JD.com, IBM and Stanford jointly discuss innovative applications of blockchain and supply chain

When users get the fresh products they choose, they can scan the code to trace the real information of the entire process, including its origin, procurement, processing, storage and transportation, and this information cannot be tampered with, so consumers can eat with peace of mind; when users buy diamond jewelry, they can understand its complete records from production, logistics, stores and even customs through the built-in NFC chip. Due to the absolute uniqueness of the identity, any illegal trading activities or fraudulent acts will be detected...

This is a set of blockchain technology application scenarios described by JD.com.

With the rapid advancement of economic globalization, JD.com will expand its market in an increasingly large range. Supply chains often feature multiple entities, multiple regions, long time spans, and a large amount of interactive collaboration. All kinds of information generated during the operation of the entire supply chain are discretely stored in the respective systems of upstream and downstream companies. The information flow lacks transparency and is easily tampered with. The authenticity, validity, and privacy security of data have become increasingly urgent issues. Blockchain technology is expected to completely solve the above problems in a low-cost and efficient manner.

Recently, at a special event organized by JD.com's Y Division, the heads of JD.com's R&D, supply chain management and operations departments had in-depth exchanges and sharing with blockchain experts from IBM China Research Institute and Stanford Consulting Team on the characteristics of blockchain technology, R&D experience and application experience, and jointly discussed the feasibility of blockchain technology innovation and implementation in JD.com's supply chain field.

Blockchain refers to a technical solution that collectively maintains a reliable database in a decentralized and trustless manner, with features such as data immutability, transaction traceability, low cost, high efficiency, and high security. Like artificial intelligence technology, blockchain is considered to be one of the important emerging technologies leading the future. It is still in its early stages of development, and many leading IT Internet companies have actively invested in the research and promotion of blockchain technology. JD.com, combined with its unique retail supply chain advantages, has actively carried out a series of internal pre-research and exploration work, built a wealth of application scenarios and accumulated profound R&D experience, which has been fully recognized by blockchain experts from IBM and Stanford.

The data immutability and timestamp existence proof characteristics of blockchain can be well applied to supply chain traceability and anti-counterfeiting. For example, blockchain technology can be used to authenticate diamond identities and record the circulation process - by cooperating with luxury goods manufacturers or dealers, a unique electronic identity can be established for each diamond to record the properties of each diamond and store it in the blockchain. Whether it is the source of the diamond, the circulation history, ownership or location, it will be faithfully recorded in the chain, and any illegal trading activities or fraudulent counterfeiting will be detected. In addition, blockchain technology can also be used for traceability and anti-counterfeiting of fresh food, medicines, artworks, etc.

Automated smart contracts based on blockchain can digitize the contract terms between JD.com and suppliers or distributors, making them programs that computers can understand and automatically execute after the agreed conditions are met. This can easily realize automatic payment of goods, deduction of fines, and other tasks that originally required a lot of manual verification and even repeated discussions, greatly saving labor efficiency, shortening payment cycles, improving accuracy, and avoiding violations. At the same time, because blockchain has an unalterable, traceable, and cryptographically based public and private key security system, the transaction parties do not have to worry about the transaction records being maliciously tampered with, unable to be queried, or disclosed to unrelated third parties.

Zhang Cuifang, Director of Retail Market Development for IBM Greater China, said:

"In October this year, IBM took the lead in cooperating with Tsinghua University and Walmart to carry out pork traceability in the supply chain, and has made some progress. As China's largest self-operated e-commerce company, it can be foreseen that blockchain has huge application potential in JD.com. IBM has been committed to establishing a number of blockchain cooperations and recently officially released the "Blockchain Ecosystem" for any blockchain application developer. We look forward to working with industry partners to accelerate the application of blockchain in various industries and life."

The Stanford advisory team includes many supply chain experts and blockchain technology experts from Stanford University, University of Michigan, University of Washington, Fudan University, Shanghai Jiaotong University, Shanghai University of Finance and Economics, etc. The team representative, Chief Scientist of Shanshu Technology Ge Dongdong, said:

“The low-frequency and high-value transaction characteristics of the logistics supply chain make it one of the most suitable application scenarios for blockchain technology. Through smart contracts, the synchronization of commodity flow and capital flow can be achieved.”

(Photo: Yu Yongli, Vice President of JD.com)

"In the future, JD.com will explore in-depth ways to cooperate with blockchain application companies and research institutions such as IBM and Stanford, give full play to their respective resource advantages, jointly promote the commercial application of blockchain technology in the retail supply chain, and carry out beneficial exploration and attempts in supply chain traceability and anti-counterfeiting, automated smart contracts, order fulfillment tracking, etc., to create a more real, secure and efficient retail smart supply chain." Yu Yongli, vice president of JD.com Group and head of Y Business Unit, said.