Blockchain and Supply Chain Management

What is a blockchain?

A blockchain is essentially a database. The database is split into chronological blocks which are linked together via cryptography or more specifically, hashes. The use of hash functions to linkblocks is what makes them an append-only and immutable data structure.

Databases are a crucial part of today’s infrastructure so I guess cryptography and immutability alone do not make blockchains special. But what if there was a network of people who tried to rebuild the same database with everyone following an agreed set of rules in verifying the contents of the database. It is a trustless system since we do not trust any single entity to be responsible for maintaining the database. Data integrity and transparency, both features of a blockchain, are crucial in maintaining supply chains. For those unaware of supply chain management, it is the process of tracking the journey of a product, from raw materials to customer and all the steps in between.

A lack of transparency that comes with the current infrastructure between different parties in a supply chain, as well as losses from counterfeit and theft can even sometimes cause lives to be at risk. For example, in developing companies a lack of compliance and counterfeit medicine being prevalent, many lives are lost as well as billions of dollars. Generally, situations in which information asymmetry is present, exploitation and inefficiencies appear.

Use of blockchain in improving supply chain management has been through closed-offenterprise solutions such as XCEED used by Renault, OpsChain which is a service provided by EY and Onyx by JP Morgan. The rest of the article explores both solutions and how they may be improving legacy systems.

XCEED - Renault

New market surveillance regulation prompted Renault to develop XCEED (eXtended Compliance End-to-End Distributed). It allows information regarding vehicle components to be shared and tracked among multiple parties. Developed in partnership with IBM, XCEED is an open source blockchain protocol. The aim of implementing this technology is to create a network for sharing compliance information throughout the supply chain. XCEED aims to ensure better compliance management whilst protecting a company’s intellectual property and confidentiality. Renault claims this will be especially useful in encouraging larger players in the automotive industry, who are potentially competitors, to work more closely together on the regulation requirements without creating excess complex data reconciliations.

Validating processes without a central agency of trust without the need for each party to exchange information is a unique proposition of blockchain. With evermore complex supply chains and a growing demand for transparency and efficiency, protocols such as XCEED can be very valuable.

That said, many of today’s supply chains have good data, which they can transfer across supply chain tiers at close to real time speed. To understand the true value proposition a couple of questions need answering: 1. What are the internal transaction efficiencies?

2. How valuable is transparency and traceability in a supply chain? Renault are claiming a productivity gain of 15 to 30% as well as a 10% reduction in costs regarding the management of non-quality/non-compliance. That said, nothing regarding the actual implementation of the protocol has been released since 2021 and it is not known exactly where it is being used. blockchain, Quorum, developed since 2014.

Confirm, one of the main applications based on Onyx, allows to verify account information prior to transactions. Failed payments cost the global economy $118bn each year and 2 out of 3 failed payments are due to incorrect account information. Onyx’s Confirm application answers these issues and is scalable, being able to process over 2 bn accounts from thousands of financial institutions. Italso reduces the operational costs, with CheckMatch, an application allowing to send checks digitally and mitigating against fraud. Broadening access, architecting new applications/platforms and accelerating exchange of information are the main issues addressed. The solution’s deployment across several financial institutions is promising for the future of the blockchain technology in the industry.

Onyx

Onyx is the world’s first bank-led blockchain platform for the exchange of value, information, and digital assets. In other terms, it is used to transfer assets faster and more securely. It is developed by Liink, the firm’s first scalable bank peer-to-peer network and is powered by a private variant of the Ethereum

OpsChain

OpsChain, developed by EY, is a public blockchain using zero knowledge proofs based on the Ethereum blockchain, that simplifies the supply chain management (Figure 1). Launched in 2018, it has been implemented in well-known retailers such

as Carrefour and has been continuously improved with a 90% reduction of transaction processing fees by 2019. The blockchain allows to suppress overlapping along the supply chain, optimising visibility of the process and allowing to trace back every aspect of it. The main advantages of blockchain are implemented across both projects and seeing the technology behind our new space get implemented in financial institutions, supply chain management and supporting a broad range of actors of different industries is promising.

References

A new blockchain solution for the certification of vehicle compliance at European level will be implemented - renault group (no date) A new blockchain solution for the certification of vehicle compliance at European level will be implemented - Renault Group. Available at: https://www.renaultgroup.com/en/news-onair/news/xceed-a-new-blockchain-solutionfor-renault-plants-in-europe/ (Accessed: October 19, 2022). EY (2021), Ey OpsChain Traceability, https:// www.ey.com/en_gl/news/2019/04/ ey-releases-zeroknowledge-proofblockchain-transaction-technologyto-the-public-domain-to-advanceblockchainprivacy-standards

Hyperledger: Supply chain SIG: Renault Xceed (2021) YouTube. YouTube. Available at: https:// www.youtube.com/watch?v=lZP5B1WXaP0 (Accessed: October 19, 2022) JP Morgan (2021) ,Story of Onyx, https://www. jpmorgan.com/onyx/index.htm Narajan.S (2020), JPMorgan launches blockchain division called Onyx after a big tech client adopts its cryptocurrency for commercial use, https://markets. businessinsider.com/currencies/news/ jpmorganlaunches-blockchain-divison-onyxjpm-coin-tech-use-2020-10-1029733602

About the authors

Imran Khan

Imran is the president of the Imperial Blockchain Society and currently works at a digital-assets firm as a Data Intern. He has been in the space for 2 years (mostly as a degenerate) and is keen to get Imperial students to build in the space.

Louis Jegou Louis

Louis is Head of Research at the Imperial Blockchain Group. He was initially attracted by the idea of profiting from the volatility of the space. Louis now believes the underlying technology will prevail and is passionate about understanding where and how blockchain will add value to society.

Louis Junqua-Salanne

Louis is a Junior Analyst at the Imperial Blockhain Society. He is attracted by the application of the blockchain technology in industries and educating more people about the space