MIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written permission. http://dspace.mit.edu/handle/1721.1/7582
Blockchain is a distributed ledger technology that records exchanges of value between parties securely, permanently, and in an easily verifiable manner. It is the technology underlying cryptocurrencies such as Bitcoin and Ethereum. Although initially used for financial transactions, blockchain's applications extend beyond finance and can impact a wide variety of industries. One such application is in supply chain management. With multiple stakeholders and business transactions, supply chains are inherently complex. Many challenges exist, including the lack of transparency and traceability, difficulty in managing risks and disruptions, and the need to build trust and reputation. Blockchain technology ushers in the potential to solve these challenges through the use of smart contracts. Smart contracts are digital agreements between transacting parties that are written in computer code and deployed to the blockchain, where they will self-execute when predetermined conditions are met. They reduce complexity in a supply chain through automated verification and execution of the multiple business transactions involved. A decentralized, immutable record also ensures all stakeholders have equal access to information and helps build trust. Smart contracts improve the transparency, traceability and efficiency of a supply chain, allowing it to be more agile while strengthening relationships among stakeholders. In this thesis, I create a proof-of-concept to explore the application of smart contracts in supply chain management. The proof-of-concept consists of three smart contracts, coded in Solidity, that can be integrated to determine the provenance of goods, track the chain of custody as goods flow through a supply chain, automatically execute payment upon fulfillment of criteria, and maintain an open database of stakeholders with a score indicating their reputation. I validate the proof-of-concept using the Ethereum platform, which was specially conceived for smart contract and decentralized application development. Preliminary testing shows that the contracts are able to interact with one another and execute their functions as intended. Further testing is necessary to evaluate the performance of the contracts on the live Ethereum network, and integration with smart sensors should be explored to create a more viable real-world solution.
Thesis: S.M. in Engineering and Management, Massachusetts Institute of Technology, System Design and Management Program, 2017.
