Transparency and Traceability in Supply Chain
Selling certain things to a customer is based on the supply chain. Almost all companies engaged in the purchase and sale sphere, cope with the fundamental phases of supply chain management. Trust and transparency in the supply chain are the two most sustainable factors for the efficient process entirely. What is the advantage of Blockchain for supply chain management? Read on and figure out what the key benefits of this new robust ledger technology are.
Supply Chain Principles
Let’s provide the definition of the supply chain notion, its management and basic principles of supply chain process. The supply chain is the cumulative network of different entities, individuals, information and resources involved in the product’s creation, transportation, and sale, beginning from the original manufacturer to the end customer. It combines the following process stages:
- raw material supply
- converting the materials to the products
- storing in the warehouses
- distribution and delivery to the retailers
- bringing the product to the ultimate consumer
Supply Chain segment and logistics are often confused notions. Logistics simply refers to the transportation of goods, whereas supply chain covers many other fields. Thus, logistics is only the part of the supply chain. The entire chain includes the coordination of raw materials delivery from a supplier to a producer, then to an ultimate user. Supply chain impacts the quality and the time frame of products’ manufacturing.
The whole process of delivering the materials from the supplier to the manufacturer, from manufacturer to retailer, from retailer to the end customer, is required to be managed.
What is Supply Chain Management (SCM)?
Supply Chain Management is a crucial process of optimization leading to lower costs and company profitable results. It creates a sustainable competitive advantage while maximizing customer value. SCM covers product development, production, logistics, information systems to coordinate these undertakings. The aim of SCM is to control shipment, delivering and distribution process, while cutting costs and optimizing time management.
SCM is important to the success of any business. Hence, it requires close monitoring of all costs paid and procedures. Supply Chain Management impacts the development of supply chains in an efficient way. CSM is based on the idea that every product is the result of the efforts of the many entities of the supply chain.
According to Investopedia explanation of SCM, it attempts to coordinate these efforts minimizing costs and trimming fat. There is the example of Conglomo, making its widgets in a domestic factory. Conglomo negotiates with suppliers to buy the raw materials it needs. Conglomo staffs the factory with paid workers to build the widgets.
The company also provides the factory with supplies to run operations, everything from equipment to light bulbs. The factory packages and ships the final widgets to stores for sale, requiring packaging supplies and equipment, trucks, drivers, fuel and insurance. SCM is centrally controlling the production, shipment, and distribution.
SCM challenges: traceability and transparency
Due to the growing difficulties in the supply chain management, this business field usually copes with the challenges that are complicated to solve. Within the global business supply chain, traceability plays the most decisive role in the advancement of its sustainability.
Why is it so crucial for small and big businesses to maintain traceability and transparency of all the processes in the supply chain management? Traceability is the whole system connecting all the stages in the chain together. It is the ability to identify and trace the history, distribution, location, and application of products, parts, and materials. As a result, traceability system follows, records and control the process from suppliers to the ultimate consumers.
Food and drug safety is one of the vital things to trace and take control of. With the increasing demands from governments, suppliers, buyers, and consumers, traceability ensures the information on food and goods origin, the conditions under which they were produced, preserved, and transported.
Traceability includes information on products’ components, quality, and safety. The collaboration of the companies, involved in the supply chain, should provide in-depth the real-time insights, and the mechanisms for analyzing the information gathered through the manufacturer management system. According to the practical guide of the United Nations Global Compact (UNGC), namely the collaboration is the best practice for supply chain traceability:
Supply chain actors are responsible for the tracking products from the source to the consumer, their origin and their history of delivering. Furthermore, mislabeling is also one of the disadvantages of bad management in supply chain segment. Due to traceability systems, one can perform more effective audits and share data.
