BLOCKCHAIN-SCM VENDOR FOCUS – April 2018

By Pete Harris, Co-Founder and Research Principal

​Welcome to the April issue of Chain Business Insights’ Blockchain/Supply Chain Management Vendor Focus.There’s so much happening in the world of blockchain and supply chain that it’s a challenge to keep up, cut through the noise, and focus on the important developments. That’s why each month we bring you a curated selection of news that you can use and need to be tracking, along with our independent and expert analysis.
 
This month, we’re covering the latest from One Network, IBM, Everledger, Eximchain, Quorum and Emergent. So let’s get stuck in.

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Imperial Logistics Taps One Network for Pharma Supply Chain

South African diversified logistics provider Imperial Logistics is working with Dallas, TX-based One Network Services to leverage blockchain technology in order to track pharmaceuticals moving through a supply chain.

Specifically, Imperial is using One Network’s Real Time Value Network (RTVN) logistics cloud platform, augmented by its recently-introduced ONE Blockchain capability. The solution enables the supply chain related to antiretroviral and antimalarial medication and supplies – from manufacture to patient – to be to managed and monitored in real time. 
 
ONE Blockchain is a secure service designed to provide blockchain-backed processes and capabilities, such as non-repudiation, trust and immutability, while overcoming the confidentiality and performance compromises often found in blockchain implementations. Customers can build applications on top of ONE Blockchain using a Software Development Kit (SDK), while the platform is also agnostic to the particular underlying blockchain transport – such as Ethereum or Hyperledger Fabric – that is used.

The pharmaceutical vertical is emerging as a promising early use case for blockchain-based solutions, in part to address concerns related to counterfeit drugs. Statistics from the World Health Organization suggest that 100,000 people in Africa die each year because they take counterfeit drugs that are substandard (often containing no, or an incorrect amount of, active ingredient).

By augmenting RTVN with a blockchain capability, One Network and Imperial are looking to allow pharmacies and health facilities to ensure the continued flow of vital and authentic drugs. That way, patients with chronic conditions receive pure drugs and the proper dosages and treatments they need.

Imperial’s solution will also address the need to comply with new regulations related to pharma supply chains in South Africa, and elsewhere. For example, in the US, the Drug Supply Chain Security Act is being implemented.

Our take:It’s encouraging to see an established digital supply chain vendor (One Network was founded in 2002) embrace blockchain and score a customer win so early in that initiative. While it operates in many logistics sectors, in pharma the company has an industry that is undergoing disruption and which has a clear need for blockchain capabilities, driven in part by regulation. Saving lives with blockchain is a great story to tell too.

All that said, we want to find out more about the ONE Blockchain solution, how it’s overcoming some common shortcomings of the technology, and why it’s taken the underlying blockchain agnostic route. Expect to hear more from us about this company in the future.

More at https://www.onenetwork.com.

IBM Looks Forward to Crypto Anchors
 
Highlighted at its recent Think 2018corporate mega-bash in Las Vegas, cryptographic anchors are an experimental technology that IBM expects to make an impact in supply chains within the next five years.

Crypto anchors are digital fingerprints that can be attached to many different types of physical goods (including food and pharmaceuticals). They can uniquely identify a product and then be leveraged to link the product to a blockchain platform for immutable track and trace.
 
These crypto anchors can take many different forms – including tiny microprocessors or optical codes, but they can all be used to prove a product’s authenticity. One example might be codes that make up a specific shade of edible magnetic ink, which could be used to dye medications. Such a code would become active and visible from a drop of water, letting a consumer know it is authentic and safe to consume. They might also be used to digitally represent that medication in a blockchain that is underpinning a supply chain track/trace system.

“[Crypto anchors will] be used in tandem with blockchain’s distributed ledger technology to ensure an object’s authenticity from its point of origin to when it reaches the hands of the customer. These technologies pave the way for new solutions that tackle food safety, authenticity of manufactured components, genetically modified products, identification of counterfeit objects and provenance of luxury goods,” wrote IBM’s Head of Research Arvind Krishna in a blog post.
 
IBM expects to make prototype crypto anchors available to early adopters in the next 18 months, with more widespread availability and adoption within five years. It also believes that it can mass produce crypto anchors for less than 10 cents each.
 
Our take:
This sounds at first like science fiction, but IBM is serious about the technology promise and the timeframe for its introduction. Given its deep blockchain expertise and its embedded initiatives in the supply chain space (think Maersk and Walmart), it’s possible that these anchors will become science fact just as blockchain technology itself is mature enough for critical business use.

More at https://www.research.ibm.com/5-in-5/crypto-anchors-and-blockchain/.
 
