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Continuous Intelligence for Blockchain-Enabled Supply Chains
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SUPPLY CHAIN TECHNOLOGIES UPDATE – SPRING 2019

4/8/2019

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By Pete Harris, Co-Founder and Research Principal
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​Our quarterly blog is getting a couple of tweaks for 2019. For starters, while blockchain will continue to be a key focus, the scope of this blog will widen a bit to also include “digital transformation” technologies that have a symbiotic relationship to blockchain, such as artificial intelligence and Internet-of-Things (IoT).
 
In addition, the blog will now cover technology developments driven by supply chain participants, in addition to those from vendors. What stays the same is our focus on the developments that really matter (not all the noise) and our expert ‘take’ to put news in context to make it useful. 
 
This time, we’re covering the latest from Bumble Bee, Carrefour, Hyperledger, Mycrop, REI, Smartrac, Transmute and UPS. So let’s get stuck in.
 

​Hyperledger Announces Grid Project


Hyperledger – an initiative within the Linux Foundation focused on the development and governance of open source blockchain technologies – has a history of abstract and esoteric names for its projects (now numbering a dozen). Burrow, Quilt and Ursa are examples. Now, we can add Grid to the ‘errr, what’s that?’ list. No, it’s not related to grid computing (which underpins cloud offerings) but it’s actually focused on supply chains.

Grid is not a full supply chain application. Rather, it is a set of components, or tools, that will allow developers to more rapidly and securely build supply chain functionality, such as track/trace, asset ownership and asset transformation. The project is leveraging data models from GS1, and other industry groups, and will create development toolkits and reference implementations to speed to development of full applications.

So far, the technical development of Grid has been led by chip manufacturer Intel, blockchain technology specialist Bitwise IO, and agriculture giant Cargill. More technical contributors are being sought to move the project through its current incubation phase so that it can become a version 1.0 offering.

Architecturally, Grid is meant to be agnostic to any underlying blockchain or compute platform. Notably, it has adopted the Sabre smart contracts engine, with its implementation of the transportable WebAssembly (WASM) language as a strategic cross-platform direction. Currently, however, this actually restricts Grid to running on the Hyperledger Sawtooth platform (championed by Intel) since the Hyperledger Fabric or Iroha blockchains do not support it (and it’s unclear when they might). That said, WASM is being pushed by some as a standard for smart contract creation both within Hyperledger and in the broader blockchain space.

Our take:  Name aside, we applaud the Hyperledger leadership in pushing this project forward. It can’t have been without some internal controversy given the influence of supporters of the Fabric platform – IBM, Oracle and SAP – which have made significant investments in their proprietary blockchain-based supply chain offerings. They might have wondered why Hyperledger needs to concern itself with vertical markets, even one as broad as supply chain and with a toolkit that is far from being a product.

Grid’s adoption of WASM shows strategic vision when it comes to blockchain interoperability, but also provides a near-term opportunity for Intel and its fellow Sawtooth fans to promote that platform for supply chain app developers. Expect to see some action in that endeavor in coming months. 

More at https://www.hyperledger.org/projects/grid.
 
Bumble Bee Taps SAP for Tuna Traceability
 
Major seafood brand Bumble Bee Foods has adopted blockchain technology provided by SAP to trace tuna originating in the Indonesian Ocean to retail stores in North America. The goal is to provide increasingly environmentally aware and quality conscious consumers with information on the sourcing and processing of their products. Having information about authenticity, freshness, safety of shipping, fair trade fishing compliance and sustainability boosts confidence in products.

The international seafood market is one where sustainability abuses and fraud go relatively unchecked. For the U.S., around 90% of seafood consumed is imported, often from Southeast Asia where it is caught by many local fishermen. Fraud inspections are infrequent, so mislabeling is commonplace – illicitly substituting a more desirable and expensive fish with a lower priced or lower quality alternative. It’s against this backdrop that a food producer like Bumble Bee finds it challenging to comply with commitments to organizations such as the International Seafood Sustainability Foundation.

Bumble Bee has begun to leverage blockchain traceability for its Natural Blue by Anova yellowfish tuna product line, which is available in retail stores operated by Albertsons, Hy-Vee, Price Chopper and Safeway. Blockchain-based traceability went live in February, around six months after the company began the project.
 
Consumers can scan a QR code on the product package to find out information on where the tuna came from, who caught it and how it was processed. That includes a timestamped trace of the different facilities the tuna passed through from fishing boats to retail outlets, as well as quality information provided by independent testing laboratories.