There are several factors affecting supply chain complexity. Due to the customers’ demands to have a product in time and for the reasonable price, it is very difficult to create an efficient supply chain. Finally, we are going to review some problems of supply chain management and traceability which hinder its sustainability:
- Globalization and customer’s demands
In globalization context, there is a huge opportunity for fraudsters due to complex supply chains. A customer wishes to get his product immediately and for a reasonable price. For that reason, companies have to relocate their manufacturing to the countries where the price is lower. Correspondingly, this acquires extended time for implementation. Supply chain requires strict control and verification across all the stages of the process.
- Food fraud
The lack of transparency is always the reason for food fraud. With the growing of highly-organized criminal activity, supply chain often suffers from such a natural phenomenon as food fraud.
However, it is a very complicated purpose for food safety systems to effectively detect fraud and to mitigate it. Therefore, food fraud adversely affects health states and damages companies’ brands and reputations. According to Rey Global Food Safety Initiative (GFSI) cutting-edge information and experiences on food fraud, most commonly reported frauds belong to fish, olive oil, milk, and honey.
Companies are losing money and customers are losing faith. Food fraud is estimated to cost the global food industry US$30 to $40 billion every year. But that’s just the economic cost.
The transformative technology Blockchain may resolve this type of problem. This technology will keep all the players in supply chain management open and record their every operation in a transparent and decentralized way. We will be discussing this huge opportunity in the next section.
- The information gap
The lack of automation impacts not just on the supply chain organization, but also creates uncertainty in the finance organization. As shown in Figure 3, an astounding 90% of enterprises report their global supply chain technology is inadequate to provide the corporate finance organization with the timely information it requires. This information includes accurate costing and delivery dates for the budget, cash flow planning, and management. Thus, the financial productivity of enterprises is being undercut by the lack of the global supply chain visibility and automation, which are vital weapons against uncertainty.
“For complete product traceability it is necessary to record not only all incoming and outgoing movements of the production lots but also all the procedures and processing operations applied to them” – Lo Bello (2005).
A properly designed traceability system is crucial to ensure that data collection is managed effectively and that the right data are collected. Companies need to exchange traceability data with other actors in the supply chain. Sharing of information and good communication between the different actors in the supply chain are important aspects of successful supply chain traceability.
- Non-compliance with the standards
Standards provide information about the social and environmental performance of goods and services, including the information about the supply chain. When consumers purchased labeled or certified products, they are sufficiently convinced that they are buying sustainable, environmentally friendly, safe or high-quality products. They trust the standards, rather than the product or the companies that make the product. The problem is that the systems to implement standards are never perfect.
- Lack of transparency
In our everyday life, we deal with many material products without hesitation to use it. We know a little about the things we purchase at the market or in the stores. It is a long journey while a supplier will deliver the product to the end consumer. A vast network of so many entities and individuals remains obscure in the way it is collaborated and compiled. The production, delivery, supply, storage, and distribution take prolonged time for implementation. The lack of transparency in supply chain management has a plenty of negative consequences, among which: food fraud, infections, unsafe working conditions, harmful substances, improper food storage conditions, low-quality products etc.
In this case, it is worth mentioning about the horsemeat scandal, the point of which was that sold and supplied beef products in the UK contained horse DNA. Mass media announced this in BBC news in April 2013. 50 000 tonnes of horse meat were supplied across Europe since 2011. As for statistics, according to World Health Organization, each year as many as 600 million, or almost 1 in 10 people in the world, fall ill after consuming contaminated food. Of these, 420 000 people die.
Blockchain Solutions for Supply Chain Management: important tool in digitized supply chains
Blockchain, the ledger technology, is captivating the world with skyrocket speed. The confirmation of this fact was stated in Quartz, according to which “blockchain” captured corporate executives who can’t afford to ignore it anymore. Compared to the last year, “blockchain” mentions in quarterly reports and conference calls more than tripled this earnings season. The statistics displays that over four weeks in October-November, blockchain mentioning by corporate executives, was used 665 times. Robust companies with a wide range of industries are involved in the ledger technology. Among them are the following: IBM, Walmart, Estée Lauder, NVIDIA, Oracle, Maersk, Citigroup, Webjet, UPS, Western Union and others.
