Blockchain for ePedigree - Whitepaper

Block Supply Chain Whitepaper
Incorporating Blockchain Capabilities in Supply Chain for the Purpose of Serial Genealogy
and ePedigree (PATENT PENDING)
Confidential and Property of Block Supply Chain Management (BSCM)™
1025 Alameda De Las Pulgas, Suite 2 #631, Belmont, CA 94002
Version 3.0 Date: 12/1/2016

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Property of Block Supply Chain Management (BSCM)™ – Copyright© 2016
1. Executive Review
The purpose of this Whitepaper is to discuss the evolution of Blockchain introduced mainly by
Bitcoins for the Financial industry. This technology enables participants to quickly and
seamlessly develop a relationship between different entities while providing transparency and
traceability.
This Whitepaper will also describe how this technology has a potential to enable businesses and
government mandated entities (such as FDA – Food and Drug Administration) to have the ability
to trace the evolution of raw materials to Finished Goods and beyond.
Until now, companies have relied on manual processes and/or bolt-on capabilities to provide
visibility for the purpose of quality, counterfeit, and/or conflict origination. With Blockchain, a
secure and reliable system can be created where the content can be trusted and shared with
stakeholders across the Extended Supply Chain (ESC) and beyond in near real-time. Each node
of the ESC will contain the exact content while verifying the previous node’s data.
2. Background
2.1. Introduction to Blockchain
Per Wikipedia (streamlined to match the focus of this Whitepaper): A Blockchain - originally,
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 Blockchain is a technology that underlies Bitcoin - conceived in 2008 and first implemented
in 2009 - where it serves as the public Ledger for all transactions. In this case, every user can
connect to the network, send new transactions to it, verify transactions, and take part in the
competition to create new blocks. The competition creating new blocks is known as mining. The
bitcoin design has been the inspiration for other applications.
Blocks
Each Block or Node includes a link to the preceding block or node and may include multiple
transactions. In the pharmaceutical industry, this technology can provide the traceability of an
Extended Supply Chain and beyond (e.g., pharmacies, FDA).
For a Blockchain to be secure, it's necessary for blocks or nodes to be updated right away with
the information from up-stream and down-stream nodes/blocks. At the same time, prior to
acceptance from previous node, it is important for the receiving node to verify the information
first.
Transactions

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A transaction transfers currency from one key to another. The clear majority of them are verified
with the digital signature of the sender and specify new transaction outputs. That can be
controlled with the digital signatures of the recipients. But bitcoin also has support for much
more complicated requirements for unlocking outputs to enable smart transactions and Ethereum
even more complicated.
To put limits on the cost of running nodes, there's typically a size limit on blocks which
implicitly limit how many transactions can be included. For bitcoin, the limit is about a
megabyte.
Decentralization
Every node in a decentralized system has a copy of the Blockchain. No centralized "official"
copy exists and no user is "trusted" more than any other. Transactions are broadcast to the
network using software applications. Mining nodes validate transactions, add them to the block
they're creating, and then broadcast the completed block to other nodes. Blockchains use various
timestamping schemes, such as proof-of-work to serialize changes.
Openness
Since all early Blockchains were permission-less, controversy has arisen over whether
permissioned databases of chained blocks of data should even be considered Blockchains. The
debate is ongoing and there are disputes regarding whether a private system with verifiers tasked
and authorized (permissioned) by a central authority, should still be considered a Blockchain.
Proponents of permissioned or private chains argue that the term "Blockchain" may be applied to
any data structure that batches data into timestamped blocks. These Blockchains serve as a
distributed version of multi-version concurrency control (MVCC) in databases. Just as MVCC
prevents two transactions from concurrently modifying a single object in a database, Blockchains
prevent two transactions from spending the same single output in a Blockchain.
The opponents say that the permissioned systems look like traditional corporate databases, not
supporting decentralized verification of the data, and that such systems are not hardened against
tampering and revision by their operators. The Harvard Business Review defines Blockchain as a
distributed ledger or database open to anyone and the Computerworld claims that "much of
[Blockchain hype] is nothing more than snake oil and spin".
Permission-less
Both Bitcoin and Ethereum are open (public) Blockchains. As of September 2016, Bitcoin trades
at the highest market capitalization while Ethereum is the second. Both of them currently secure
their Blockchain by requiring new entries include a proof of work. Ethereum plans to switch to a
proof of stake in the future.
Disadvantages

