Blockchain and automation help remove the bottleneck process of supply chain management

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 SDK or the representational state transfer web service to communicate with the Hyperledger Fabric network. The organizations that participate in the development of the Hyperledger Fabric network are known as the members. Each member organization in the blockchain network is able to set up its peers to participate in the network. All peer needs are configured with appropriate cryptographic material such as CA and other data. Chaincode will be updated 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 stakeholders’ peers – for example, when goods or services are fully delivered, a completed work will be issued. This will be on the blockchain network and will be transparent to all stakeholders, so when the invoice is presented, the confirmation will automatically be confirmed and payment will be made.

Procurement data such as Invitation to Tender (ITT), Request for Proposal (RFP), Request for Quotation (RFQ), Contract Award, Work Completion Certificate (WCC) and Invoice will be distributed evenly among the nodes at the same time, making it impossible for cyber invasion on all nodes simultaneously.

Blockchain has been identified across the industry as the next level in SCM operations due to transparency, efficiency, data security, reduced costs, traceability, smart contracts and unbroken chain of transaction history. Blockchain implementation will further enable a single audit trail, automated and transparent issuance of ITT/RFP/RFQ to suppliers, end-to-end SCM automation with secure data and a quality reporting system. Blockchain technology can also improve supply chain labor efficiency and hydrocarbon production.

The article identifies the following issues and challenges that the oil and gas industry faces in SCM:

• Lack of an end-to-end automated process
• Unnecessary time spent on inquiry and strategy to choose due to the disjointed systems in SCM
• Manual issuance of ITT/RFP/RFQ one after the other
• No structured supplier database; lack of reliable supplier’s (contractor’s) assessment register
• The current system’s vulnerability to cyber attacks
• Poor reporting
• Difficulty reeling in necessary information
• Troubled audit trail
• Lack of transparency
• Data loss and data inconsistency

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Find paper SPE 202945 on OnePetro here.