During IBM presentation, Martin Schroeter, CFO, said: “So our view of blockchain is that it will fundamentally change—again, fundamentally change processes, but it has to have a few characteristics in order for it to really take off. And we think and we expect that this is going to be a nice, big, growing business at some point for us.”
Is the increasing of Bitcoin price has the impact on blockchain chatting? Certainly, yes, it is the part of the reason. According to Quartz, there is more likely assumption that corporate execs are talking about blockchain as the sky-high price of Bitcoin has made the technology impossible to avoid.
Centralization vs. Decentralization
To start with, let’s figure out what this huge animal Blockchain is, and let’s make a differentiation between centralization and decentralization. Centralization means that all the transactions are made via third parties which have different internal systems, their own visions, and their own business models.
Due to these factors, there are many frictions and much paper documentation which leads to non-compliance with the legitimacy, inefficiency and obscure state of the situation. In such networks every participant can change the data history, it is vulnerable and has high-cost payments.
Decentralization is entirely new and opposite notion. The ledger where all transactions are fixed and saved is immutable and distributed among all the nodes of the network. Everyone in the network is able to view the transaction history, to get visibility of all the data they have permission to. Thus, decentralization forms the basis of blockchain technology, ensuring trust, transparency, and traceability of business processes.
Why is decentralized technology suitable for modern supply chains?
This question requires an advanced answer. Aforementioned challenges of supply chain management strictly indicate the need of taking measures for its efficiency. So, to make the information more summarized, historically there were a diversity of issues affecting the supply chain sustainable development. For decades, the supply chain suffered from three main problems: data visibility, customer demand management, and process optimization. Certainly, blockchain technology cannot serve as the pill for the solution of all the problems, but it may help to improve the process of traceability, trust, and transparency. Ledger digitized technology is trustworthy increasing credibility and accountability through businesses.
Plenty of industries implement blockchain with its ability to maintain privacy and security in the business development. Our aim is to help businesses select and deploy the right blockchain technology for their business cases, as well as to develop applications based on the blockchain. For companies’ insurance blockchain provides smart contracts between the companies. They give an additional level of security and reduce costs without the need for third-party accounting services.
Why does supply chain management really need this powerful operating digitized tool? What does it predict?
The blockchain is decentralized distributed digital ledger providing all the participants in supply chain business-to-business exchanges. It is a single immutable database, as no one can change or delete the transactions. Therefore, potential fraud schemes are impossible to apply a priori. First of all, Blockchain provides transparency, trust, and traceability for supply chain management.The following advantages of the ledger technology may totally change the supply chain management state.
Advantages of blockchain technology for supply chains:
- Safe transactions among all the players
A decentralized supply chain is distributed peer-to-peer network, where all the players in the process are able to fix the transactions and validate them in real time. Each participant can view the progress of goods across the whole supply chain ecosystem.
The transparent and shared network can be permitted. This means that due to the presence of confidential data, there are restrictions on who can take part and in what capacity can have access to the network. In order to contribute, the participants must receive the invitation and then validation.
No other individual can participate in the network, however, validated members can view all the transactions made so far without the possibility to change them. Based on the certain level of permission, the players of the supply chain has end-to-end visibility of the network.
The decentralized peer-to-peer model allows involving the participants in open transparent collaboration with each other, having no opportunity to skip or deceive.
- Provenance of traceability
No one can modify or delete the records without the permission of other participants. Blockchain enables the detailed traceability of assets, the conditions under which they stay, the responsible party owning it, at any time.
Nowadays, modern trends in various industries are digital technologies, which considerably simplify the business operation. Due to innovative solutions, there are many risks of cyber attacks. Blockchain technology can help to keep precious data private and protect supply chains’ operations.
In Medium, Marin Ivezic, cybersecurity partner at PwC, shared his opinions in the article on blockchain for cybersecurity: “We could potentially track the provenance of a given IoT device, or even the components that make up a particular device from a supply chain perspective, as well as the integrity of the embedded software. Individual components could be tracked as they move from suppliers to manufacturers, and ultimately to the customers at the end of the chain.
