SOCIOTECHNICAL NETWORK MODELING TO QUANTITATIVELY ANALYZE THE IMPACT OF BLOCKCHAIN ON THE RISK OF PROCURING COUNTERFEIT ELECTRONICS

Abstract

This dissertation develops sociotechnical agent-based network modeling to quantitatively analyze the impact of blockchain and other related policies on the supply-chain risk associated with the procurement of counterfeit electronics in critical systems. Safety-critical, mission-critical, and infrastructure-critical systems (e.g., aerospace, transportation, defense, and power generation) are forced to source parts from a supply chain that they do not control over exceptionally long periods of time. Critical systems are exposed to the dual risks of the impacts of system failure and the exposure to the vagaries of the marketplace over decades. Therefore, critical-systems operators, manufacturers, and sustainers, must implement policies and technologies to reduce the risk of obtaining counterfeit parts. Several policies, ranging from debarment and claw back to “hop counting,” have been considered and used to mitigate such risks. One technology that critical-system operators, manufacturers, and sustainers could adopt is distributed digital ledger (i.e., blockchain) for the supply chain. This dissertation does not focus on how such a blockchain could be implemented but rather on how (and if) blockchain for the supply chain can provide value for verifying the authenticity of parts when prolonged periods of time (decades) elapse between part manufacturing and part sourcing. Additionally, during a part’s ownership changes, supply-chain actors may choose to participate in the distributed ledger based on individual incentives and can recuse themselves from such participation later. The lack of complete participation may affect the designed functionality, and the consequences of lack of participation need to be understood. Using a comprehensive supply-chain model, it can be shown that blockchain for supply chain can reduce the prevalence of counterfeit electronics in the supply chain of critical systems by up to 70%. However, such a reduction requires near complete participation by all supply-chain stakeholders, which is not likely. Due to the relatively high cost of ownership transfer on a blockchain, and the indirect cost of supply-chain information disclosure, a high participation rate is not anticipated. Although blockchain can have benefits in other aspects of supply chain, it may not be a viable solution to combat the counterfeit electronics problem.