For Bumble Bee and its suppliers, the blockchain traceability provides a tamper-proof dataset for performing analytics in order to ensure that fisheries are properly and sustainably managed and that the supply chain is efficient. QR codes are used to track the product from the point where the tuna are landed right through the supply chain. Along the way, the codes are read by smartphones and tablets and appropriate data is stored, some of it on a blockchain.

For its blockchain and analytics capability, Bumble Bee turned to IT giant SAP, which operates a cloud-based blockchain as a service offering. In fact, SAP offers a number of different blockchain platforms via its cloud, and for Bumble Bee it hosts an instance of the MultiChain platform, a permissioned blockchain developed by U.K./Israel-based Coin Sciences. In order to ensure that blockchain performance is maintained, only data items that are required to be tamper proof are stored on the blockchain itself, while other reference data is kept in a traditional database.

Bumble Bee is encouraged by the project and is now looking to expand its blockchain usage for traceability of other products and has a goal of implementing it across all of its products. “We’re taking an aggressive approach … Our goal is to have all our products on blockchain, 100%,” notes Bumble Bee CIO Tony Costa.

Our take:  One in five people in the world eat tuna, so it’s a big business to farm it and deliver it to consumers. That probably explains why tuna traceability projects have found a large enough addressable market. They have already been rolled out by a number of blockchain application vendors, including Provenance in the U.K., and Viant, a spinout from Ethereum specialist ConsenSys. In fact, French-based certification agency Bureau Veritas also uses MultiChain in its Origin traceability system, which has been used for the tuna market.

Given the multi-participant and geographically-dispersed supply chain – fishermen, buyers, processors, testing labs, wholesalers and retailers – and the prevalence of fraud, a blockchain-based solution is decently suited to underpin the informatics by keeping data tamper proof without any single entity that can fraudulently manipulate it.
 
More at https://news.sap.com/2019/03/bumble-bee-foods-sap-create-blockchain-track-fish/.

REI Deploys IBM AI to Improve Supply Chain
 
U.S. outdoor clothing and equipment retailer REI has deployed IBM’s artificial intelligence-powered Watson Order Optimizer application to meet a number of goals, including product margin, shipping speed and fulfillment cost.

With some 155 stores across the U.S., which are supplied by three distribution centers, REI was already a satisfied customer of IBM’s Order Management system. The product helped to increase annual sales by in $100 million through more efficient in-store inventory management and faster customer service.

By adding Watson Order Optimizer to augment the rules-based logic of the basic order management system, REI was able to change its fulfillment process based on business goals that vary throughout a year.
 
For example, REI focuses on three major sales periods: summer, winter and the holiday season. As a season nears an end, stores might begin to discount items in order to sell inventory and make room for new products. 
The AI functionality can see if a markdown date is approaching, and calculate the effect of a discount on the product’s profit margin and how popular that product is at a particular store given its typical sales volume. Then, for example, if a West Coast purchaser buys a product that is close to its markdown date in an East Coast store, the company may decide to pay additional shipping costs from an East Coast store, instead of having a closer fulfillment center or nearby store fulfill that order if the markdown date is further out.

Order Optimizer also helped REI reduce split shipments – where an online order needs to be fulfilled with more than one shipment, increasing freight costs. REI found that Order Optimizer reduced splits from an average of 1.4 per order to 1.25 to 1.30 per order. That small reduction is significant in the context of the millions of shipments that REI makes.
For the holiday season, REI’s supply chain is focused on ensuring that it delivers packages to customers on time. Order Optimizer allows REI to ship from any store, so it can fulfill more orders later into the holiday season than previous years, which can potentially increase revenues.

Like other Watson services, Order Optimizer – which was released in 2016 – is available from IBM as both software that runs in a customer’s own data center and as cloud-delivered service.

Our take:  There’s no doubt that – given the kind of revenue and cost benefits experienced by REI – AI will be increasingly used by retailers to optimize their supply chains, especially where complex omni-channel customer service is provided. 
 
But AI is only as good as the data that feeds models, and so ease and speed of data integration will be a key differentiator between competing systems, as will the ease/flexibility tradeoff when it comes to analytics functionality. Where it’s important to ensure that underlying datasets are authentic, then blockchain technology might be applied to ensure they have not been hacked.

More at https://www.ibm.com/support/knowledgecenter/SSZMC6/landing/welcome.html.
 
Small Deliveries:

Carrefour – The French-based international retailer Carrefour is now allowing customers to track the origin and shipping of certain premium quality milk products. Via a QR code on the milk carton, customers are able to determine information about the animal and farm of origin, transportation route and processing center details, and the dates that the milk was tracked through the supply chain. 
 
