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Blockchain for digital supply chains

blockchain
(Image credit: Image Credit: Zapp2Photo / Shutterstock)

As our business frameworks and structures have moved to become predominantly data-driven digital entities, a new electronic backbone of partners, suppliers and industry associates has crystallized and become the new substrate for all operational functions. That new foundational fabric has a name; we call it the digital supply chain.

Composed of a logically aligned collection of people, processes, products and places, the digital supply chain also includes new Artificial Intelligence (AI) functions for predictive intelligence and a number of virtual ‘employees’ in the form of digital twins. Where we used to define digital twins solely in the context of machines in the Internet of Things (IoT), we can now also establish digital versions of human workflow procedures, entire teams, complete departments and whole companies.    

But as digital twins are employed, deployed and (mostly) enjoyed as valuable members of the new digital supply chain, we must also think about a system of control to ensure that we know what functions they are performing and what the output results of their simulation calculations are. That foundational fabric also has a name and you’ve already heard of it; we call it blockchain.

Using the immutable distributed ledger technology in blockchain allows us to track and support a live, parallel digital twin deployment. To store any contextual state required by a digital twin, a high-speed system of record or cache is needed. This state store typically holds the current status of the digital twin (e.g. if a passenger is checked into their flight, or if a shipment is loaded on a truck) and any uncorrelated events or transactions. It may also be queried by external tools wishing to obtain the latest view of the digital twin. As digital twins expire or become stale, data is typically flushed from this state store and moved to other analytical stores or data lakes.

A decentralized tamper-resistant store

For digital twins that span multiple organizations, require data or transactions to be shared in a trusted fashion between multiple parties, have a degree of needed transparency with regards to business logic, or would benefit from having a shared, decentralized, tamper-resistant store, then blockchain can act as an additional layer to the parallel or multiple digital twin deployment. Tamper-resistant immutability is key, especially in environments where mission-critical or life-critical operations depend upon it – and many digital twin supply chain functions will be exactly that.

Without providing a re-analysis of how blockchain has evolved and how the use of both public permissionless and private permissioned blockchain implementations are providing different orders of magnitude for the transactions they control (there is plenty to read on this across the web), let’s look at the use of permissioned enterprise blockchain in regard to digital twins in the supply chain.

Blockchains store data in a tamper-resistant, distributed and ‘append-only’ storage layer that is cryptographically derived and shared. Adding transactions to this ledger typically involves reaching agreement of the validity of the transaction between multiple blockchain network participants; in concept if not practice, members of a digital supply chain should be able to agree on validity of transactions in a relatively fluid manner. The cryptographic ‘chaining’ of the data makes it difficult to change the transaction once it has been added to the ledger.

This type of functionality can be useful when deploying digital twins that need to securely store and share key states or checkpoints between multiple parties (e.g. product delivery milestones across a supply chain), meet regulatory compliance requirements, reduce the chances of fraud, or record key decisions being made by various actors in a complex system. 

Smart transactions, smart contracts

There’s a lot of talk surrounding digital business and arguably too much generic showboating surrounding the development of so-called digital transformation initiatives. Putting some meat on the bones of these new platform advancements requires us to define just exactly where we will be deploying new software code. In the context of this discussion, that deployment surface is smart contracts i.e. the business logic based code that runs within a blockchain network to define the parameters of the transactions that can take place.

There are many definitions and descriptions of smart contracts and each blockchain framework that supports this capability tends to implement it differently. As an application in their own right, smart contracts are used to automate the execution of business logic against transactions, validate that a transaction should be written to the ledger and write to the ledger in a way that supports transparency and trust. Again, for digital twins that are operating in parallel to distributed or complex systems, the ability to distribute business logic in a transparent and secure manner can prove to be beneficial.

We’ve moved beyond what we used to call Business-to-Business (B2B) operations at this point, we have entered a space where digital twins may be transacting with each other autonomously and automatically inside the digital supply chain. Of course, the trade-off of moving to this higher tier of operational intelligence is additional complexity, so this consideration must be weighed against the obtained benefits in any firm's own personal cost-benefit analysis.

The ability of blockchain to track digital twins with a high degree of transparency and traceability can also help with future legal requirements, especially when it comes to the import of raw materials. As an example from several years ago, the USA obliged its publicly listed companies to fully document their supply chain for tantalum, tungsten and tin, related ores and gold. Soon afterwards, the OECD issued guidelines on the due diligence of companies with regard to supply chains of minerals from conflict and high-risk areas.

Future considerations for the use of blockchain with digital twins includes the creation of common marketplaces and representing shared assets as tokens for fractional ownership and sharing purposes. As digital twins become more complex and as network complexities increase, it is possible that blockchain will (in some form) become a more prevalent component of a digital twin runtime architecture.

To go back to our title, blockchain is not necessarily the missing link for digital twin populated digital supply chains, because it’s here already. The missing link may be the wider implementation, penetration and proliferation of its use as detailed in context here.

Nelson Petracek, CTO, TIBCO Software

As CTO of TIBCO Software, Nelson Petracek specialises in the areas of messaging, microservices, hybrid integration, event-driven architectures, and event processing.