Blockchain in Supply Chain — Promise and Reality
The Promise of Blockchain for Supply Chain Management
Article by Josefina Samvelyan & Ralf Kubli
Supply chain management is responsible for designing, planning, execution, control and monitoring of supply chain activities. Imagine doing all of these processes for billions of different products, tracking them and making sure every step was executed correctly and recorded.
Let’s break it down to what is the day to day process of supply chain management: In order for a product to have its final form whether it’s a car, a yoghurt, a tool or a chicken it changes many hands, from a farmer growing produce, or a manufacturer assembling the product until it’s in a supermarket or a parking garage.
Blockchain applications promise to bring dramatic improvements to operational and reputational solutions in supply chain management. One area attracting many players is track and trace. In an ideal world, manufacturers and consumers are able to track all constituents and ingredients of an item back to its origins, be this a farm, a mine, or a processing plant. In addition to knowing where something came from and what it is made it up of, we expect that such technologies will allow manufacturers and brands to interact in novel ways with consumers.
In an ideal world, manufacturers and consumers are able to track all constituents and ingredients of an item back to its origins.
Blockchains promise a universal data and trust layer which can be securely used and relied upon by authorized participants in a private environment, i.e. permissioned chain, or by anyone in a public chain.
With the hype around blockchain, companies and consumers have heard many high flying ideas and concepts. Manufacturers hope to trace all parts from original equipment manufacturers, in order to avoid fakes and parts that do not meet specifications. Food producers and supermarkets want to track origins of foodstuff to be able to recall only specific batches of food in case of contamination. Clothing manufacturers want to eliminate child and slave labor. Commodity traders want to track materials to prove sustainably sourced and conflict free materials. Thanks to blockchain technology, companies will be able to trace all shipments, authenticate transactions, and check data accuracy in a fast and efficient manner.
Empty Promises or Reality?
Now all these revolutionary opportunities and promises sound really amazing but do they actually work? We hear a lot of big names as well as startups talking about what they can do. Here we have identified those few companies who have not only tried but actually succeeded in implementing blockchain technology in supply chains with promising results.
When you buy a pack of coffee from Cambio, a direct trade organic coffee company, you can easily scan the secure scantrust label with a smartphone and see the journey from the harvest in Peru to roasting in Shanghai till the delivery to your home. This transparency is possible through Scantrust, a blockchain company originating in Switzerland that uses open source technology to serve its clients for easy documentation of their goods. The process is possible by giving each product a unique digital identity in the cloud and tracing every step.
2. Smart Containers
Smart Containers Group is a Swiss-based high-tech company that ensures the safe transfer of sensitive goods, such as pharmaceuticals and food with temperature controlled containers. The unique process is feasible through the combination of cutting edge blockchain technology with highly efficient software and hardware systems. The services are called Sky Cell for pharma and Food Guardians.
Provenance.org is a small tech start-up from the UK that offers track and trace services and has successfully on-boarded clients from a variety of industries: from produce and fish to fashion. One of its clients, UK’s largest consumer co-operative, The Co-op wanted to bring more transparency to its brand. Through blockchain, it increased trust with its customers and also connected all the other parties involved in the supply chain. Co-op also tackled problems of sustainability and slavery by tracking the supply chain across various markets.
We.trade? is one of the first blockchain-based trading platforms that has found a solution for SME’s who want to manage, protect and track open account trade transactions between one another. We.trade joined forces with the largest banks of Switzerland and around the world including UBS, Deutsche Bank, HSBC and seven others.The platform is now available in 13 countries all across Europe, including Switzerland and UK. Through blockchain We.trade brings more trust and transparency within the trade process by identifying and tracking each step and all the parties involved in the transaction.
5. Louis Dreyfus Co.
Louis Dreyfus Company (LDC) , one of the world’s largest food traders, and Dutch and French banks made the first ever blockchain-based commodity trade in agriculture by selling U.S. cargo of soybeans to a retailer based in China. The new process cut cost and also reduced documentation and transaction time significantly.
It is estimated that nearly 30,000 bottles of illegitimate wine are sold every hour in China. This is an issue that OriginTrail and TagItSmart tackled. OriginTrail is an IT solution provider, with awards from Walmart, Oracle and others for solving problems within the supply chain management industry through Blockchain. They now have clients from various industries such as life science, consumer products, food, logistics and more.
Slavefreetrade believes in human rights and a slave free work environments. Even though there are many such organisations, this one is unique for its combination of knowledge for the problem and use of modern technology as a solution. Slavefreetrade.org took time to discern the contemporary nature of slavery and labour problems and what it means to have a decent work life in order to pinpoint the problem at its core. Through their platform, organisations and individuals have the means to discover, map, assess and monitor the workplace within the supply chain.
Counterfeiting has been reaching an estimated value of $917 billion a year for illegal trade in the goods sector alone. But fake products are not only hurting our economy but also our health. Counterfeiting is a widespread problem in China and is especially prevalent among imported goods. In order to solve this problem Tael, a blockchain-based company offers a track and trace through a sealed and protected unique NFC (Near Field Communication) located on each product which serves as a blockchain based anti-counterfeiting.You can touch the Techrock label and see where the product originated and thus verifying its authenticity.
The companies deploying Tael, focus on infant nutrition, supplements and cosmetics. Its partners include Nestle, Rakuten, and Nature’s Care.
What is next for your industry?
CV VC has a unique visibility in the blockchain space across corporate initiatives and viable startup companies. Due to our significant experience in building businesses with startups and advisory with corporates, we can identify the most important use cases and value-adding startups for your business.
Corporations will be dramatically impacted by emerging business models built on the new Blockchain technology stack. The time to engage with entrepreneurs enabling new business models, or start Blockchain units in a corporation, is now.
Josefina Koetter Samvelyan
Josefina recently joined the advisory team of CV VC and is focusing on research and insights that help blockchain companies grow and explore new fields of business.
Ralf Kubli is focusing on investment opportunities and advisory in the Blockchain space and is engaged in tokenizing assets, securities and ICO structuring. Ralf’s goal is to enable easy to use technology delivering on the promise of decentralization on global scale. Prior to joining Lakeside Partners (later CV VC), Ralf built the business of an artificial intelligence startup in the USA. In the legacy world, Ralf spent 18 years in the automotive, aerospace, and specialty chemicals in senior management positions. Since 2015, when he discovered blockchain and crypto through an angel investment, he cannot unsee the potential of Distributed Ledger Technologies. After browsing with Gopher and coding HTML in the early days of the web, he returned to tech with AI and Blockchain.