Originally, Carrefour built its own blockchain platform for food traceability, but last year the retailer noted that it would adopt IBM’s Food Trust system. Carrefour is already using blockchain technology to track chickens, eggs, tomatoes and oranges. 

Mycrop – Indian agritech startup Mycrop is leveraging both blockchain and AI technologies to support its seed supply chain partners, including farmers, aggregators, distributors and retailers. The goals of the pilot project are to bring transparency to the market, promote authenticity and stop low-quality seeds from entering the market.
 
By tracking seed packages via QR and other codes, and using a blockchain to record information about the seeds and their journey to farmers, the company hopes to establish transparency to allow more informed purchase decisions.

Previously, Mycrop has used an AI application to predict and analyze farming output based on data collected from smallholder farmers. 

Smartrac – Based in the Netherlands, Smartrac is a specialist in digitally tagging physical assets, using NFC and RFID technologies. It has partnered with SUKU Ecosystem, an initiative of Citizens Reserve, which is a blockchain startup headed by former Deloitte executive Eric Piscini.

SUKU is building an “On-demand, decentralized platform that is expected to provide feature-rich supply chain software for trading partners.” It expects to release its platform later this year.

Transmute – An Austin, TX-based startup in the blockchain identity space, which is also a member of Oracle’s Global Startup Ecosystem accelerator program, is targeting the supply chain and logistics space with its Transmute ID service. 

Transmute ID is a blockchain and workflow management tool that: (1) Creates and manages identities of people, companies and assets; (2) Creates and attests to (signing) important business credentials; and (3) Optimizes and tracks multi-party business processes.

In particular, Transmute is a contributor to the open source Sidetree Protocol, which allows the anchoring of decentralized IDs to blockchain platforms (including Oracle’s private blockchain offering). Transmute’s work is focused on enabling millions of IDs to be anchored on a private blockchain, providing provable identities to IoT devices being an ideal use case. Oracle’s substantial business in the supply chain space – which has clear applications for IoT – makes it an attractive partner for Transmute.
 
UPS – The global freight and logistics company is partnering with Inxeption, which has built an e-commerce platform and online product catalog. Manufacturers, distributors and wholesalers can set up company-branded online sites to conduct e-commerce transactions. Inxeption’s blockchain-backed technology helps ensure that sensitive information, such as contract-specific pricing and negotiated rates, are shared only between the buyer and seller.
 
Our end take:
 
As you’ll see from the above reports, blockchain and related technologies are indeed making an early mark on the supply chain space. Anyone who has experience of automating supply chains – or indeed any IT-intensive global business – knows that deployments at any substantial scale don’t happen overnight. During the early years (not months), while there is generally a lot of interest and experimentation, one should expect more failures than successes. The clever business visions are the ones that ignore hype and take a longer term view – looking out a decade or longer.

The world of blockchain in 2019 is certainly undergoing uncertainty, especially where projects are linked to some kind of cryptocurrency, which are generally very volatile in nature. While it’s helpful for marketplace players to be candid about early experiences, and to acknowledge mistakes, there’s little value in declarations from observers (such as those we’ve recently read) that “Blockchain is Dead.” Those pundits are just wrong. It’s just going to take a while for blockchain’s value to be measured and appreciated. And with supply chain, we’re already seeing some of that.

2 Comments
Neha link
4/25/2020 07:55:32 am

Supply chain is very important and it is a need of any business to move on. These supply options should be expanded for the customers so that they can have the benefit of door to door delivery. Because of the Blockchain and IOT supply chain management has become really much more advanced.

Reply
Neha link
4/25/2020 07:57:48 am

Supply chain management plays an important role for any business. These supply options should be expanded so that the customers get the benefit of door to door services. Because of the blockchain and IOT supply chain has became more advanced than before.

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  • Home
    • About Us >
      • Sherree DeCovny
      • Ken Cottrill
    • Custom Research
  • Our Research
    • Smart Contracts in Supply Chain
    • Blockchain and the Future of Food
    • Blockchain in Trade Finance
    • Surveys
    • eBook Series
    • Blockchain Meets Supply Chain >
      • Purchase eBook
    • Blockchain in Smallholder Farming >
      • Purchase eBook
    • Blockchain and the Future of Food eBook >
      • Purchase eBook
    • Blockchain in Legal Cannabis >
      • Purchase eBook
  • Insights Blog
    • Chain Reactions Podcast
  • In the News
    • Our News
  • Contact