Blockchain and Automation Help Debottleneck Supply-Chain Management
This research addresses the bottlenecks experienced in supply-chain management (SCM) in an African hydrocarbon company. These bottlenecks slow down processes and make the procedures tedious, leading to operational inefficiencies. This paper discusses the security of the SCM data and the overall automation of the procurement value chain, providing transparency to the stakeholders involved in the entire SCM process. It also provides a system that is not prone to malware or data alteration.
Existing supply-chain systems lack trust and transparency. A new technology will be developed using a blockchain hyperledger, a distributed ledger technology. The supply-chain management (SCM) application serving the request and procurement process will use the Hyperledger Fabric software development kit or representational state transfer web service to interface with the Hyperledger Fabric network. The organizations that participate in developing the Hyperledger Fabric network are known as the members. Every member organization in the blockchain network is capable of setting up their peers to take part in the network. All of the peers’ needs are configured with suitable cryptographic materials such as certificate authority and other data. Chaincode will be actualized in peers to initiate transaction-invocation requests. This process will result in the chaincode providing an executable smart contract. The system executes the terms of the contract by all necessary stakeholder’s peer—for example, when goods or services are completely delivered, a work completion certificate will be issued. This will be on the blockchain network and will be transparent to all stakeholders so, once the invoice is presented, the verification will be automatically ascertained and payment will be made.
Procurement data such as invitation to tender (ITT), request for proposal (RFP), request for quote (RFQ), contract award, work completion certificate (WCC), and invoice will be distributed among the nodes uniformly at the same time, making it impossible for cyber-invasion on all the nodes at the same time.
Blockchain has been identified industrywide as the next level in SCM operations because of its transparency, efficiency, data security, reduced costs, traceability, smart contracts, and unbroken chain of transaction history. Blockchain implementation will further enable an easy audit trail, automated and transparent issuance of ITT/RFP/RFQ to vendors, end-to-end SCM automation with secured data, and a quality reporting system. Blockchain technology also can enhance supply-chain manpower efficiency and hydrocarbon production.
The paper identifies the following problems and challenges faced by the oil and gas industry in SCM:
- Lack of an end-to-end automated process
- Unnecessary time spent on request and strategy to select because of the disjointed systems in SCM
- Manual issuance of ITT/RFP/RFQ one after the other
- No structured vendor database; lack of trusted vendor (contractor’s) appraisal records
- Vulnerability of the current system to cyberattack
- Poor reporting
- Difficulty in spooling needed information
- Uneasy audit trail
- Lack of transparency
- Data loss and data inconsistency