By Pete Harris, Co-Founder and Research Principal
Read just about any ‘business and the blockchain’ feature article and supply chain is sure to be listed among key use cases. Examples of projects underway include ensuring the authenticity of diamonds, tracking tuna from catch to plate, and ensuring that life-saving pharmaceuticals are transported to hospitals quickly and are maintained in temperature-controlled environments.
The term supply chain can mean different things to different people. Some view the term as purely related to logistics, while others will extend it to the administration related to shipping of goods and financing aspects of trade. There’s also a view that aspects such as end customer eCommerce experience and payments infrastructures are part of the supply chain challenge.
Moreover, the scope of what constitutes a supply chain varies from person to person. Is the provenance of rock samples extracted to test for oil a supply chain application? There’s no doubt that those involved in the project believe it is, and yet there is no real manufacturer or customer involved. On the other hand, from a process POV, if it looks like a duck and quacks like a duck …
Moving from ideas and experiments to real life benefits is likely to be challenging. When it comes to implementing blockchain technology for supply chains then it will need to be integrated with other existing and emerging technologies – everything from traditional databases, ERP systems to IoT sensors and big data analytics.
At Chain Business Insights, we like to delve a little deeper when it comes to defining supply chains and applications for blockchain. We’re driven by marketplace needs and we want to research the real pain points. We want to find out specifically which use cases will be driving supply chain blockchain implementations in the near-to-medium-term future. You can help us. Take a few minutes to participate in our survey and give us your wisdom. As a thank you, we’ll provide you with an overview of the results when we tabulate them in early May.
By Pete Harris, Co-Founder and Research Principal
While some might think of IBM as primarily a vendor of computer hardware, most of its revenues actually come from huge software and services businesses. For some time, it has been active in the supply chain space with its analytics offerings, and more recently it has invested heavily in blockchain technology. Now, it’s begun to experiment with how blockchain can be applied to supply chain management and trade finance while also creating a robust commercial offering that global businesses can rely upon.
To first look at the technology it has built, IBM’s core blockchain offering is called simply IBM Blockchain and, at least for now, it’s being offered ‘as a service’ delivered via IBM’s Bluemix cloud platform. In this cloud model, IBM hosts the hardware and systems software and blockchain platform in its data centers, and customers pay a monthly fee to host their specific applications.
IBM Blockchain is built on top of an open source offering, called Fabric, which is administered by the Linux Foundation via its Hyperledgerproject. Fabric, which was just released as a 1.0 alpha version, includes a lot of IBM code and IBM continues to be a key developer of it, but other companies are playing an increasingly important role in making Fabric ready for mission-critical applications, supply chain management being one of them.
By Sherree DeCovny, Co-Founder and Research Principal
Palm oil is the largest vegetable oil in the world in terms of produced volume next to soybean oil. It’s mainly used in food and for cooking, but it is also used to manufacture soap, detergent, pharmaceutical products, cosmetics, biofuels and oleo products. Most of it originates in Indonesia and Malaysia, although a small amount comes from Thailand, Colombia, Honduras, Guatemala and Papua New Guinea.
The fruit is transported from the plantation to the mill, and then the crude oil is transported to the ports and shipped to refineries abroad. The EU is one of the largest importers of palm oil. In 2015, it imported 4.54 million tonnes, although volumes have been decreasing because of the gradual substitution of palm oil for other vegetable oils in foods. The Netherlands accounts for over 60% of European re-exports of palm oil, and Germany follows with 24%.
Sustainability is important because oil palms grow in ecologically vulnerable areas. Since 2004, the Roundtable on Sustainable Palm Oil (RSPO) has been collaborating with the global supply chain to transform the palm oil industry and support a transition toward 100% sustainable palm oil. It developed environmental and social criteria that companies must comply with to produce Certified Sustainable Palm Oil (CSPO), and many companies have adopted this standard as their industry benchmark.
By Ken Cottrill, Co-Founder and Research Principal
Norwegian zoologists recently euthanized a sickly beaked whale that was beached on the southwestern coast of Norway. A post-mortem revealed the probable cause of the creature’s illness: its stomach was full of plastic bags.
The U.N. estimates that 8 million tons of plastic garbage is dumped in the world’s oceans each year. A report published in January 2017 by the World Economic Forum (WEF) and the Ellen MacArthur Foundation says that given projected growth in the production of plastics, by 2050 the planet’s oceans could contain more plastic than fish by weight. Aside from the ecological damage wrought by this tsunami of discarded containers and other items, it also represents a criminal waste of resources.
The above report maintains that 40 years after the launch of the first universal recycling symbol, only about 14% of plastic packaging is collected for recycling. Walking away from this mass of material is an expensive habit; each year $80 billion to $120 billion worth of plastic is lost to the global economy.
But there is hope. The scale of the problem, and growing outrage across the world, have triggered multiple responses.
One of the most promising was launched in May 2016 and was responsible for publishing the WEF/McArthur report. Called the New Plastic Economy initiative, it is now endorsed by more than 40 industry leaders including heavyweights such as Coca-Cola, Du Pont and Unilever.
The initiative’s overarching goal is to help the world transition to environmentally sustainable and economically sound plastics usage, with an action plan that is aligned with the principles of the circular economy.
The participants have endorsed a plan to reuse and recycle 70% of plastic packaging globally. Around 20% of this material could be profitably re-used – by replacing single-use plastic bags with re-usable alternatives, for example – and a further 50% could be profitably recycled with better materials design and improved management methods.
Blockchain technology has a role to play in this Brave New World of plastics stewardship.
Consider, for example, the Plastic Bank.
Conceived in 2013, the Bank’s mission is to incentivize the collection of waste plastic before it becomes ocean trash, and to alleviate poverty at the same time.
Individuals in impoverished parts of the world collect discarded plastic and deliver it to collection sites for recycling. Companies buy this Social Plastic as a feedstock. The ingenious part of the system is a blockchain-based digital currency and exchange platform created by the organization, which enables local entrepreneurs to accept plastic waste as currency. People can use the currency to buy supplies such as cooking oil or pay for education.
The Bank is building supply chains “to collect and recycle social plastic which we then sell to brands to use as ethically sourced plastic in their manufacturing,” says the organization’s cofounder Shaun Frankson.
Operations in Haiti began in 2015, where people can exchange junked plastic for solar powered cell phone recharging services. An operation in the Philippines went live this year, and there are plans to launch in Indonesia and Brazil, and globally thereafter.
The blockchain element of this innovative enterprise is set to grow. The Plastic Bank is working with IBM to refine and expand its blockchain platform.
Expect more inventive ideas like this to emerge as the pressure to clean up the planet’s plastic-clogged oceans increases – and a lot more scope for blockchain applications.
Monitoring flows of waste product through newly created reverse supply chains is one possible application area for blockchains. Another is providing information on the recyclability of recovered plastic objects.
And, of course, such applications are not confined to plastic waste. Trashed packaging materials are everywhere.
For example, the Cainiao Network, the logistics arm of Chinese c-commerce behemoth Alibaba Group, recently set up the Cainiao Green Alliance Foundation to address China’s mountain of packaging waste, which is fed by the country’s e-commerce boom. In 2015, some 10 billion cardboard boxes were used to ship items in China. The country is expected to be shipping 145 million packages a day by 2020. That’s a lot of boxes headed for the dump.
We have the ingenuity to create an efficient reverse supply chain for end-of-life packaging – hopefully, images of ocean creatures gorging on plastic scrap have given us the will.