Secure Supply-Chain Collaboration: A New Technology for Supply-Chain Management1

One of the major sources of inefficiency in managing supply chains is information asymmetry; i.e., information known by one or more links in the chain (e.g., a retailer) is not known by other links (e.g., the manufacturer) . Information asymmetry is known to create inefficiencies in managing supply chains, among them underinvestment in capacity, leading to shortages, misallocation of inventory, transportation, increased prices, and reduced customer service. There are several causes of information asymmetry, among them fear that a supply-chain partner will take advantage of private information, that information will leak to a competitor, fear of espionage, hacking, etc. This paper will introduce and illustrate the use of “secure multi-party protocols” in managing supply chains. These protocols, which we label “secure supply-chain collaboration protocols”, enable supply-chain partners to cooperatively achieve desired mutually agreed-upon goals without revealing the private information of any of the parties, even though the jointly-computed decisions require the information of all the parties. Although, at first sight, SSCC protocols may seem impossible, there are known general theoretical results in computer science that have established the existence of protocols for such so-called “secure multiparty computation problems”. Unfortunately, such general protocols are impractical, and the supply-chain interactions framework is very different from what is found in the multi-party computation literature. Practical secure multiparty techniques do exist in other areas (e.g., information retrieval, electronic voting, scientific computing, approximate matching). We are developing and providing such protocols to manage supply chains. 1 This work is supported in part by the e-Enterprise Center at Discovery Park, Purdue University and by the National Science Foundation Grant IIS-0325345