Blockchain Impact on Supply Chain & Logistics

1. Blockchain Impact on Supply Chain & Logistics

2. Speaker Introduction Louise Wiggett MD : Global Trade Solution

3. Blockchain Technology Introduction

4. Traditional Ledgers

5. In the Digital World There are many copies, that may contain different versions of truth

6. Brief timeline of Blockchain Technology History

7. Structure • A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively. • A blockchain database is managed autonomously using a peer-to-peer network and a distributed time-stamping server. They are authenticated by mass collaboration powered by collective self-interests.

8. Blockchain visually Illustration of a Blockchain transaction

9. Types of Blockchains • Currently, there are three types of Blockchain networks: • Public Blockchains • Private Blockchains and • Consortium Blockchains

10. Public vs Private Blockchains

11. Consortium Blockchains • A consortium Blockchain is often said to be semi-decentralized. • It, too, is permissioned but instead of a single organisation controlling it, a number of companies might each operate a node on such a network. • The administrators of a consortium chain restrict users’ reading rights as they see fit and only allow a limited set of trusted nodes to execute a consensus protocol.

12. We are only scratching the surface ..…

13. Bitcoin is a cryptocurrency, a form of electronic cash. • Bitcoin can be sent from user to user on the peer-to-peer Bitcoin network directly, without the need for intermediaries. Number of Bitcoin transactions per month

14. Ethereum • Ethereum is an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality. • While a standard contract outlines the terms of a relationship (usually one enforceable by law). • A smart contract enforces a relationship with cryptographic code.

15. Global commerce grows every day, and it seems that the modern-day payment providers aren’t keeping up in handling global transactions that occur daily. • Visa and MasterCard can only perform 24,000 transactions per second, but Ripple can perform up to 50,000 transactions per second. • Ripple is now used by more than 100 banks and credit companies across the world today • With Ripple, it is more than possible to perform cross-border payments without restrictions or glitches.

16. How does Blockchain technology fit into Supply Chain & Logistical Management?

17. Global Research : Blockchain In April 2019, two economists, Christine McDaniel, trade expert from the Mercatus Center at George Mason University, and Swedish economist Hanna C. Norberg, wrote a research paper on blockchain’s potential to facilitate a more efficient and seamless global trade, arguing blockchain can help expedite customs procedures, reduce expenses and boost both global trade volumes and economic output

18. Supply Chain Management Let’s break it down… DELIVER PLAN SOURCE RETURN ENABLE MAKE

19. PLAN

20. Plan Impact of Blockchain technology on planning Reduce risks Increase partner trust Visibility Eliminate fraud

21. Reduce risks • With increasing the number of small suppliers scattered around the world, international trade is becoming more complex. • In the US alone, it is estimated there are about 48 million food-borne illnesses of which 128,000 require hospitalisation. • To prevent outbreaks of these illnesses, regulators are increasing the requirements for tracking products through the entire supply chain to improve food safety.

22. Eliminate fraud • Multinational organisations lose five percent of revenues to fraud each year, according to a study by the Association of Certified Fraud Examiners. • Research conducted by PWC earlier this year indicated that half of all UK companies may have been affected by fraud or other economic crime in the past two years. • Blockchain combats fraud because the ledger is constantly reconciled—and can only be updated when verified by both parties or users. • And second, because Blockchain allows for permissioned networks, it could finally level up the playing ground in today’s digital environment and empower users themselves to determine what personal data and information they share, where, and with whom.

23. Source Impact of Blockchain technology on sourcing Traceability Smart contracts Reduce delays from paperwork Digital payments

24. Smart contracts • A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. • These transactions are traceable and irreversible. • The aim of smart contracts is to provide security that is superior to traditional contract law and to reduce other transaction costs associated with contracting.

25. Manufacturing Impact of Blockchain technology on manufacturing Decrease lead time Enhanced manufacturing Product testing and verification Employee productivity

26. Manufacturing • Create a ‘Blockchain Bill-of-Materials’ • Renault is experimenting with storing its vehicles data on a Blockchain-based system which would provide a single source of truth for each vehicle’s maintenance data.

