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Using blockchain to achieve deep visibility into a multi-tier supply chain

There may be traceability from one supplier to the next using conventional systems, but the data may not be there two levels down. Because every process and transaction is securely stored and shared via blockchain, traceability is absolute.

Norbert Sparrow

May 30, 2017

5 Min Read
Using blockchain to achieve deep visibility into a multi-tier supply chain

One of the many reasons that engineers and industry professionals make it a point to attend the co-located PLASTEC and Medical Design & Manufacturing (MD&M) events across the country is to keep up with emerging technologies and innovations that are popping up today at an unprecedented pace. The trade show and conference coming to the Javits in New York, NY, next month carries on this tradition, and then some. While scanning outlines of the sessions at the three-day conference that begins on June 13, “Blockchain Technology’s Potential to Disrupt Healthcare” caught my attention. Well, that’s different, I thought. Intrigued, I had a conversation with Chandra Narayanaswami, Principal Research Staff Member and Chief Scientist at IBM, who will speak to that topic at PLASTEC East/MD&M East on June 15 at 1:15PM.

For most people, if they have even heard of blockchain, it’s because of its association with bitcoin. “Bitcoin uses some of the blockchain technology,” Narayanaswami told PlasticsToday. “It is one of the primary applications that generated the initial excitement in the blockchain world, but there is a clear distinction when enterprises talk about it.”

Put simply, a blockchain is a distributed database with an expanding list of records, called blocks, that can’t be tampered with or revised once recorded. In an article titled “The Truth about Blockchain” in the January 2017 edition of the Harvard Business Review, Marco Iansiti and Karim Lakhani noted the following:

“With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision. In this world every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared. Intermediaries like lawyers, brokers, and bankers might no longer be necessary. Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction. This is the immense potential of blockchain.”

Blockchain: Where bitcoin and enterprise applications part ways

One of the areas where bitcoin and enterprise applications diverge is in the anonymity of operations. “Bitcoin is essentially a currency for transactions with a lot of presumed anonymity,” explained Narayanaswami. “In an enterprise context, what we call the permissioned blockchain, parties entering into a contract are identified and known.” There is absolute transparency among these parties—deep visibility across the entire supply chain—and that is how blockchain technology brings value to the process.

For medical manufacturing OEMs working within a multi-tier environment—where multiple parties are producing and assembling goods—you want to know where all of these parts are in the process, said Narayanaswami. “Are there delays? Defects? You want to track that and adjust your manufacturing process accordingly.”

In addition to improved visibility into the supply chain, Narayanaswami sees two other major benefits that blockchain technology brings to manufacturing.

One of them is connected to the aforementioned visibility, what Narayanaswami calls “provenance.”  Should a problem arise with a device, “you are able to trace it back to a manufacturer who supplied [a part] and had an issue and figure out how to best address this,” said Narayanaswami. “Traceability currently exists at some levels but not at the multi-tier level. There may be traceability from one supplier to the next, but it may not be there two levels down.” Because every process and transaction is securely stored and shared via blockchain, traceability is absolute.

Narayanaswami also cites the value of smart contracts executed within the blockchain platform. “For example, a purchase order has been issued and later a supplier sends the fulfillment order—that automatically triggers a smart contract, which compares the number of units ordered versus those received, accounts for any time constraints and transfers payment. If there is a discrepancy, delay or something else that might trigger a penalty, that is factored into the payment automatically.”

Although blockchain technology used in this manner is in early stages, Narayanaswami believes that we will see some meaningful adoptions within the next couple of years. “The value proposition is already clear in some applications,” he said, citing the provenance of food and pharmaceuticals, for example, or unimpeachable tracking of system maintenance. When several vendors are involved, you want to have an immutable record of how systems were maintained,” Narayanaswami told PlasticsToday.

IBM Watson Health sees blockchain as vehicle for advancing medical innovation

Beyond manufacturing, IBM Watson Health currently is using blockchain as a framework for the secure sharing of patient-level data. The vast amount of data that is being generated through disparate sources, including electronic medical records (EMRs), clinical trials and wearables, has the potential to accelerate medical innovation, according to IBM Watson Health, but the sensitivity of data in EMRs and concerns related to security have impeded progress in sharing much of this information for research and clinical use. “By keeping an audit trail of all transactions on an unalterable distributed ledger, blockchain technology establishes accountability and transparency in the data exchange process,” according to a press release from IBM.

In January, IBM Watson Health signed a research initiative with FDA aimed at defining a secure, efficient and scalable exchange of health data using blockchain technology, with an initial focus on oncology.

Chandra Narayanaswami is scheduled to lead a session devoted to blockchain technology’s potential to disrupt healthcare at PLASTEC East/MD&M East on June 15 at 1:15PM. The event runs from June 13 to 15 at the Javits Convention Center in New York City. For more information and to register to attend, go to the event website.

About the Author(s)

Norbert Sparrow

Editor in chief of PlasticsToday since 2015, Norbert Sparrow has more than 30 years of editorial experience in business-to-business media. He studied journalism at the Centre Universitaire d'Etudes du Journalisme in Strasbourg, France, where he earned a master's degree.


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