Recently, blockchain and supply chains have been extremely popular.
Some believe that blockchain, along with artificial intelligence and big data, is one of the three pillars of financial technology, and that blockchain may become the “Internet” of the next decade.
A McKinsey research report shows that transforming operations through supply chains can increase China’s labor productivity by over 15%; by developing global supply chains to enhance competitiveness, productivity can rise by an additional 10% or more.
What exactly are blockchain, supply chains, and the Internet of Things? We specifically consulted a world-renowned expert, Professor Liu Yunhao, former Dean of the Software College at Tsinghua University and current Chair of the Computer Science Department at Michigan State University.
You may know that this academic star is incredibly talented; many say “his life is simply a cheat code for success.”
He has written novels, started companies, obtained a Bachelor’s degree in Engineering from Tsinghua University’s Department of Automation, and a Master’s degree from the Beijing Foreign Studies University. Before turning 30, he became the youngest director in the Ministry of Posts and Telecommunications, and at the age of 30, he decided to study abroad at Michigan State University, where he obtained a Master’s and Doctorate in Computer Science in just over three years.
After teaching at the Hong Kong University of Science and Technology for several years, he returned to Tsinghua University as a professor, was elected as an IEEE Fellow and ACM Fellow, and was selected as one of the first Young Thousand Talents, National Distinguished Young Scholars, and Changjiang Scholars in the same year. In 2011, he received the National Natural Science Second Prize as the primary contributor. He is one of the first scholars in China to formally define the Internet of Things and later became the Dean of the Software College at Tsinghua University and the Editor-in-Chief of ACM Transactions on Sensor Networks. Now he also serves as the Chair of the Computer Science Department at Michigan State University, which has the world’s top supply chain management program.
Recently, Liu Yunhao has “done something big”; Tsinghua University has partnered with retail giant Yonghui Supermarket Co., Ltd. to invest heavily in establishing the “Tsinghua University-Yonghui Smart Supply Chain Management Joint Research Institute,” where he serves as the director.
Articles online about blockchain and supply chains can be confusing, making it harder to understand. Therefore, Zhuangjian (ID: penetratingview) specifically consulted Professor Liu Yunhao. His answers were in-depth, professional, and engaging, without misleading concepts or empty slogans. After reading the entire article, I felt enlightened; this is truly the best article to understand blockchain, the Internet of Things, and smart supply chains!
01
What is the essence of blockchain?
Liu Yunhao: At its core, blockchain is a reliable distributed data recording tool that packages growing data over time into blocks, linking all blocks in chronological order to form a chain.
For example, blockchain is like a train, where each train car stores goods, similar to how each block stores data, connecting all cars to form a train, just as all blocks connect to form a chain. However, due to the clever and unique design of blockchain, the content of newly generated blocks is influenced by all previous blocks, making even the slightest tampering of previous blocks detectable, thus contributing to the anti-tampering and reliability features of blockchain.
The consensus rules derived from blockchain allow it to be applied in distributed systems, promoting the decentralized characteristics of blockchain.
02
In simple terms, what is the Internet of Things?
Liu Yunhao: From the early days of SMS and voice calls to today’s images, videos, video calls, and online games, we have completed interconnectivity between people with the popularization of smartphones. The instantaneous transmission of any form of data between people has become very simple.
So, has network communication developed to this point enough? Has it reached its peak? Obviously not.
Humanity’s persistent pursuit of science and technology and quality of life will not stop here. Demand will continue to arise, and technology has not yet reached its ceiling. Historically, network connections have primarily targeted people, striving to connect individuals.
Now that people are connected, can we connect all things in the world? That is the Internet of Things, which aims to utilize embedded technology and wireless sensing technology to directly or indirectly connect everything in the world, giving them a status equal to that of humans in the network, ultimately realizing the beautiful vision of “all things connected and thriving together.”
03
Where in our daily lives do we see applications of the Internet of Things?
Liu Yunhao: Through the Internet of Things, we can centrally manage and control machines, devices, and personnel, as well as search for the location, status, and information of people and objects, while also aggregating minute data into big data.
IoT technology can empower many fields, granting capabilities of networking and intelligence, such as smart buildings, smart cities, smart logistics, environmental monitoring, and supply chains.