27. Product testing and verification • Generally speaking, manufacturing-related data often resides in disparate systems, across multiple independent supply chain partners, in different formats. That’s a challenge. • The key to exploiting Blockchain is to use the data at the fraction of the cost of a sophisticated ERP system.

28. DELIVER

29. Deliver Impact of Blockchain technology on delivering Transportation Warehousing

30. Warehousing • Reducing reconciliation issues: • The visibility and consensus provided by Blockchain helps mitigate disputes among parties, including those related to inventory reconciliation, charges levied, service level agreements, billing and so on, thereby significantly reducing time and costs. • Documentation: • Maintaining accurate documentation for audit by customs authorities; examples: warehouse entry, storage, transfer, de-bonding, duty payment, damages, liquidation, remanufacturing, discrepancies, and abandonment.

31. Transportation • The Blockchain in Trucking Alliance, also known as BiTA, is the largest organisation in this space. • BiTA was formed because leaders in the trucking industry saw the value of Blockchain implementation into the world of trucking and logistics. • BiTA’s ultimate objective is to form and promote the adoption of Blockchain standards in the freight industry.

32. RETURN

33. Reverse logistics • Retail returns costs is estimated at roughly $15 - $22 billion annually in the US alone. • Blockchain can securely validate the products sales history and associated financial transaction resulting in the ability to quickly facilitate a return along with associated refund to the customer via the chain. • This would allow the original purchase, the refund, and any subsequent sales to be recorded against the Blockchain.

34. Practical example

35. Food industry • In the food industry, it’s imperative to have solid records to trace each product to its source. • Walmart uses Blockchain to keep track of its pork it sources from China and the Blockchain records where each piece of meat came from, processed, stored and its sell-by-date. • Unilever, Nestle, Tyson and Dole is also starting to use Blockchain technology for similar purposes.

36. Pharmaceutical Industry Blockchain-based track-and-trace system used to monitor pharmaceutical goods

37. Mining industry • BHP Billiton, the world’s largest mining firm, announced it will use Blockchain to better track and record data throughout the mining process with its vendors. • Not only will it increase efficiency internally, but it allows the company to have more effective communication with its partners.

38. Diamond trade • Diamond-giant De Beers uses Blockchain technology to track stones from the point they are minded right up to the point when they are sold to consumers. • This ensures the company avoids ‘conflict’ or ‘blood diamonds’ and assures the consumers that they are buying the genuine article.

39. Transport Innovation in Africa • Transportation is about to get a technology-driven reboot. Future transport systems will certainly be connected, data-driven and highly automated • Africa is home to seven of the 10 fastest-growing economies in the world • As trade improves on the continent, transportation in Africa is gaining a spotlight with the need for easier movement of goods, services and people across borders • China began large-scale trade activities with African Countries and made its business interests with the continent a top priority • Technologies like Blockchain will enable and drive this growth and expansion and reduce costs

40. Africa’s Drone Revolution • Africa is leading the way in terms of drone usage • The world’s first commercial drone delivery service began operations from a hill in the middle of Rwanda • Zipline, a San Francisco-based robotics company, delivers blood by drone to almost half of all • Rwanda’s blood transfusion centre's. Orders are made online, by text, phone, or WhatsApp • South African National Blood Service will shortly be using drone technology to deliver blood • Kenya’s Astral Aviation purchased two Falcon cargo drones • Astral, operates air cargo services in Sudan, Tanzania, Somalia and Rwanda, connecting to European hubs that import perishables products like flowers from East Africa

41. Number Plate Recognition • Vehicle registration plates of the Democratic Republic of the Congo have various security features to make counterfeiting difficult • For example, the background of all letters has a hologram foil labelled authentic • The DRC plates are produced by Ferrari and Gucci • The deployment of the new number plates was not withot challenges as it caused a lot of delays and uncertainty

42. Customs to Customs Connectivity Blockchain Technology is being used as the enabler • Customs to Customs Connectivity project –between South Africa and Swaziland /eSwatini (Swaziland) • This project has enabled the movement of data between the Customs authorities increasing trade facilitation and the safety aspect • It is necessary for the Customs world to adapt and use the new technologies without disrupting and hindering trade

43. Thank you