He stated that this idea has the potential to become a part of the supply chain cyber and cyber-physical systems security efforts that are of great concern to nation states around the globe, particularly noticeable in the efforts being put forth by the US, China, Russia, India, and others in recent years.
To make the summary, it is worth saying that smart contracts built on blockchain are written as code in the blockchain, ensuring trust between the parties. Individuals involved are anonymous, but the contract is a public ledger. They are less vulnerable to hacks and unauthorized modifications. No one outside the network can make the alterations on blockchain applications and validate them. Only the one who is the network member. Thus, cybersecurity is much more robust, restraining a hacker to steal private data. If you need help implementing your token distribution logics, business behavior and storage in a decentralized way – Ethereum ecosystem is a way to go and we can help.
- Automotive operating costs and saving time
There is no need to hire banking systems and auditing services for making payments and finance transfer from the payer to the payee. Blockchain makes these procedures simple. Secured and rapid operation approximately in minutes saves costs and reduces fees, compared to standard audit clearing houses, which take several days to fulfill the payment.
- Fraud prevention
With the increasing of regulatory and consumer demand provenance information is substantial for the business brand and reputation. In order to conduct criminal schemes, fraudsters delete or change information in accounting systems, substitute documents to their own fake files. On blockchain network there is no centralization, every transaction is made across the network between all the participants. These transactions are fixed and saved on the shared decentralized ledger, where their visibility and transparency cannot allow fraudsters to alter the information and delete data. Due to the immutable transaction history, the manufacturer’s goods will have provenance.
Let’s see how the history of transactions is created. There is an intelligible explanation provided on IBM Blog. Before adding a new transaction block on the network, its validation must be agreed by network participants. It is called consensus. The blocks have a timestamp, are secured by cryptography private key, and linked to the previous block in the chain. You can definitely add a new transaction to the network, but original records will be open and traceable. In this case, blockchain serves as the network where everyone in the chain can view the asset origin, its owner and its way of progress.
- Reduction delays due to paperwork
Still, some companies undertake manual paperwork, which leads to transportation and payment delays. A decentralized platform will make all these operations quickly, safely, transparently without third party involvement. Blockchain implementation promises to be an optimal and high-level solution over the next few years. First, it predicts providing of secure means for financial transactions and data sharing. Manual paperwork has errors in orders, invoices and other related documents due to the human nature. Thus, blockchain electronic documents can be a good substitution.
Implementation of Blockchain for Supply Chain Management
Blockchain empowers supply chain sphere, fundamentally increasing the interest of big worldwide players to deploy it for the reasons of the lack of transparency, especially in the food sector. It has already inspired IT players and start-ups for launching new pilot projects that have been successfully developing along with supply chain management.
Walmart and IBM Collaboration in Food Safety Alliance
In the press release of IBM on 14 December 2017, it was stated that IBM, Walmart, and Tsinghua University have recently announced their collaboration in Food Safety Alliance to enhance food tracking, traceability, and safety in China, to achieve greater transparency across the food supply chain.
It is worth mentioning that IBM and Walmart have already piloted the common blockchain project on tracking food items, including pork in China and mangoes in the U.S.
Walmart’s food safety solutions are built on IBM blockchain platform. Frank Yinass, Walmart vice president: “What we hope to do with blockchain, is bringing all food safety system stakeholders collaborate, so that we can do it very quickly and efficiently”. He said that all the transparent information will show insights that will allow people to have safer, more affordable and sustainable food system. It will essentially reduce the time of tracing the goods: from days and weeks to minutes.
The collaboration helps to ensure brand owners’ data privacy while helping them integrate their online and offline traceability for food safety and quality management channels. Companies that join the alliance will be able to share information using blockchain technology, and plans include them being able to choose the standards-based traceability solution that best suits their needs and legacy systems. This will, in turn, bring greater transparency to the supply chain and introduce new technologies to the retail sector designed to create a safer food environment and enhance the consumer experience.
