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supply chains have grown increasingly
more complex and they are very much
global
think about your iphone for example it's
designed in california but components
are sourced from suppliers in 43
different countries across six
continents
these parks go through their own
manufacturing processes which involve a
number of different transactions and
interactions
it's incredibly hard just to understand
the origin of where raw materials are
coming from
even in the 21st century large parts of
today's supply chains still rely on
paper-based records and as products are
shipped worldwide
the paper trail continues to grow
if you want to ship a container from
mombasa to rotterdam you end up with a
pile of paper that is 25 centimeters
high so imagine how many documents and
papers are being moved around
with paper comes inefficiencies and
digital technologies could help overcome
them
one of them blockchain is floated as a
solution that could do that securely and
efficiently
it offers a way to trace a product's
journey from grain to bottle or from
thread to shirt
brands are now starting to realize its
potential with consumers willing to pay
a premium for transparency this is
walmart's second blockchain project
target is also
pushing into the space the 50 trillion
dollar supply chain industry is moving
to blockchain
if you are drinking a cup of coffee this
morning or tonight you're gonna grab a
bottle of beer there's a very good
chance that there is a small holder
farmer in ecuador or zambia that is
growing that coffee or that park
these are some of the poorest people in
the world
and they're completely invisible
in the global supply chain
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almost everything we buy has passed
through a supply chain
these vast networks are responsible for
transforming raw materials into products
and getting them into customers hands
yet for most of us they remain hidden
the upstream parts of supply chains are
the most obscure and hardest to untangle
this is where the production begins
usually with a person that gathers the
raw ingredient a miner a fisherman or a
farmer
there is no way you can trace it back to
a mama farmer and ensure that the mother
got paid
typically what happens if i am that
smallholder farmer and i sell my coffee
cacao barley to the buying center is i
might get a paper receipt i might not
get a paper receipt because it is all
cash i'm never able to build a history
that allows me to improve my crop
because nobody trusts me
from the brand's perspective if you
really want your supply chain to be
traceable and transparent
you do need to know who the farmer is
and blockchain can do that
bitcoin started as an open source
project in 2009 and it's a blockchain
was first used to power bitcoin and it's
often mentioned in the context of
cryptocurrencies there is this
proposition that the technology
behind bitcoin is is going to take off
exponentially
it's important to keep in mind that
blockchain is not bitcoin
bitcoin is an application of blockchain
technology just like the email is an
application of the internet
the term blockchain is used to refer to
distributed ledger technology
blockchain is a decentralized digital
registry where every participant in the
network holds an exact copy of it
in the case of the supply chain it can
keep track of price or who owns what but
it can also include information about
weight geolocation and quality among
many other details
companies using digital databases can do
the same but blockchain is more
resistant to tampering because of the
sheer number of copies of the data
every time there's additional input a
new time-stamped block of data is
created encrypted and linked
chronologically in a chain
a copy of this block is then distributed
to all the devices across the network
and can be accessed via an app a qr code
or even a text message
the decentralized nature of blockchain
allows companies to reduce their risks
of data loss corruption data fraud as
essentially there isn't an intermediary
body like a government or a bank or a
third party that manages this data given
that everybody has the same information
it creates this general level of trust
amongst them that the information is
true it's validated and it's trustworthy
in the supply chain blockchain acts like
a digital twin of a physical product
most often anchoring to its qr code a
barcode or an rfid tag things that some
industries were already using to track
their assets
so what happens is when data is tracked
through these sensors and tags it's
automatically sent to a blockchain
this adds a level of operational
efficiency to supply chain operations
which saves a lot of costs for
businesses
for a while now businesses have been
trying to use various digital
technologies to optimize their supply
chains but blockchain offers an added
level of security
with standard technologies if you
digitize a trade document you can very
easily copy it a bit of leading is
actually a document that shows that
you're the owner of the goods so it's a
very very important document in
international trade and there have been
attempts to digitize bills of lading for
decades now
but the adoption rate remains very low
there were some massive fraud scandals
in asia because an electronic bill of
lading was used twice for financing with
blockchain you have the guarantee that
there is what is called no double
spending that this bill of lading cannot
be used twice for financing because it
proves the authenticity of the trade
document
so for all these reasons blockchain has
generated a lot of interest for a supply
chain management and international trade
it's really hard to say whether
blockchain has moved beyond the hype
completely um you know right now that
the sort of stage of the projects that
we're seeing are mainly at pilot stages
but what i will say is that i think
blockchain is being recognized as a as a
really important technology for supply
chains
blockchain is being used by a number of
big companies big retailers big shipping
companies
fashion industry is using blockchain
especially larger brands or really
fashion brands who want to make sure
that the products that are being sold
are not counterfeit
and now
i scan
click
and the magic happens authenticated
often when the adoption of blockchain is
led by a large company like a retailer
or a distributor they have an incentive
to really encourage small suppliers
within their supply chain to also
get on the bandwagon and adopt
blockchain technology as well
increasingly blockchain providers are
consortiums and large tech companies who
