The Alchemy of SDN and Blockchain: Pure Gold for Secure Supply Chain Extranets


JUNE 2019

By: Matt Goggin

Industries are exchanging data more than ever before, whether that data is associated with digital transactions (trading securities, processing credit card transactions, settling insurance claims) or physical logistics (buying products, shipping parts, managing fleets of vehicles).

The rising adoption of the IoT and Industrial IoT is fueling growth of connected and autonomous systems, which is adding to the massive volume of data sharing platforms, and for all the right reasons: cost savings across entire supply chains, and support of innovative new services that improve the competitiveness of businesses serving an increasingly demanding “now generation.”

Amazon’s blazing success in the e-commerce space is one of the most stunning examples of how dramatically logistics can impact how consumers discover, buy and re-order products, get them faster, get them cheaper, rate them and more. While behind the scenes at Amazon, the automation of everything from inventory to warehouses to trucking to tracking and tracing every move is orchestrated between many different suppliers and shippers.

Amazon’s acquisition of Whole Foods Market ups their game in that Amazon now is in the business of “fresh” – and that includes ensuring the ice cream stays frozen while getting a $100 grocery order placed at 7 AM to the consumer’s porch by 9 AM. This next level of on-demand convenience is only one example of defining then meeting higher and higher expectations, impacting billions of people’s lives in very positive ways.

The sophisticated supply chains that are not as apparent as the Amazon B-2-C example are literally everywhere today, with industries able to exchange data and therefore track, trace, validate, clear and settle transactions 24/7/365, and doing so (as Amazon has done so) leveraging the Internet for data transmission and connection of disparate systems.

The attack surface created when multiple businesses, using various applications, tapping into multiple clouds, has grown exponentially, and there is no end in sight given supply chains’ dependence on the public Internet. Extranets, which began at the dawn of the Internet when organizations like DARPA started their research and applications to create controlled private networks enabling US government agencies to exchange data securely, allow customers, partners, vendors, suppliers, and other businesses to gain information without granting access to the organization’s entire network. Early extranets were made available to authorized individuals through user IDs, passwords, and other authentication mechanisms via login web pages.

Institutional electronic trading (on traditional exchanges in the 1980s and 1990s) drove massive innovation and investment in extranets mapped onto private circuit-based point-to-point networks, but it was electronic trading by individual investors that drove extranets (for example, E-Trade) which were mapped onto the public Internet and connected to institutional exchange extranets where retail orders were sent for “best execution” by professional broker-dealers.

These early extranet applications – which were wildly successful – inspired the Internet “bubble” at the turn of the century, creating massive value through the disruption of every industry, most notably the music, entertainment and news industries, retail, banking, insurance, and healthcare.

Extranets changed everything, and today are making magic possible as entire cities are connected and cars are driving themselves, and collaboration among industry participants continues to grow driving massive concerns about not just digital but physical safety.

In this context, effective Supply Chain Management is a mission-critical factor, and effective Supply Chain Management is only sustainable when the networks connecting multiple entities are secure, beyond what we thought security meant when extranets began.

An extranet requires security and privacy, which in the past has meant expensive and complex infrastructure, including Firewall server management, user authentication, encryption of messages, and the use of virtual private network (VPNs) that tunnel through the public Internet, with a means to make access available to all participants, both humans and machines.

Today, Software-Defined Networking (SDN) is eliminating expenses associated with physical infrastructure, through “programmability” made possible by SDN technologies like Dispersive Virtual Networks (DVN).

The Alchemy of SDN and Blockchain: Pure Gold

The huge advances made possible through ultra-secure Software-Defined Networks supporting Supply Chain Management extranets are driving adoption, which creates more security challenges. These challenges are based in the volume and variations across connected systems – mission-critical systems (like the energy grid) – which is where our integration with blockchain solutions is solving for data integrity and security at every layer of the telecom and computing stacks.

Blockchain, which is a distributed, digital ledger, has many applications and can be used for any exchange, commercial agreements, legal contracts, tracking, transparency, and payment. Since every transaction is recorded on a block and across multiple copies of the ledger that are distributed over many computers (or nodes), it is highly transparent and secure since every block links to the one before it and after it.

There is no central authority over the blockchain, and it’s extremely efficient and scalable, with early blockchains already increasing the efficiency and transparency of supply chains improving everything from warehousing to delivery to payment. Chain of command is essential for many things, and blockchain has the “chain of command” built in.

Blockchain provides consensus because all entities on the chain have the same version of the ledger. Everyone on the blockchain can see the chain of ownership for an asset on the blockchain. Records on the blockchain cannot be erased – which is essential for a transparent supply chain.

But blockchain networks are only as secure as the transmission of the data provides for, and blockchains are not inherently safe unless the transactions can be completed on a fully secure, private network – permissioned to allow only the appropriate extranet participants (be they automated machines or credentialed humans).

We believe the next generation of extranets will drive even more efficiencies and support even greater innovation in supply chain technologies and economics when SDN is combined with Permissioned Blockchains. With both leveraging the most resilient network in the world (the Internet) while controlling and validating private data exchange and collaborative computing, with an immutable record of every event, resulting in everything from audits to compliance becoming more automated and less onerous.

Digital information can flow more smoothly and securely, even as physical goods, including that pint of ice cream ordered from Whole Foods can arrive on time and still frozen, validated and recorded, convenient and delicious for the consumer, competitive and profitable throughout the chain.

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