Technical Blockchain Implementation for Supply Chain
How to use Blockchain for supply chain management?In this section, we touch on the technical methods of blockchain implementation, models of business processes, blockchain architecture, and client applications specifications. Our understanding is that you need the solution that will prove provenance to your customers as well as potentially further optimize resources due to benefits of data availability and new approaches to business with technology in hand.
Business Process Modelling. BPMN 2.0
How can you predict the future state of your business and analyze the current one? There is one effective tool called Business Process Modeling. It is a high-priority mechanism for businesses to improve processes, applying functioning tools and navigation for their effective operating. BPM is a mechanism, intended to map out a workflow of business processes for analysis and advancement. This method is applied by representing different activities, steps, logic decisions, events and resources to optimize their efficiency and improve business performance. Visualization of the processes by using diagrams, charts, maps are used to make better decisions.
We are strongly convinced that streamlined management and well-organized work process are key priorities for team smooth and flexible functioning. BPM combines such steps as Process Mapping, Process Discovery, Process Simulation, Process Analysis and Process Improvement.
Why use Business Process Modelling?
In this section, we are going to share the benefits of BPM, and why we use it in business cases. Business Process Modeling instruments allow representing the business process in a way with a digital transformation to the automated process. In ancient times, the work process was conducted by one person from start to the end. It definitely was a time-consuming and inefficient way of production operating. It took the last two decades to replace previous organizational techniques once BPM emerged. Through the evolution of process practices, analysts and those who create business process tools had been learning to describe, make reengineering and standardize business processes. As a consequence of that path, Business Process Modelling Notation (BPMN) has become something of a standard. The Object Management Group (OMG) has developed it.
BPM provides plenty of benefits in the business performance. Here we share highlights of some of them.
Features of Process Modelling:
- BPMN combines both IT processes and people processes
- Process communication improvements
Due to common unified language, the communication and decision making are easier to implement. Well-shaped process modeling offers rapid training for new people. It also minimizes potential danger of staff loss. Mapping and flowcharts are perfect for shaping a good understanding of the situation for business managers, who want to communicate their ideas quickly and clearly.
- Consistency and control
The process is executed in a consistent manner due to the documented process instead of relying on people. Modeling rules make decisions better. As for regulatory policy, BPMN ensures compliance with legal regulations by following the company guidelines.
- Visual shape of the processes
Visual representations simplify the understanding of the general picture, making it comprehensive.
- Operational efficiency improvement
Process Simulation is used to promote optimization, allowing analysis and understanding of the process flows. It reduces cycle time, increases the productivity of existing resources, and enables better resource utilization.
- Align operations
Business Process Modelling is a tool for team members to execute business tasks and activities in accordance with the strategy implementation.
Business Process Modelling Notation (BPMN 2.0)
Now we are going to briefly touch on the technique of BPMN 2.0 that is widely applied to companies and organizations.
BPMN 2.0 is the new industry standard our company applies for businesses to run their processes efficiently. It was last updated in 2011. According to BPMN 2.0 specification, the primary aim of BPMN is to provide a notation that is readily understandable by all business users, from the business analysts that create the initial drafts of the processes, and finally, to the business people, who will manage and monitor those processes. Thus, BPMN creates a standardized bridge for the gap between the business process design and process implementation.
This International Standard represents the amalgamation of best practices within the business modeling community to define the notation and semantics of Collaboration diagrams, Process diagrams, and Choreography diagrams. Below is BPMN core structure schema:
It includes such building blocks as: flow objects (events, activities, gateways), connecting objects (sequence flow, message flows, association), swimlanes (pools and lanes) and artifacts (data object, text annotation, groups). BPMN is a core part of Business Process Management (BPM), an initiative of enterprise architecture.
Business processes describe how a business pursues its objectives. In OMG BPMN Tutorial, BPMN is flexible to handle all variants of BP. Among them, there are process maps (simple flowcharts of high-level activities), process descriptions (flowcharts with more information), process model (flowcharts with enough information for analysis, simulation and execution).