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Nikolai Hampton pointed out in Computerworld that "There is also no need for a ‘51 percent’
attack on a private Blockchain, as the private Blockchain (most likely) already controls 100
percent of all block creation resources. If you could attack or damage the Blockchain creation
tools on a private corporate server, you could effectively control 100 percent of their network
and alter transactions however you wished." This has a set of particularly profound adverse
implications during a financial crises or debt crises like the financial crisis of 2007–08, where
politically powerful actors may make decisions that favor some groups at the expense of others
"The Bitcoin Blockchain is protected by the massive group mining effort. It’s unlikely that any
private Blockchain will try to protect records using gigawatts of computing power — it’s time
consuming and expensive."
"Within a private Blockchain there is also no ‘race’; there’s no incentive to use more power or
discover blocks faster than competitors. This means that many in-house Blockchain solutions
will be nothing more than cumbersome databases."
Applications
Blockchains are a technology that may be integrated into multiple areas. Examples include a
payment system and digital currency, facilitating crowd sales, or implementing prediction
markets and generic governance tools.
Major applications of Blockchain include cryptocurrencies—including Bitcoin, BlackCoin,
Dash, Nxt and Ripple—and Blockchain platforms—Factom as a distributed registry, Gems for
decentralized messaging, MaidSafe (software) for decentralized applications, Storj for a
distributed cloud, and Tezos for decentralized voting.
The Harvard Business Review conducted a two-year research project exploring how Blockchain
technology can securely move and store host "money, titles, deeds, music, art, scientific
discoveries, intellectual property, and even votes". As of 2016, some parts of the financial
industry are implementing distributed ledgers for use in banking.
Alternative Blockchains
Alternative Blockchains (altchains) are based on bitcoin technology in concept and/or code.
These designs generally add functionality to the Blockchain design. Altchains can provide
solutions including other digital currencies, although tokens used in these designs are not always
considered to be such. Altchains target performance, anonymity, storage and applications such as
smart contracts. Starting with a strong focus on financial applications, Blockchain technology is
extending to activities including decentralized applications and collaborative organizations that
eliminate a middleman. Notable designs include:
LaZooz – decentralized real-time ride sharing
Swarm and Koinify – decentralized crowdfunding
Synereo – synchronous and asynchronous communication
Other Uses

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Blockchain technology can be used to create a permanent, public, transparent ledger system for
compiling data on sales, storing rights data, and tracking digital use and payments to content
creators, such as musicians. A concept such as Imogen Heap's Mycelia. A service was launched
in July 2016 that allows managers to use a Blockchain for tracking high-value parts moving
through a supply chain. Everledger is "building systems to record the movement of diamonds
from mines to jewelry stores" and is one of the inaugural clients of IBM's Blockchain-based
tracking service.
Commercial offerings
Distributed ledgers and other Blockchain inspired software are being developed by commercial
organizations for various applications:
 Deloitte and ConsenSys announced plans in 2016 to create a digital bank called Project
ConsenSys.
 The R3 Project connects 42 banks to distributed ledgers built by Ethereum, Chain.com,
Intel and IBM.
 Microsoft Visual Studio is making the Ethereum Solidity language available to
application developers.
 SafeShare Insurance offers Blockchain-based insurance for the sharing economy,
underwritten by Lloyd's of London.
 A Swiss industry consortium, including Swisscom, the Zurich Cantonal Bank and the
Swiss stock exchange, is prototyping over-the-counter asset trading on a Blockchain
based on Ethereum technology.
2.2. Introduction to Supply Chain Management
A typical Supply Chain consists of multiple nodes. Nodes can represent single entities which
include entities within them. Suppliers feed the next link (node/block) on the supply chain while
progressing the completion of a Finished Good. In the case of Medical Devices, for example,
silicon wafers are created which in turn become silicon chips. Silicon chips are then made to PC
board and from there a PC board is combined with other parts in order to complete the device as
shown below.

