BLOCKCHAIN-SCM VENDOR FOCUS NOTE – JUNE 2018

By Pete Harris, Co-Founder and Research Principal

It’s already time for the June Chain Business Insights’ Blockchain/Supply Chain Management Vendor Focus Note. (We skipped our May note to focus on our trade finance research brief and to fulfill a number of speaking engagements). In each note, we bring you a curated selection of important news that should be on your radar screen, along with our independent and expert analysis.
 
This time, we’re covering the latest from IBM, R3, SAP, Bonafi, dexFreight, FR8 Network, Infosys and Walmart. So let’s get stuck in.

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IBM Partners with Jewelry Industry on TrustChain

Along with a consortium of gold and diamond industry players, IBM has launched TrustChain to track and authenticate finished jewelry items across their supply chain.

TrustChain runs on IBM Blockchain – a commercial cloud-delivered offering from Big Blue that’s based on the open source Hyperledger Fabric blockchain. Its founding members are Asahi Refining (a precious metals refiner), Helzberg Diamonds (a U.S. jewelry retailer), LeachGarner (a precious metals supplier), The Richline Group (a global jewelry manufacturer) and UL (an independent, third party verification service, which is the administrator of the service).

TrustChain’s mission is to “instill trust in the origin and ethical sourcing of jewelry by bringing together a community of responsible and ethical organizations across the complex and multi-tiered jewelry supply chain,” according to an IBM statement.

The network tracks and authenticates diamonds and precious metals through every stage of the supply chain as it becomes a piece of finished jewelry. It provides digital verification, physical product and process verification as well as third-party oversight – initially tracking six styles of diamond and gold engagement rings on its network. Currently, consumers don’t have access to provenance information, but that’s expected by the end of this year. 
 
“This initiative is important for our industry as we seek to raise the collective responsibility and provenance practices to new heights,” notes Mark Hanna, Richline Group’s CMO. IBM points to research from Nielsen suggesting that 66% of consumers will pay more to support sustainable brands.
 
Potentially related, IBM’s research division has announced IBM Crypto Anchor Verifier, which marries AI with optical signatures and image processing to help prove the identity and authenticity of objects. The first trial of this technology is in partnership with the Gemological Institute of America, which is using it to evaluate and grade diamonds. 

IBM believes that its verification technology is a “natural partner” to blockchain. It proposes that Verifier can be used to capture the optical signature from an original, uncompromised item and subsequently record it on a blockchain, which can verify throughout the supply chain that the item hasn’t been tampered with.

Our take: Another month, another mention of IBM and a blockchain consortia. Maersk, Walmart, now jewelry. Get used to it as this is the IBM model – i.e. partner with a big player in a vertical that can lend credibility, industry leadership, contacts and provide a technology platform from a AAA-rated IT vendor.

We’re a bit surprised not to see Everledger in the mix with this group, since it has focused on diamond track/trace since its day one, and it is an IBM partner. On the other hand, we’re delighted to see the marriage of blockchain, AI and image processing being leveraged for supply chain applications. 

More at https://www.trustchainjewelry.com.


R3/HSBC/ING 

Like IBM, R3 is a regular feature in this vendor focus. Last time it was its involvement with TradeIX in the Marco Polo “reinventing” trade finance initiative. This time, it’s another trade finance project, related to letters of credit (LCs), which just took a big step forward.

The platform developer, which also operates a financially-oriented community of early adopters, has been working with a dozen banks since last year on a letter of credit application that runs on its Corda distributed ledger platform. (Technically, it’s not a blockchain.)
 
Last month, two of those banks, namely HSBC and ING, announced that they had completed an end-to-end transaction involving customers using just the application. Specifically, the application was related to a shipment of soybeans from Argentina, through the Geneva trading arm of agri-food giant Cargill, to Malaysia, through Cargill’s Singapore subsidiary as the purchaser. HSBC used Corda to issue and send an LC to ING, with each bank acting on behalf of one of the Cargill entities.

A key benefit of using the Corda-based application was a reduction in the five to 10 days it typically takes to process a manual/paper-based LC transaction to just 24 hours.

HSBC’s head of growth and innovation Vivek Ramachandran noted: “What this means for businesses is that trade finance transactions have been made simpler, faster, more transparent and more secure. The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous. The quick turnaround could mean unlocking liquidity for businesses.” 

Oh, and while we’re discussing R3, in a separate development, Commerzbank announced that it had interfaced SAP’s S/4HANA ERP suite to Corda. It’s a significant integration for R3 since the SAP product is widely used by banks and corporates to support supply chain financing processes. Also notable is that SAP is a Hyperledger member, and so the Commerzbank integration suggests it has a pragmatic approach to leveraging blockchain.

