Global Supply Chains in Chaos

Cyber security breaches and counterfeit goods are exposing vulnerabilities in centralized supply chain systems long overdue for an overhaul.

Photo by Shaojie on Unsplash

When the EVER GIVEN wedged itself across the Suez Canal in March 2021 it was easy to see how this would disrupt delivery of goods across the world. Billions of dollars worth of global trade were halted each day as the mammoth container ship created a bridge blocking the busy trade route for six days.

Some disruptions to supply are not so easy to identify. Let’s explore how counterfeiting and cyber attacks create vulnerabilities that can effect the supply of everyday goods and services that we all depend on.

Fakes and Phonies

Some people are happy to purchase cheap knock-offs of designer brands while others prefer to stay true to authentic products. Some might not even know that the item they are purchasing isn’t genuine.

Irrespective of individual choice, the prevalence in availability of counterfeit goods has a ripple effect on supply chains. By diverting trade away from genuine products an incentive structure rewarding the production of fake goods is reinforced.

Photo by Christian Wiediger on Unsplash

Two weeks ago Amazon announced that in 2020 it had spent $700 million USD and allocated 10,000 staff to its effort to tackle counterfeiting on its platform.

Amazon’s efforts are to be acknowledged but they are a belated recognition that for decades its platform’s operating model created a thriving breeding ground for counterfeit products and dubious merchants. Imagine the number of authentic merchants whose businesses were damaged by rampant counterfeiting.

Producers Under Ransom from Cyber Attacks

A week ago, JBS — one of the world’s largest meat processors — had operations in three continents disrupted due to cyber security incursions. Its data model and security policy left it open to cyber security attack.

Photo by Bermix Studio on Unsplash

Centralized data systems are a honeypot by design; and create single points of failure and vulnerability. When these systems are employed in high value businesses it’s not a matter of if, but when, these systems will be attacked.

The attackers utilized ransomware for their attack. After several days of disruption to production in North America and Australia, JBS yielded and paid the $11m ransom.

No doubt the JBS teams and vendors are working tirelessly to apply one band-aid after another to patch up their compromised centralized systems. It is not clear whether or not the hackers demanded payment of ransom in Bitcoin, but it is ironic that the very tools that hackers tend to utilize are perfect to protect against this type of attack.

How do we build more resilient supply chains?

The problems experienced by Amazon and JBS are symptomatic of supply chain information systems and operating models that are now failing humanity.

Communities deserve better than systems where counterfeiting is incentivized, or disruption to the dependable flow of critical goods and services is a distinct reality due to obsolete design.

Tackling Counterfeiting with Credentialed Marketplace and Supply Chain Transparency

Counterfeiting must be tackled at its root. That’s what Smart Trade Networks is doing. We have designed and deployed blockchain-based social consensus systems that mitigate counterfeiting risk all the way through supply chains. Rather than embed systems where consumers just take the word of the e-commerce platform, we prefer systems that demand accountability from all actors throughout the supply chain.

Our Multisig data validation protocols introduce what philosopher Julian Baggini describes as a three step process of truth triage.

Whenever a new supply chain event or measurement update is required, relevant supply change agents must ‘sign the data in’ via a Multisig. No single actor, without oversight from others, can enforce claims onto the blockchain. By ensuring that the data is not only transparent but that the data signers are also transparent to the community at large, we have in effect introduced reputation value into the data update and validation process. This is what we mean when we say ‘social consensus’.

Authenticity is about the credence claims made about products and processes by agents. When agents are continually inviting accountability to the community at large, we create stronger cumulative guarantees about product authenticity.

Products that are credentialed at each step via a Multisig social consensus mechanism can be listed on the STN Credentialed Marketplace. Products on this marketplace can only be there when they are tracked via STN technologies. Future developments will enable cross-chain credentialed products to be listed on the STN Credentialed Marketplace.

Decentralised Nodes are the Answer

As for the JBS-type problem, the sooner critical supply chains move away from information systems with single points of failure and honeypot-like attack vectors the safer we will all be. The JBS episode disrupted upstream and downstream markets, and also saw employees out of wages.

Decentralized data systems in which all supply chain actors can play a constructive part in data integrity enable all actors to contribute to and benefit from information integrity.

The Smart Trade Networks proof of authority blockchain network enables all actors to contribute to information integrity at modest cost. You don’t need specialized hardware or complex set-ups to be a data archive node. Indeed, at STN we have enabled nodes on refurbished desktops and Raspberry Pi 4s. Workers can run nodes and be paid by JBS for doing so. The same goes for upstream producers and downstream agents like butcher stores, restaurants and transporters. In fact, anyone in the community can run an archive node. This way we all become agents of truth.




​Smart Trade Networks is a general-purpose technology platform, utilising blockchain technologies, that harnesses a diverse range of product provenance information as a basis of improved payments and confidence amongst supply chain participants.

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