Permissioned Blockchain Implementation
We believe that permissioned blockchains can be of great priority for businesses to run. The reason for that is that businesses have a significant number of confidential information which requires to be secured and not be accessible to the outsiders of the network. Aforementioned blockchain feature of permissions for fraud prevention in supply chains controls access and identity management. We implement permissioned blockchain solutions to make records in the network private. There are restrictions on participation. The new members must have an invitation and then be validated to the permissioned network. It ensures intensified security.
All the transactions in the network are encrypted by the private key, but there is no possibility to view and alter previous transactions without execution of consensus protocol between the nodes. Each member of the network must solve a complex, resource-intensive cryptographic problem. Hereby, Applicature supports Proof-of-Authority (PoA) consensus algorithm, allowing making private setups in the network. It has a number of pre-approved authority nodes, a set of authority nodes, who can approve and validate transactions and blocks. Therefore, a new node can be added by approving it by the “validator”, who runs software allowing him to put transactions in blocks. The process is automated and does not require validators to be constantly monitoring their computers.
So, why use Proof-of-Authority? It is the most suitable engine for private blockchains, being more secured and incentivized. The concept behind PoA is that individuals earn the right to become validators, so there is an incentive to retain the position that they have gained. By attaching a reputation to identity, validators are incentivized to uphold the transaction process, as they do not wish to have their identities attached to a negative reputation. This is considered more robust than PoS.
So, let’s get deeper into Blockchain nodes. They are anonymous individuals in the network. To add the transaction to the blockchain ledger by a node, there must be consensus protocol adopted. The consensus determines whether the transaction should be validated in the ledger. It is called a block. Each node in the blockchain keeps a copy of the ledger, downloaded automatically upon joining the blockchain network. They propagate transactions and blogs everywhere.
There are different types of actors in the supply chain who can be the nodes in the blockchain network with the ability to make transactions and record information:
- end consumers
Blockchain Architecture and Client Applications Specifications
We understand that you need the solution that will provide provenance to your customers, as well as potentially further optimize resources due to benefits of data availability and new approaches to business with technology in hand. We would like to share with you our experience and knowledge on the traceability implementation to your supply chain business processes.
This first phase is to review your business processes together and decide on which of them to include in blockchain based traceability project. Once the roadmap of the project is generated, including goals, it’s time to get the definition of the architecture and research of top candidates for blockchain deployment. Technical Architecture includes the following steps:
- generating an overall architecture schema
- considerations for blockchain implementation
- research and list of blockchain platforms for deployment
- Visual Wireframes for the minimal version user-facing applications
The next phase covers the proof of technical assumptions and validation of the risks standing between us and successful final proof of concept. Within Technical Feasibility Project we deploy the selected blockchain candidates and run all necessary tests to confirm the match with our criteria. We intend to deliver the most appropriate configuration in its early stages of development, usable for the Proof of Concept.
Proof of Concept is a project to implement most critical and essential functionality and provide projected business results. Proof of Concept will be a multicomponent solution containing:
- blockchain-based distributed server-side data storage/data bus;
- centralized or decentralized business logic applications or smart contracts;
- critical-version user mobile application
- critical-version user-facing dashboard web application
Registration of Supply Chains and User Mobile Apps
Everyone in supply chain management has the account, with the access via private key. Some of them can have a lot of information, while others have restricted data. The registration process is as follows: the participants request to register their identities on the blockchain, the registration authority verifies the identity; all the results are recorded on the network, being visible to all the participants or anonymous depending on the situation.
The essential part of blockchain implementation for the supply chains concerns the linking of physical goods and products with their digital representation in the blockchain network, and user-friendly interface as well. On smartphone applications, there is the possibility to scan bar codes or serial numbers which are linked to blockchain identifiers, for simple and easy usage of the technology. There is no difference from UI, whether it is connected to API and database, or to the blockchain. Therefore, the actors in the blockchain do not undergo paradigm shifts.
