A new white paper from the MIT Connection Science team provides a framework for leveraging blockchain frameworks to enable supply chain business networks. It introduces an ontology for describing the components of blockchain-based supply chains, and an approach to deploying them in production.
Blockchains are transforming the world. They have shaken the global financial system. They are the foundation of cryptocurrencies built on open, distributed ledgers that are being applied in everything from global payments to digital identity. Blockchains have enabled new movements for social change and decentralized forms of governance.
As these ecosystems grow, there is increasing interest in how blockchains could be used to transform traditional business networks, such as supply chains.
"Supply chains today are very much still rooted in paper and email," says Rob Miller, a co-author of the new report and CEO at the MIT Connection Science (ConnX) research group. "There's real potential to transform supply chains by using blockchain frameworks."
The new white paper — authored by ConnX researchers and alumni Jean ZS Lee, Jiin Ahn, JB An, Edaena Salinas-Jimenez (MS '18), and Daniel Novy (MS '14) — provides a framework for understanding the essential elements of blockchains, along with an approach for deploying them in production.
"We see two primary applications," says Miller, who is also an assistant director at MIT's SENSEable City Lab. "One is asset provenance and tracking, where you want to know where something came from in the past, how it was made, when it arrived in the supply chain. The second application is around payments."
The report describes a blockchain ontology that consists of five elements: a network, a data model, a consensus mechanism, smart contracts and an application layer. It also lists the criteria for evaluating these frameworks and shows how to apply them in practice to real-world scenarios such as payments and asset provenance.
"This is just the first step," says ConnX principal investigator Carlo Ratti. "We want to provide a common language for researchers, practitioners and policymakers to build upon. The ontology that this paper sketches is just one of many ways how the blockchain can transform supply chains."
For example, the authors are working with companies in several verticals using ConnX's open-source framework Hyperledger Indy. "Blockchains can unlock new business models and improve transparency among competitors," says Ratti, who is also the director of MIT's Sensable City Lab.
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This is a use case where Japan already has a significant lead. They are quite far along the testing and demonstration phase of TradeWaltz, which will use blockchain to replace paper documents and automate import/export procedures and customs for containerised freight between Japan and friendly nations. It should significantly reduce costs and increase speed and authentication of information. The only downside is that although it's using blockchain technology, it is not decentralised.
Also... sheesh, I know I sound like an advert for them... sorry, it's just that it's a field I'm slightly involved in, and can see how beneficial it could be if it delivers. You can see more at https://www.tradewaltz.com/en/