Farnborough Air Show

Companies Look to Blockchain To Secure Supply Chains

 - July 12, 2018, 6:00 AM

Thales (Chalet D7, Innovation Zone 3699) and Accenture are using blockchain to help secure aerospace and defense (A&D) supply chains, with the companies planning to display a new proof of concept of the technology at the Farnborough International Airshow.

The program demonstrates how blockchain and the Internet of Things can be used to prevent counterfeit or gray-market goods from entering a supply chain. This is achieved through two steps. First, each component or product must be easily authenticated and identified. To do so, the companies have created two mechanisms to uniquely identify material in the supply chain: “programmable unique functions,” which are used to assign a “fingerprint” to small components like microchips; and “cryptoseals,” which are physical seals placed around bags of products such as diodes. When a seal is tampered with outside of the approved process, it communicates to the blockchain using the Internet. 

Second, the movement of such authenticated items along the supply chain must be recorded in a way that is secure and transparent for approved participants. While blockchain technology is more readily associated with financial services—notably cryptocurrencies like Bitcoin—it has potential as a “ledger” to record transactions. In this case, the transactions are those marking the introduction, movement, and consumption of certified goods across a supply chain, said Mark Walton-Hayfield, senior manager for digital transformation at Accenture. Blockchain can both securely track those transactions and provide access to approved partners to view all the transactions on the supply chain, or specific aspects of them. 

Blockchain has the potential to transform A&D supply chain management, Walton-Hayfield said. At the moment, participants in a supply chain tend to create their own, individual records of transactions. A blockchain-based approach would produce a single, secure overview, serving as "the glue between all of the actors in the scope of the supply chain that we digitize; they know that the transactions recorded are authentic." 

There has long been a challenge with identifying counterfeit or gray-market goods in A&D supply chains, said Gareth Williams, vice president for secure communications and information systems at Thales UK. Using a blockchain environment—in combination with cryptoseal and programmable unique functions—helps build a "historical trust story behind a part," he said. 

"It gives an immutable line of trust, so you can deal with things like counterfeit and gray-market goods more easily."

Thales believes the technology could bring significant benefits to the UK Ministry of Defence (MoD) and other major customers. The company could well become a customer for the technology itself, Williams said: "It would give us great efficiencies in our supply chain," he said. "We’re looking at a couple of internal programs, where we deliver solutions to the MoD, where we think that this could really bring innovation to the table."

Thales and Accenture are currently at the proof-of-concept stage for the technology and have demonstrated it to the MoD and other companies in the A&D industry, Williams said. The first version of the proof of concept was shown at the Defence and Security Equipment International (DSEI) exhibition in September 2017. The companies recently completed work on a second iteration, which incorporates machine learning and several other new technologies and has use cases beyond the detection of counterfeit goods, said Walton-Hayfield. 

"Version two adds some of the more advanced features of smart contracting, including algorithms that work out how well or badly suppliers are performing, based on how many of their products get certified at the end of the process," he added.  

There could be a wide range of uses for blockchain that go beyond securing supply chains, Williams said. "We could check if the right software versions are running on a particular piece of equipment, or if an individual technician or engineer who worked on it has the correct training certifications."

The companies are currently looking at how they can pilot the system in a real-world use case, such as Thales’s own supply chain. This would allow them to incorporate real-world data, said Walton-Hayfield. "Supply chains haven’t really changed for 20 years, apart from getting bigger and more complex," he said. "We want to scale out solutions that will prove the business value associated with these initiatives and start to transform supply chains to make them more digitally enabled."