Imagine, if all cars were connected, they could coordinate paths, distances, and speeds, eliminating traffic accidents and bringing us closer to autonomous driving.
If all home appliances were connected, allowing for remote control, we could turn on the air conditioning and water heater before arriving home, and if we forgot to turn off the lights, we could do so remotely, even checking security information from afar. Wouldn’t that be more convenient and secure?
The Internet of Things provides a way for all real objects to communicate with each other, and utilizing these pathways will bring significant changes to our society.
We are currently in and will long remain in an era of interconnectedness, with an unprecedented scale of networked devices.
According to telecommunications giant Cisco, by 2015, over 15 billion products were connected to the internet globally; by 2020, this number is expected to reach at least 30 billion. We are living in an unprecedented era, with ubiquitous devices and constant connectivity generating immeasurable data and containing unparalleled value. Just connecting most of the world’s devices to the internet requires a bit of imagination. If we also consider data and services as networked objects, the situation likely exceeds imagination! Although it may seem beyond belief, it is not unrealistic. The Internet of Things is turning these imaginations into the reality of the future world.
04
What innovative applications does blockchain technology have in the field of IoT?
Liu Yunhao: As for the applications of blockchain technology in the IoT field, they are determined by the aforementioned characteristics of blockchain, such as anti-tampering and decentralization.
The Internet of Things can leverage the advantages of blockchain technology to achieve reliable and secure encrypted transmission and storage of data, detect and recover from data tampering; on the other hand, it can give rise to new distributed computing and collective intelligence sensing technologies, facilitating the coordinated operation of IoT nodes, and implementing data permission and privacy management.
05
What is supply chain management? Why is the level and efficiency of supply chain management increasingly important for businesses?
Liu Yunhao: In our society, the clothing industry is one of the oldest trades. There is a well-known clothing brand in Spain called ZARA (many people have probably bought their jeans), which in recent years has significantly improved its market response speed by over ten times through a management method called “flexible supply chain,” greatly increasing profits and surpassing competing brands.
From a more formal perspective, as the core control of logistics, commerce, information flow, and capital flow, supply chain management spans the entire process of modern enterprises from procuring raw materials to producing intermediate products, deploying sales networks, and ultimately delivering products to consumers, while constructing the overall functional network structure from suppliers, manufacturers, distributors, retailers to end-users.
In today’s increasingly fierce economic globalization, business competition has gradually shifted from company-to-company competition to supply chain-to-supply chain competition, with the intelligence level and automation efficiency of supply chain management becoming one of the decisive factors for achieving business success.
Currently, IBM, a leader in smart supply chain management, has established a transparent, collaborative, and highly predictive supply chain management system based on its Watson AI system, serving many global enterprises; additionally, domestic companies like JD.com, Alibaba, and Kingdee have deployed supply chain clouds to empower traditional enterprises in upgrading, enhancing R&D, and improving market efficiency.
06
What lessons can non-retail companies learn from smart supply chain management?
Liu Yunhao: Let me give you an example to clarify; everyone uses smartphones now. Have you noticed a few features? The price of smartphones is much cheaper now than it was twenty years ago (when I saved for months to buy my first phone). Aside from technological changes, the high degree of industrialization and the continuous improvement of the smartphone manufacturing supply chain is one of the important reasons.
Similarly, why do different smartphones have such a large price difference? Excluding competitive factors, a significant cost difference lies in the differences in their supply chains. We often hear in the news that a certain smartphone’s supply chain has issues. In fact, anyone interested can learn about the supply chains of common products; what you see as cheap may not necessarily be a “bloodbath sale,” and what you see as expensive may not necessarily be “worth the price.” You will find it is a particularly complex and interesting matter.
The person selling egg pancakes at the gate of Tsinghua University understands supply chains very well, knowing where the flour is cheapest, which supermarket has the most discounts, and what can be stored for how long, and when to stock up.