Due to the strong integrity nature of the blockchain network, the customer can view the information on the product supply chain in a real-time manner. Mobile-readable cryptographic QR-code on the product’s labels is designed for customers to easily verify the origin of the material, ingredients, traceability, etc.
User-Facing Web Dashboards
Using AI algorithms and big data enables businesses to leverage historic trip sheets and real-time data to estimate time of delivery, and to optimize vehicle routes and sequence deliveries using information on local conditions like traffic and weather.
In order to provide valuable insight into the performance of drivers, facilities, and operations, data-driven dashboards are used. They enable organizations to examine key performance indicators like total travel time, helping to benchmark and improve service planning.
There is a flexible system supported by the dashboards for the managers and administrators who need to monitor, analyze, and manage the supply chain performance. Web dashboards support examination of the statistics of the goods, that are comfortable for viewing from a user perspective. Since there is time log, UI changes can be applied to depict the history of changes.
Event Sourcing and CQRS
All Blockchains are actually event sourcing systems, the principles of which are congruent with blockchain. Event Sourcing is the programming pattern that propagates that series of industry domain event are to be saved as a storage for future usage, and application state is defined based on the history of the events influencing such state.
Event Sourcing offers a good innovation on top of entity-focused approach, by providing the ability to not only get the current state of the entity but review the history that led to the current state. It means that the state of the application is determined by the sequence of events.
Basically, any source control system operates using this approach, it has a history of all the changes that ever been made to the source code system with the possibility to rebuild current state at any time.
Why use Event Source for your system?
Why is the usage of this pattern useful and necessary for many systems? Let’s explain the reasons. The first great advantage is that event sourcing provides an audit trail, when every change in the data is logged in a particular strong processable way that gives more confidence. The second powerful reason is debugging technique, enabling to copy the productive system into a lab. This allows view the errors and bugs, replaying the events. With the extra monitoring code, you can see the reasons of debugging. In the event log and application state context, we can view all the states through the history. Thus, the third reason is the ability to embed the historical state into the application state itself, allowing rolling back to the past states of the code with the event log.
The substantial factor that differentiates blockchain from event sourcing is an immutable feature. It is the basis of the whole concept where we can’t change what happened, but we can manage the system reaction and change of state based on the events. Therefore, blockchain due to its core principle of immutability is the theoretically ideal implementation of event sourcing for supply chains. We use this powerful approach to logistics as well.
Event Sourcing has a symbiotic relationship with CQRS, Command Query Responsibility Segregation. CQRS allows Event Sourcing to be used as the data storage mechanism for the domain. The main idea of CQRS is that it separates the processing of updates from the provision of queries, providing two separate models; one for dealing with updates, another one – for reads. Consequently, it means you can use a different model to update information, than the model you use to read information. According to Martin Fawler, British software developer, for some situations, this separation can be valuable, but for most systems, CQRS adds risky complexity.
Martin Fawler displayed the difference between the traditional architecture and CQRS architecture in the following schemes:
The crucial benefit of this approach is the presence of separate software components.
The combination of Event Sourcing and CQRS is represented also in Greg Young documents, where he depicts the intersection of these two concepts within a system, where Domain Driven Design has been applied. According to Greg, Event Sourcing is also very important when building out a non-trivial CQRS based system. The problem with integration between the two models is a large one. The maintaining of relational models, one for read and the other for write, is quite costly. It becomes especially costly when you factor in that there is also an event model in order to synchronize the two. With Event Sourcing, the event model is also the persistence model on the Write side. This drastically lowers costs of development as no conversion between the models is needed.
- Each participant of the blockchain network can view the progress of goods across the whole supply chain ecosystem. The decentralized peer-to-peer model allows involving the participants in open transparent collaboration with each other, having no opportunity to skip or deceive.
- No one can delete or change the transaction without the consensus from other players of the chain.