Our take:  It’s one small step for trade finance, one giant leap for blockchain. Having major banks and shippers involved in a real-life transaction is encouraging. And we’ve noted that as with the recent R3/Marco Polo pilot, ING is playing a leading role in making blockchain for supply chain a reality. That said, we want to see more transactions, and more participants, in the coming months before we begin to use phrases like “production ready.”

More at https://www.ing.com/Newsroom/All-news/ING-part-of-groundbreaking-blockchain-shipment.htm.

SAP 

Having announced a blockchain offering last year (one that technically resembles what IBM is offering), the IT applications/database/ERP giant has begun to roll out some supply chain-oriented services that leverage it.
 
Last year, the company demonstrated its Blockchain for Ocean Shipping prototype, which digitized documents such as bills of lading and anchored them to a blockchain. Now, it has announced a focus in the food supply chain space, with a farm-to-consumer initiative.

SAP is working with producers like Johnsonville (sausages), Naturipe Farms (fruits) and Maple Leaf Foods (meats) to promote "cross-company collaboration along complex value chains for which the technology can remove abundant process steps and friction, and establish automated trust."

SAP plans to integrate its blockchain platform into its existing Global Track and Trace offering, which like blockchain is also cloud-delivered. The blockchain platform will act as "an additional layer complementary to core processes that creates one shared view on the data from all involved stakeholders contributing to the supply chain."

In order to accelerate its blockchain/supply chain initiatives, the company is partnering with Swiss-based modum.io, which has developed a logistics platform incorporating blockchain, smart contracts and IoT sensors. To date, it has focused on pharma and cold-chain applications.

Our take:  SAP is a latecomer to blockchain and thus far it looks to be following IBM’s playbook. But its position in business software and in supply chain should give it opportunities to catch up and even become a leader. Alliances with startups like modum will be important for it. 

More at https://www.sap.com/products/leonardo/blockchain.htmlandhttps://modum.io. 

Also worth noting:

Bonafi– Based in Los Angeles, Bonafi is developing Crypto-Tag technology that can be combined with mobile devices and blockchain to secure supply chains. Its tags don’t require power to operate and interact with NFC-enabled mobile devices/applications to authenticate items. The company recently selected an IoT platform from Irvine, CA-based NetObjex to integrate with blockchain platforms. More at https://www.bonafi.io and https://www.netobjex.com. 
 
dexFreight– Headquartered in Florida, dexFreight is building adecentralized, peer-to-peer, community-owned, open source logistics platform built on blockchain and machine learning for all actors in the supply chain, to collaborate and move shipments more efficiently. It is currently fundraising in accordance with  Regulation D and CF rules. More at http://dexfreight.io. 

FR8 Network– The global supply chain blockchain platform  has partnered with leading CRM platform Salesforce, allowing companies that already ship with Salesforce to plug directly into its technology. FR8 has also expanded beyond its domestic freight focus to address a wider market need, and aims to provide a standard protocol approach to cover data, payments, regulatory and cybersecurity, with an emphasis on the ‘final mile’ of a supply chain. More at https://fr8.network.
 
Infosys Finacle– a unit of the Indian IT leader is developing India Trade Connect, a blockchain-based trade finance platform in partnership with seven Indian private banks, including ICICI, Axis Bank, South Indian Bank and Yes Bank. The platform, which is designed to be agnostic to underlying blockchain technology, provides ownership validation, certification of documents and payments. More at https://www.infosys.com/newsroom/press-releases/Pages/pioneers-blockchain-based-trade-network.aspx.

Walmart– As is widely known, the retail giant has been piloting blockchain technology – IBM Food Trust – since the end of 2016 to improve food safety procedures, such as recalls. Now, according to public comments made by its vice president of Food Safety Frank Yiannas, it is now in production in a limited way. Apparently, around 20 different products are now live at Walmart.

Updates, Amplification (and the occasional correction):
 
ONE Network Enterprises– Apologies - we misspelled this company’s name in our April focus note. More at https://www.onenetwork.com.

Responsible Gold– mentioned in April’s focus note, the Responsible Gold project from Emergent Technology is being built in partnership with Chronicled. More at https://www.emergenttechnology.com and https://chronicled.com. 

End take: It’s all about blockchain meets IoT. That’s how it seems, anyway. IoT devices include sensors that track location, temperature or other parameters, crypto tags that prove identity, and mobile devices that can act as part of a bridge between sensors, tags and blockchains. 
 
IoT platforms – similar to messaging middleware that’s used to integrate enterprise systems – are another important bridge technology. Some exist. Expect more to emerge. And expect some acquisitions (such as IBM’s purchase of The Weather Company, or SAP snapping up Plat.One).
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