Everledger Scales Up with $10+ million Investment

London-based Everledger has raised $10.4 million in a Series A funding, with investment from venture capital and private equity sources including Fidelity Investments, Vickers Venture Partners, Graphene Venture Capital, FPV, Fenbushi, Bloomberg Beta and Rakuten. The funds will allow Everledger to expand its operations and enter new markets.

Founded in 2015, Everledger has built a provenance system focused on the diamond and colored gemstone market, tracking them from source through their entire supply chain. Its business focus is to ensure authenticity and ethical compliance, guarding against the supply of conflict minerals and reducing risk for governments, banks, insurers and traders.

Everledger leverages blockchain technology (specifically IBM’s Hyperledger-based cloud offering), as well as IoT and machine learning technologies in its service. Since its founding, the company has worked with manufacturing and retail partners to record the provenance of more than 2 million diamonds. In 2017, it created the Diamond Time-Lapse initiative, which offers a historical ledger of the movement of diamonds through supply chains, including processes such as polishing and cutting, as well as certification.

Ahead of its Series A, the company opened offices in India and China, both of which are major diamond markets. In fact, India accounts for about 90% of the global polished-diamond manufacturing market by value.

Our take:
Everledger is something of a poster child for the supply chain provenance space. It has quietly created some strong technology partnerships (like IBM), scored some important industry partner wins (Brilliant Earth, House of Gubelin) and entered key markets, such as India and China. Attention will now be on how it can put its new capital to good use to grow, or to move from “startup to scaleup” as the company’s CEO Leanne Kemp puts it. 

As it grows, the company may well have to contend with competitive efforts in the diamond world, such as the blockchain-based provenance system being developed by De Beers, the world’s largest diamond producer. For its part, Everledger has begun to diversify into other luxury markets, such as art and fine wine. It has also forged a partnership with SAP’s Ariba procurement network unit and also with startup shping, which is rolling out a smart shopping mobile app. Those ventures could see Everledger’s technology be adopted by the much broader business and consumer procurement markets. There’s a lot of opportunity, so expect the company to be back for a Series B before too long.

More at https://www.everledger.io.

Also worth noting:

Eximchain– A blockchain-focused startup in the supply chain space, founded in 2015 within MIT’s Media Lab, has raised $20 million from a group of investors from China and Hong Kong. The company is building its own public blockchain based on Quorum, which is a variant of Ethereum. Next in its plan is an ‘airdrop’ – a giveaway of its cryptocurrency – to specific recipients. More at https://www.eximchain.com.

Quorum– Speaking of Quorum, press reports suggest that JPMorgan Chase, which created the Ethereum variant, is considering spinning off the development, which currently resides within the bank’s Blockchain Center of Excellence. Quorum has been open sourced, and it is already used by the bank itself as well as by a number of startups in the supply chain space. A spinoff would seek to increase the platform’s appeal still further. Compared to Ethereum, Quorum has been built to operate with greater privacy and performance. More at https://www.jpmorgan.com/global/Quorum.

Emergent Technology Holdings– The payments company has entered the gold marketplace with two offerings. Like several others, it plans to introduce a coin/token – G-Coin – that represents physical gold, and which can be transferred between owners rather more readily than physical gold can be.

However, it’s also introducing the Responsible Gold blockchain, which will be used to provide a provenance record for physical gold as it moves through a supply chain from conflict-free miner to refiner to vault. The company’s private blockchain is combined witha mobile application that scans smart chips in tamper-proof seals to record transfer of custody and other data on the Responsible Gold blockchain. Global mining company Yamana Gold has already licensed the service. More at https://www.emergenttechnology.com.

End take:
There’s increasing interest and action in the blockchain meets supply chain space. We’re now seeing blockchain being deployed in limited production systems, which is encouraging. Our prediction is for further real-life action this year.

We’re also tracking an increasing number of startups that are using cryptocurrencies and tokens in their services, including to raise initial funding through an ICO or similar. We’re a tad old school here at Chain Business Insights and so we are wary of these approaches. 
 
Designing the token economics of such services is tricky, and then offering the service and coin in a way the passes increasing regulatory scrutiny is becoming a challenge. Then there is the process of marketing an ICO, made more difficult as social media and email marketing firms are shying away from being involved in them. There’s also the little problem of running the right kind of secure custody framework for coins to avoid them being stolen from supposedly safe but often vulnerable software wallets. One hack can take a company down.

In short, tokens can and will play an important role in the digitization of assets in a supply chain. They can also be sensibly and responsibly used to raise funding. But working with them is no easy matter, and a number of supply chain vendors are beginning to find that out for themselves.