- Blockchain enables the detailed traceability of assets, their progress, the conditions under which they stay, how they were produced, when and where, the responsible party owning it, in real time.
- Blockchain technology can help to keep precious data private and protect supply chains’ operations.
- Smart contracts built on blockchain are written as code in the blockchain, ensuring trust between the parties. Individuals involved are anonymous, but the contract is a public ledger. They are less vulnerable for hacks and unauthorized modifications.
- Secured and rapid operation approximately in minutes saves costs and reduces fees.
- A decentralized platform will make all the operations quickly, safely, transparently without third party involvement. The blockchain solution will reduce transportation and payment delays.
- Due to the immutable transaction history, the producer’s goods will have provenance. On blockchain network there is no centralization, every transaction is made across the network between all the participants. These transactions are fixed and saved on the shared decentralized ledger, where their visibility and transparency cannot allow fraudsters to alter the information and delete data.
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Quartz Index https://qz.com/index/1130714/mentions-to-blockchain-tripled-this-earnings-season-compared-to-last-year/
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Global Supply Chain Benchmark Report https://www-935.ibm.com/services/us/igs/pdf/aberdeen-benchmark-report.pdf
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Global supply chains: the importance of traceability and transparency https://www.researchgate.net/publication/280731288_Global_supply_chains_the_importance_of_traceability_and_transparency
Horsemeat scandal to be reviewed, government announces http://www.bbc.com/news/uk-22149690
Youtube video. Genius of Things: Blockchain and Food Safety with IBM and Walmart https://www.youtube.com/watch?v=MMOF0G_2H0A
Cybersecurity of Blockchain and Blockchain for Cybersecurity https://medium.com/@marinivezic/cybersecurity-of-blockchain-and-blockchain-for-cybersecurity-f25d4b7cca2c?token=4ORqcwHxGJ-hKgbr
Smart Contracts: The Blockchain Technology That Will Replace Lawyers https://blockgeeks.com/guides/smart-contracts/
Three supply chain challenges and how to overcome them http://www.supplychaindigital.com/scm/three-supply-chain-challenges-and-how-overcome-them
Three features of blockchain that help to prevent fraud https://www.ibm.com/blogs/blockchain/2017/09/three-features-of-blockchain-that-help-prevent-fraud/
5 Problems Facing the Global Food Supply Chain https://foodsafetytech.com/column/5-problems-facing-global-food-supply-chain/
Blockchain: The best way to decentralize supply chains https://www.supplychaindive.com/news/blockchain-Sweetbridge-decentralization-supply-chain-management/504362/
Business Process Modeling Tutorial (BPM Guide Explaining Features) http://creately.com/blog/diagrams/business-process-modeling-tutorial/
5 Key Benefits of Business Process Modeling http://www.modernanalyst.com/Resources/Articles/tabid/115/ID/1728/5-Key-Benefits-of-Business-Process-Modeling.aspx
Business Process Modelling Notation – Tutorial http://www.omg.org/news/meetings/workshops/HC-Australia/Mancarella.pd
About the Business Process Model and Notation Specification Version 2.0 http://www.omg.org/spec/BPMN/2.0/#docs-normative-supporting
The difference between public and private blockchain https://www.ibm.com/blogs/blockchain/2017/05/the-difference-between-public-and-private-blockchain/
Proof of Authority Chains
Rolling your own Proof-of-Authority Ethereum consortium http://blog.enuma.io/update/2017/08/29/proof-of-authority-ethereum-networks.html
AI and blockchain: Solving supply chain’s transparency problem http://www.supplychaindigital.com/technology/ai-and-blockchain-solving-supply-chains-transparency-problem
Nights March 2016 Martin Fowler – Event Sourcing https://www.youtube.com/watch?v=aweV9FLTZkU
The Many Meanings of Event-Driven Architecture • Martin Fowler https://www.youtube.com/watch?v=STKCRSUsyP0&t=2132s
CQRS Documents by Greg Young https://cqrs.files.wordpress.com/2010/11/cqrs_documents.pdf