Blockchain: Future of ledger

Due to the nature of a supply chain capitalizing on the comparative advantage of multiple firms, visibility from the end point to the beginning is very difficult. For example, Company A produces a good and sells that good to Company B. Company B incorporates that good into a component containing goods from multiple other companies and sells that entire component to Company C. Company C then uses the component to build an entirely more complex product that is a combination of many different systems acquired from multiple suppliers. A global supply chain gets ever more complicated by introducing more suppliers as well as other entities such as shippers, distributors, and retailers, all of whom have physical access to the good and therefore a chance to tamper with the good. To better illustrate the scale of this problem consider the fact that big auto company manufactures vehicles at 139 different manufacturing plants located in 33 different countries, with an average of over 14,000 parts per vehicle supplied by over 3,200 suppliers from as many as 10,000 various facilities. 19 Tracking counterfeit parts is a colossal task for a multi-national like this auto company.

Blockchain can be used for tracking parts moving through a supply just like "building systems to record the movement of diamonds from mines to jewelry stores".

A blockchain— is a distributed database that maintains a continuously-growing list of records called blocks secured from tampering and revision. Each block contains a timestamp and a link to a previous block. The first blockchain was conceptualized by Satoshi Nakamoto in 2008 and implemented the following year when the bitcoin network was started.

To understand how this problem can be resolved

Organizations operate entirely independent of other entities when creating a product to sell to customers. Such organizations dependent on others operate interorganizational supply chains. Interorganizational supply chains are made up of multiple entities all providing a specific good or service contributing to a final product or service purchased by an end customer.

when large organizations do own entire blocks of their supply chain, they still must manage their intraorganizational supply chain.

Intraorganizational supply chains may be easier to manage and protect as governance decisions can be made from one management team while all subservient entities must abide by those policies. An organization installing a robust ERP system would be an example. In contrast, interorganizational supply chains require different mechanisms to manage communication through autonomous firms. One solution would be to have each supplier on the supply chain use the same ERP system. Though, that solution becomes problematic when one supplier provides goods to multiple acquires who all use different ERP systems, as well as when a supplier is too small to justify incorporating an ERP system as a business decision. There is still a much cheaper alternative used to try and solve this same problem: the legal contract.

Understand how this problem be solved by Blockchain and how to manage  this supply chain transaction

The unique identifier of each transaction is the hash of the previous transaction. The ability to link transactions to each other, coupled with the traditional legal contract is what holds potential for increasing assurance in a supply chain.

The goal is to provide acquirers(of material)  with insight into who their upstream suppliers interact with assuming all parties are using the same blockchain based system.

Understand how MS will handle this problem with MS products

MS has world class ERP like D365 Operation which can be used for interorganizational and interaorganizational or mix of both to stream line supply chain with MS Blockchain services Ethereum Consortium Blockchain Network solution template on Azure

Practical Scenarios

This technology will help companies to interact each other and reduce inefficiency and improve quality and give more value to customer. One example would be one energy company who handles a portion of the production, transmission, and distribution of natural gas to customers. Another example would be one medical company who “owns factories that make particular drugs all the way down to the trucks that deliver the drugs to pharmacies.” Needless to say, both companies still rely on other entities, such as their raw material sources, to achieve the ultimate end goal of selling goods to customers.