are integrating blockchain into their
existing tools for supply chain
management but there's also a large
number of startups offering custom
solutions
one of them is bank q
it has over 2 million farmers and
informal waste pickers across 51
countries registered on its blockchain
platform
where we operate like zambia uganda
sudan the farmers have a cell phone that
works via sms not a smartphone we don't
need
an internet connection for the mama
farmer
as long as you have a sim card that's
connected which is geo-located it's just
picking up the location from farmer to
co-op to truck driver truck driver to a
way bridge way bridge to the final
destination
one of bangku's clients an international
brewer abe inbev has just started
tracking the barley that ends up in beer
of their ecuadorian subsidiary
their buying centres are in remote
locations in the highlands where farmers
like milta and drango live
this area has the highest poverty levels
in the country
and the company hopes blockchain can
change that
the brewer was already using devices to
measure the weight and moisture of
barley to determine its quality and
price
bank u doesn't need any additional
technology it just taps into these
devices
app on the buyer's smartphone gathers
this data via bluetooth and only a
low-grade internet connection is needed
to send it to the cloud where it gets
added to blockchain
the smallholder farmer mama farmer or
father farmer
when they come to sell their harvest
they get an sms message on their sms
phones that confirms what was the
quality what was the quantity and what
was the price
that digital receipt on their sms phone
starts building that transparency
you're not getting rid of middlemen you
need middlemen but you can reduce
corruption dramatically
bank u doesn't use the cryptocurrency
feature of blockchain and it doesn't
handle payments it just provides farmers
with the secure code that allows them to
cash out save money for later or
transfer the sum to their bank account
if they have one
we primarily work in the developing
countries because that's where the
biggest disparity is right that's where
the biggest abuses that's where the
biggest
um
supply chains are
right i mean you know africa feeds the
world right and you know asia makes your
garments
at the end of the day the smallholder
farmer has never been given the economic
passport
this economic passport provides crucial
evidence of sales needed by farmers to
open up opportunities to borrow money at
lower interest rates
this can then be used to expand their
business
if you want to break the cycle of
poverty just
believe and use this information because
that's what banks normally do right if
you need it alone you walk in with your
work history your life bill and your
education and that's all we're doing
because all the data is on blockchain
the farmer owns it and if you don't
trust me
call the ceo of abn path and he has the
same copy of my transaction
another widely adopted feature of
blockchain is smart contracts it's
really a misnomer actually smart
contracts are not smart there's no ai
component to them and they are not
necessarily contracts in the legal sense
there are computer programs that
self-execute when certain conditions are
met for example when a truck crosses the
border payment is made
or
when a price reaches a certain level
then an indemnity is being paid
so the smart contracts can actually
be be used based to automate any type of
transaction
using parameters that have been gathered
smart contracts can also help to
automatically determine a price
safeguarding small holder producers
this is actually validating the quality
of the prop um so when you put in a
parameter the system says hey this is
out of range or this is in range and
this is the fair price that you should
get so you can game the system
we can see the origin of where a product
has come from but we can also track its
chain of custody throughout the supply
chain and we can see how it's
transformed to become the end end
product for the consumer and i think
that's really impactful not just from a
perspective of understanding costs and
materials but actually there's the
environmental factors
blockchain could help to track scope 3
emissions which are the greenhouse gases
produced along the supply chain these
account for about 90 percent of a
company's emissions
but despite its potential to increase
transparency and reduce corruption
exploitation and emissions blockchain is
not a silver bullet
from a customer's perspective just
because we can trace the provenance on
blockchain doesn't mean we get the full
story
we still know only as much as the
company decides to disclose
blockchain is only as good as the
information that is added to the
blockchain there's the famous sentence
garbage in garbage out and so having
verification systems
outside of the blockchain to ensure that
the data that is entered onto the
blockchain is of good quality is
critical but this can be complex
it can be expensive
even though blockchain is not the only
way to prove the origin or authenticity
there's increased interest by brands in
using a technology that can help to
build consumer trust
something that's increasingly important
a study by ibm showed that over 70 of
people who find traceability very
important are willing to pay a premium
to companies offering it
i think blockchain is being driven
mainly by consumers and consumer demand
for transparency that's one of the big
driving factors of blockchain right now
and so unless there's that incentive to
really provide um proof that that
products within that supply chain have
been ethically sourced sustainably
produced then um i don't think companies
are really pushing to use blockchain the
existing systems that they have can do
the job
and while this shift in our supply
chains may happen slowly it could
ultimately be lower costs rather than
increase transparency that will steer
the industries towards blockchain
and this could have an impact upstream
farmers through this sms method now have
a different experience when they're
sitting with the bank when they're
sitting with the seed company
because they're not looked at as a
number with a
piece of paper that crumbles and the
best example is you know you see this
mama farmer who all her children are in
school today they have running water in
their house right
all we have done is restored
that mother's ability to prove her
existence
all we did was make the connection she
does all the work we're just the tools
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so
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you