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A new operational backbone: the digital supply chain

As our business frameworks and structures have evolved 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 logically aligned collections of people, processes, products, and places, the digital supply chain also includes new artificial intelligence and machine learning (AI/ML) 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 establish digital versions of human workflow procedures, entire teams, complete departments, and whole companies.     

The foundational fabric: blockchain

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

Using blockchain allows us to track and support a live, parallel digital twin deployment. Blockchain may be utilized to store key milestones or states in the lifecycle of a digital twin, and be augmented with a high-speed cache or state store to facilitate access to live, rapidly-changing operational data that doesn’t fit into blockchain storage structures. 

With data potentially cryptographically linked to the blockchain distributed ledger, this additional event-driven state store typically captures the current or real-time status of the digital twin (e.g. as a passenger is checked into their flight or as a shipment is loaded on a truck) and any uncorrelated events or transactions. It may also be queried by external tools to obtain the latest image or snapshot 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, forming the basis for a complete, end-to-end contextual view of the twin.

A decentralized tamper-resistant store

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 on 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 the 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. 

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

For digital twins that span multiple organizations, data or transactions must be shared in a trusted, secure fashion between multiple known parties, have a degree of needed business logic transparency, and have a shared, decentralized, tamper-resistant store. To meet these needs, blockchain can act as an additional layer to a parallel or multiple digital twin deployment. A tamper-resistant store is key, especially in environments where mission-critical or life-critical operations depend upon it—like many digital twin supply chain functions.

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, including AI/ML models, 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 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 or code that runs within a blockchain network to define the parameters and logic 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 applications 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 beneficial.

Benefits of blockchain for supply chain management

We’ve moved beyond what we used to call Business-to-Business (B2B) operations at this point and entered a space where digital twins are transacting with each other autonomously and automatically inside the digital supply chain. Of course, the trade off of moving to this new tier 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 U.S. obliged its publicly listed companies to fully document their supply chain for tantalum, tungsten and tin, related ores, and gold. Soon afterward, the Organisation for Economic Co-operation and Development (OECD) issued guidelines on the due diligence of companies with regard to supply chains of minerals from conflict and high-risk areas.

Prepare for the future of blockchain with digital twins

Future considerations for the use of blockchain with digital twins include 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.

Blockchain-backed digital twins can be complex to develop and execute, but the right tools make it far easier. Read this paper to learn more about use cases and applications for digital twins, key technology foundations, blockchain as an enabler, and more.

There’s arguably too much generic showboating surrounding the development of so-called digital transformation initiatives. Putting some meat on the bones of these advancements requires us to define exactly where we will be deploying new code. Click To Tweet

And join me for the TIBCO LABS Quarterly Update on February 4th 10:00 AM PST to discuss how organizations can apply capabilities related to IoT, edge analytics, blockchain, process mining, augmented reality, and more to meet business needs.

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