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For example, in the above diagram, each Node is feeding the next Node until the product is
complete and can be shipped out. There are some in-between entities that help with such
operations as providing raw materials, assemblies, sub-assemblies, value added work, etc.…
These Nodes may not need full access to some information but they are required to provide
necessary data to show that, for example:
 They are not using child labor
 They are not using conflict minerals
 They are not using counterfeit products
 They accurately report the details (such as Lot Number, Serial Number…) of the key
components
They completely adhere to the Extended Supply Chain and Industry and Government mandated
rules and regulations.
Existing Approaches and Their Disadvantages
Currently, there are a lot of manual processes associated with the dissemination of the
information. In the case that there is any automation, the data are just moved from one to
another entity assuming that the information is accurate and available in a timely manner.
In the case of counterfeit products, the data alone cannot be used to identify where the
counterfeit took place at. Similarly, in the case of a quality issue, a lot of investigation is needed
before the cause is identified. Because of the latency and inaccuracy, the products built after the
first incident may have to be reworked or scrapped. If there are health or financial related
implications, the impact would be increased by multiple folds. Not including the costs
associated with storing, repairing, returning…of the failed products.
Businesses also have a timeframe of when they return defective products/components for the
purpose of a credit. The latency can cause the deadline to be surpassed.
The other weak link is the ability of any of the nodes to transform the product prior to sending it
to the next stage/node due to lack of security. In the case of corporate espionage, the violator
might not even be a part of the Extended Supply Chain.
Going back to Medical Devices and/or Pharmaceutical industries, organizations such as FDA
cannot quickly have access to an accurate and secure dataset in a timely manner. Because of
that, each node is required to assist with each investigation and Corrective Actions.
3. Blockchain for Supply Chain
Blockchain can be leveraged as a secure, accurate and timely platform in order to provide the
necessary information to internal and external stakeholders without disrupting their existing
processes and operations. Processes and operations may encompass business processes,
contractual obligations, and best practices. While operations may encompass human, machine,

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human-to-machine and machine-to-machine interworking. Such operations may contain
supporting systems such as existing ERP, SCM, CRM, Quality, PLM, PRM, Order Management
and others. The advantage of Blockchain is that it is not limiting and it is not intrusive. In
comparison to other new technologies, Blockchain is a sustainable system that is capable to
support any heterogeneous environment now and in the future. Below, we describe the
interworking of a proposed Blockchain for Supply Chain.
3.1. Ledger
A Ledger or sometimes referred to as Distributed Ledger is a consensus of replicated, shared,
and synchronized digital data geographically spread across multiple sites, countries, and/or
institutions. A Ledger is needed to better add, read, and/or share data associated with an
Extended Supply Chain and beyond. Ledger standards and formats may be created by an
individual industry, a government agency or Master of the Extended Supply Chain (usually the
owner of the Finished Good. While there are some initiatives such as Linux HyperLedger but
they are at early stages and they may not represent various industries and/or industry leaders
(such as technologists).
3.2. Security
Any Blockchain framework should support a hierarchy of nodes and the relationship to each
other. For example, Node 1 can provide information to Node 2, but Node 2 cannot change the
information contained in Node 1 Container (block of data). At the same time, Node 2 may have
some Read privileges to verify Node 1’s data (physically or technologically such as using RFID
tags). With all that said, there could be some sensitive and confidential information where Node
1 may not be sharing with Node 2 but will be encrypted and included in the block. That
information may include Recipe, Supplier Details, Costs, and other elements. With Bitcoin the
transactions are very simple but in Supply Chain, transactions could be very complex.
Private vs Public Keys
As mentioned above, the relationship between Blocks requires a hierarchy. Within that, the
proper keys may be provided for partial or full visibility, and ability to Write or Change. Those
keys are very important and should be designed accordingly.
Decentralized Databases
Ideally, all blocks will contain all the details in associated transactions. In some industries, such
as Semiconductor, that might not be possible since each single transaction triggers a lot of other
transactions. Therefore, Blockchain might not be suitable for certain applications in that
industry. But under normal circumstances, all Blocks will contain the same set of data from the
beginning to the end. Thus, the possibility of manipulating the data is highly impossible.
Even though the database is distributed, certain entities such as FDA might have access to all of
the details from inception through the end.

