

Of the whole conference, I liked this talk the best. Probably because John W.’s thinking along blockchain systems seemed similar to mine.

John spent a long time at IBM, where he was involved with Hyperledger Fabric, which he was quite critical of it and the flaws of similar systems. I also question whether Fabric really meets the criteria as blockchain, or really is just a globally distributed database. (In contrast, Hyperledger Besu, is the real thing.)

Some of the criticisms of private blockchains and similar are that, although hidden from the public, transactions (at least the metadata) are visible to competitors, which is the real issue (not the wider public).

Consortiums can also have a very long lead time and legal overhead to set up, and the resulting solution may still not meet security requirements.

Additional issues are when you going one private consoritum for one supplier, then another for your bank, then another for a major vendor, etc.

A key important question that John asked of other presenters, particularly when they talked about consortium solutions, is how many nodes are in your blockchain and who is running them; a blockchain where only a central party is running nodes doesn’t need to be a blockchain. He also asked what platform they were running, and if Hyperledger, then whether it was Fabric, Besu, etc.

John W.’s talk was about the Baseline Protocol, https://www.baseline-protocol.org/

This is a move away from private blockchains to anchoring on Ethereum mainnet. It is a move away from blockchain as a database / store to blockchain as middleware, for transaction ordering and hashing.

I think this makes a lot of sense, as public networks have a high degree of systemic trust — they have large numbers of validators, multiple teams implementing the software, and are open source for visibility.

Baseline Protocol is a standard, being developed under OASIS, and will allow multiple parties to easily interoperate on the Ethereum mainnet, without the issues of running their own consortium network.

The low barrier to entry also makes it more accessible to smaller enterprises.

Another benefit that I see with using public blockchains is that contracts don’t only have to include business logic, but can also include value, e.g. deposits and penalties, from the public chain (i.e. Ether, or even derivatives such as Tether could be used).

This is the main take away from the conference that I will be following up on.

Lightning talks

A series of short, 6 minute talks.

How digitized supply chain financing can help secure supply chains during crises, Atul Patel, dtledgersAn example where I’m not sure if their platform needs blockchain, so good that their website mostly uses the term DLT (distributed ledger technology). Not really a lot of information, other than that their product is useful for managing supplier finance. Seems to be a private platform, running Hyperledger Fabric (which John W. was critical of).
QuillTrace Blockchain agnostic Provenance as a service, Preetam Rao, QuillHash.Another product talk, QuillTrace (https://trace.quillhash.com/), this one at least appears to work on public networks, and is a template tool for building supply chain smart contracts. For Ethereum at least it appears based on ERC721 contracts.
Blockchain types and supply chains, Bharadwaj Varanasi, Univesity of QueenslandResearch paper on alternative consensus protocols (on a private Ethereum network), with consortium management contracts for a Proof-of-Authority (PoA) Byzantine-fault-tolerant (BFT) network using the Istanbul BFT 2.0 protocol (IBFT 2.0). I would be interested if the consortium contracts could be adapted to manage a permissioned consortium, but running on the public mainnet.
Frethan Blockchain Deployment, Lindy Chen, ChinaDirect Sourcing (CDS)CDS provides due diligence for large enterprises on Chinese suppliers, but is not suitable for smaller businesses. They have a blockchain based tool, Frethan (https://www.frethan.com/), for checking supplier details, that can be used by smaller organisations. They have a combination of their own platform (not sure of the technology) for document hashing, and an ERC20 currency/token used to raise funds. They have limited nodes, in their own local & Chinese locations, and with shipping partners.
I spoke to Lindy afterwards a bit. Like some of the others, I’m not sure if their product needs an actual blockchain, or if it does it would probably be better to move it all to mainnet.

Strengthening consumer trust is a beef supply chaing with a blockchain-enabled human-machine reconcile mechanism

Shoufeng Cao, Queensland University of Technology

Some research about food provenance in China, related to BeefLedger, which works in this area. Some interesting research that wasn’t blockchain specific, e.g. provenance information delivered via video, rather than text & images, had a much greater impact on trust levels.

They have a fairly well developed model of the beef supply chain (live exports vs quarters vs packaged) and their app reports provenance scans (“You are the frist person to scan the product”) to help reduce fraud by simply copying the label.

However, I’m still not sure why their product needs a blockchain (rather than just a database).

Blockchain-based Solutions for Traceability, Trust, Privacy, and Quality Control in Supply Chains

Sidra Malik, Univesity of New South Wales.

Some fairly solid research modelling tracking provenance from farm to consumer, recognising the increasing consumer demand for these services and the various hurdles/issues.

The presentation referenced a couple of papers, from UNSW and Csiro/Data 61, that I will try and read up on.

  • Malik, Sidra, Salil S. Kanhere, and Raja Jurdak. “ProductChain: Scalable Blockchain Framework to Support Provenance in Supply
    Chains.”
    2018 IEEE 17th International Symposium on Network Computing and Applications (NCA).

Had a good model of the types of supply chain activities: Create, Transfer (move), and Product (or transaform), with some nice examples of how transactions would be linked, and performance characteristics of using different chain sizes vs side chains.

  • Malik, Sidra, Dedeoglu, Volkan, Salil S. Kanhere, and Raja Jurdak. “TrustChain: Trust Management in Blockchain and IoT supported Supply
    Chains.”
    2019 IEEE 2nd International Conference on Blockchain (Blockchain-2019).

This paper recognised many of the trust and reputation issues, such as sensor tampering, sybil attacks, bad mouthing, etc, with some models for commodity reputation and seller reputation, along with penalties and rewards. It also had latency and throughput comparisons for baseline transactions vs adding trust information.

  • Quality Control: dishonest IoT data – disincentivizing through monetary penalties, Volkan Dedeoglu,Kamran Najeebullah, Ambrose Hill, Raja Jurdak, Salil S. Kanhere

A model for multiple sensor points to incentive accurate data across multiple parties.

  • Privacy: trade secrets vs provenance, traceability over blockchains, Sidra Malik, Volkan Dedeoglu, Salil S. Kanhere, Raja Jurdak

A model that preserves privacy, with incentives for supply chain entities to provide traceability information to consumers.

The series of papers look good, although the conference only had time for a brief overview (the last few very brief).

Publication information was provided for some of the papers, but I’ll have to check if they are publicly available.

Overall

Overall the conference was quite well put together given the circumstances. It was focussed on business content, with almost no technical information.

On the management side, random breakout rooms, for “hallway conversations” seemed to work a lot better than trying to have planned breakout rooms for people nominating to discuss specific talks (didn’t really work well, as people didn’t nominate).

Hopefully next year it will go back to a full event.

The conference is organised by the same people who run the Brisbane Ethereum Engineering Group meetup (https://www.meetup.com/ethereum-engineering/events/), which I regularly attend, when it was running in Brisbane city, and now online.

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