In today’s market economy, in fact, no enterprise survives outside of the supply chain, even if it is not a retail enterprise like Yonghui. Non-retail enterprises directly involved in the supply chain include raw material suppliers, product designers, equipment manufacturers, and integrators. Although they do not directly face end consumers, they must always pay attention to the entire supply chain to adjust strategies, allocate resources in advance, and implement supply-side reforms. Indirectly involved non-retail enterprises include financial investment institutions, platform-building agencies, marketing institutions, etc. Although they do not directly participate in the specific process of goods circulation, their profitability is closely dependent on the development status of relevant physical commodity enterprises (industries), and a profound understanding of supply chain management can effectively enhance their capital operations, structural adjustments, and resource allocation efficiency and effectiveness.
07
What is the significance of supply chain management in promoting Industry 4.0?
Liu Yunhao: When it comes to Industry 4.0, most people think of robots; indeed, they have developed rapidly in recent years. Recently, there was a video online from Boston Dynamics showing robots that can walk, run, carry things, and even collaborate and open doors for each other.
▽ Robot company Boston Dynamics released a video
What many may not realize is that these intelligent robots are also closely related to supply chain management—feel free to search online for information about Boston Dynamics; the components of their robots come from various suppliers, and Boston Dynamics is essentially the final assembler.
Industry 4.0, also known as the fourth industrial revolution, aims to utilize cyber-physical systems to digitize and intelligently manage supply, manufacturing, and sales data in product production, transforming production models from centralized control to decentralized enhanced control, thus achieving rapid, effective, and personalized product supply. In the global context of Industry 4.0, effective supply chain management can significantly optimize and enhance the monitoring of production and manufacturing, tracking of goods distribution, collection of heterogeneous data, processing of multi-dimensional information, and extraction of business intelligence, meeting the high demands for economic efficiency, scalability, reliability, and real-time response in product production, allowing enterprises to interactively develop and produce based on precise consumer demand, ultimately realizing a comprehensive intelligent transformation of the national economy.
08
Recently, Tsinghua University partnered with retail giant Yonghui Supermarket Co., Ltd. to invest heavily in establishing the “Tsinghua University-Yonghui Smart Supply Chain Management Joint Research Institute.” As the director of this institute, can you explain the main purpose of its establishment?
Liu Yunhao: During the recent Spring Festival holiday, we saw explosive growth in the tourism market and movie box office across the country, achieving increases of 10% to even over 60%. This actually reflects the broader trend of “consumption upgrade” leading to “industrial upgrade” in our current economic landscape.
From an industrial perspective, the supply chain is the essential structure and infrastructure of commodity society. In recent years, with the increasingly popular economic globalization and the national strategic supply-side reform, supply chain management has shown a significant and urgent trend towards intelligence. At the same time, we can easily observe from the recent developments of domestic and international companies like Amazon and Alibaba that intelligent supply chain management empowered by cutting-edge technologies such as IoT, cloud computing, and artificial intelligence has become a battleground for enterprises amidst this dual rise.
Since intelligent supply chain management relies on a series of cutting-edge technologies such as IoT, cloud computing, big data, and artificial intelligence, Tsinghua University (Institute of Trustworthy Networks and Systems) has rich academic achievements and long-term research accumulation in these technological directions. Together with Yonghui Group’s extensive data collection and practical experience in retail supply chain management, they jointly established the Tsinghua University-Yonghui Smart Supply Chain Management Joint Research Institute.
Specifically, the main purposes of establishing the joint research institute are threefold:
First, to create a favorable research environment for researchers in related fields such as IoT and artificial intelligence, conducting R&D on cutting-edge technologies in smart supply chain management, aiming to produce world-class research results;
Second, to cultivate interdisciplinary talents in the new field of smart supply chain management, supporting students interested in related technologies to enter the research institute for study, laying a solid foundation for their future work in technological innovation and entrepreneurship;
Third, as a joint platform for Tsinghua University and Yonghui, the joint research institute will actively expand cooperation with world-class universities and continuously deepen the transformation of academic achievements, leveraging the platform advantages of leading companies like Yonghui to accelerate the implementation of results, aiming to drive the transformation of the “new retail” industry and supply chain sector.
The editor’s note: The establishment of a research institute through the collaboration of top universities and leading enterprises is a great joy for both academia and industry. We believe that the establishment of the institute will bring new opportunities for deepening supply-side reforms and driving the transformation and upgrading of China’s industries!
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