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Cryptography
Cryptography is one of the most important component of Bitcoin. Similarly, such capability
should be included as must-have functionality. Without it, Blockchain cannot be trusted.
Peer-to-Peer and in Real-Time
The advantages of Blockchain is the ability for Nodes to transmit their data in a peer-to-peer
mode in real-time. Those nodes could include suppliers, manufacturers, servicers, 3PL, 3rd
party
organizations, installers, maintainers, distributors, reseller, and any other entity that has the
capability of impacting the configuration. Real-time capability has tremendous value in tracing
problems, identifying trends, reducing the time for identifying appropriate Corrective Actions,
and minimize the impact to warranties.
Physical Validation
There are inexpensive technologies such as RFID where products/components can be validated
by the next Node on the chain resulting in a perfect match. Manual processes such as Travelers
or basically relying on Serial / Lot Numbers might not be sufficient and can result in counterfeit
products or products that do not adhere fully to the required standards.
4. Advantages of Blockchain for Supply Chain
Blockchain for Supply Chain will guarantee multiple identical masters of truth which are
consistently available. Blockchain for Supply Chain can be used to help address the following
issues:
 Counterfeit (for example in Pharmaceuticals / Medical Devices): At each block of the
Extended Supply Chain the originality of a product can be confirmed. In some other
industries, major components may be also validated to ensure that the end product has
not be tampered with.
 Child Labor (Consumer Products / CPG / Retail): The supporting information such as
Biometrics may be included to ensure that children are not used for making of a product.
 Conflict Mineral (Mining / Retail): Origin of each product and associated details will
ensure that Conflict Minerals are not used or sold.
 Governance, Risk Management and Compliance – GRC (A&D / High Tech): Due to
Import and Export laws, it is very important that the product and its components’ origin
are known at all times. In some cases, percentage of components originated from a
specific country could impact the trade. In some other cases, certain products cannot be
sold directly to some countries.
 Warranty Coverage (High Tech / Industrial Mfg / Retail / Consumer Products): The
ability to identify issues and addressing them in a timely manner is very important and it
can impact the bottom line. At the same time, identifying the culprit and returning it can
help with the Return process. Warranties cover a certain timeframe and if returns take
place within it, full credit can be collected.

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 Product Safety (Food & Beverages / Retail): Time to time, a safety issue is identified
where it could cause safety issues for the consumer. Availability of products in real-time
can reduce the amount it takes to identify the issue while allowing a timely
communication to consumers.
Block Supply Chain has advantages for many other industries and many other applications which
are not listed above.
5. ePedigree and Serial Genealogy
5.1. Lot Control
Lot Control is used in various industries such as Semiconductor, F&B, and Pharmaceuticals for
the purpose of monitoring possible quality issues. Lots could be assigned by suppliers which in
turn can be changed to reflect the progress of the item/product built/developed. Unfortunately,
repositories that contain the Lot details are stored in multiple locations sometimes using manual
tools.
5.2. Serialization
Serialization is used in conjunction with and without the Lot Numbers. In most cases, Serial
Numbers are signed upon the item reaching a certain acceptable level. This limits the amount of
details which can be captured. Once again, the details are stored in silos of data.
5.3. ePedigree and Quality monitoring
In Life Sciences, companies are obligated to monitor and capture all quality related details
throughout the Extended Supply Chain by FDA. Blockchain enables FDA and all links/nodes in
the Extended Supply Chain to have visibility to their respective set of data. In the case of FDA,
they will quickly be able to receive the related details.
Of course, this does not mean that all nodes have access to all of the data. At the same time, it
does not mean that all nodes can only change the data which they own. The next node will be
able to confirm as what has been received.
This system has to be combined with a system of physical confirmation (visual, RFID,). for its
full validity. This is for the purpose of government mandated regulation but it can also help
verify counterfeits, conflict-material, out-of-date, out-Rev’d products/items.
6. Summary
Block Supply Chain is a new technology that is evolving. Supply Chains and their stakeholders
have always been trying to have access to accurate and trust worthy real-time data.Once
developed, Block Supply Chain can usher a new dawn for Supply Chain with positive impacts to
top and bottom lines.

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7. About This Whitepaper
9.1. Author
Maher “Mike” Nejad has over 30 years of experience working with various businesses and
industries (such as Industrial Mfg, High Tech, A&D, Retail, Auto, F&B, CPG). Mr. Nejad has
held executive roles at companies such as: Oracle, Computer Associates, EADS, NTT Data,
Accordus, DEC, Hitachi Consulting, and KPMG. Mr. Nejad has deep working knowledge of
SAP, Oracle Apps (Legacy, Fusion), JDE, VARnet, Great Plains, Agile PLM, Oracle Fusion,
BPM, i2, Manugistics and many others.

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