By Pete Harris, Co-Founder and Research Principal
Welcome to the second edition of our revamped quarterly supply chain technologies blog. As noted in the spring blog, we are now including various digital transformation technologies that supply chains are aligning with blockchain, such as artificial intelligence (AI) and Internet-of-Things (IoT).
This time, we’re covering news from the FDA, IBM, MediLedger, TradeLens, Target, Shipwell, Treum, Ripe, R3, BlockSyte, Walmart and VeChain. So let’s get stuck in.
The FDA, Walmart, MediLeger, Pharma and Friends
The U.S. Food & Drug Administration (FDA) is working with at least two blockchain-related consortiums. This is part of a pilot program focused on helping drug supply chain participants to develop an “electronic, interoperable system that will identify and trace certain prescription drugs as they are distributed within the United States.” Such platforms will need to comply with the requirements of the Drug Supply Chain Security Act (DSCSA), which was enacted in November 2013, and which the FDA enforces. Pharma players have a deadline of November 2019 to comply with certain aspects of the legislation, with a 2023 deadline for full compliance.
IBM – which has become the 800-pound gorilla of blockchain for supply chains – is the technology lead of one of the consortiums, which also involves consulting firm KPMG, pharma manufacturer Merck and retailer Walmart. The other consortium, dubbed MediLedger, has more than 20 participants, with startup Chronicled providing the technology smarts. Significantly, Walmart, itself no stranger to blockchain’s use for supply chain traceability, has also recently joined the MediLedger project.
The IBM-led consortium will leverage the Hyperledger Fabric-based IBM Blockchain platform, and is likely to also tap into IBM’s Food Trust technology for food track/trace, which was developed originally in partnership with Walmart. Beyond the track/trace capability required by the DSCSA, IBM will likely use its pharma-focused platform to support other healthcare-related applications.
Meanwhile, MediLedger – which also includes wholesaler AmerisourceBergen, manufacturers Amgen, Genentech and Pfizer, distributors Cardinal Health and McKesson, and retailer Walgreens – has launched its Product Verification System, focused on verification of drugs that are returned for resale. That business alone is worth $6 billion annually in the U.S. Future phases of MediLedger will add the full functionality, such as data interoperability and full track/trace, required by the DSCSA.
MediLedger leverages an enterprise variant of Ethereum, which supports permissioned access and privacy. MediLedger’s platform is a fully decentralized blockchain, with each participant running its own node, and keeping private data off chain. Only public data and transaction proofs are stored on the chain itself.
San Francisco-based Chronicled actually began life in 2014 focused on authenticating high-priced consumer goods, such as sneakers, and has developed expertise in product identity and blockchain integration with IoT devices. It began to focus on pharmaceutical supply chains and created MediLedger in 2017.
Our take:The pharmaceutical industry is a huge one that is begging for increased efficiency. Political, regulatory, insurance payer and retailer pressures are pushing prices down, so technology projects that reduce costs are of interest to pharma manufacturers and their supply chain partners. To some extent, technology developed for other verticals, especially food, can be leveraged in the pharma space, making it less expensive and less risky to build and deploy. And pharma supply chain platforms can theoretically be adapted for broader healthcare transformation initiatives, which is a massive opportunity.
More at: https://newsroom.ibm.com/2019-06-13-IBM-KPMG-Merck-and-Walmart-to-collaborate-as-part-of-FDAs-program-to-evaluate-the-use-of-blockchain-to-protect-pharmaceutical-product-integrity, https://www.mediledger.com
TradeLens Tweaks its Governance and Gets Some Love
TradeLens, a joint venture between IBM and Maersk that uses blockchain technology to provide information sharing and collaboration across supply chains, has begun to get some serious traction after a slow start. Some 15 ocean carriers are now signed up, including five out of the top six players, representing more the 50% of ocean container cargo.
Recent carrier additions to TradeLens include Hapag-Lloyd, Ocean Network Express, CMA CGM and MSC Mediterranean Shipping Company. They join others including PIL, ZIM, KMTC, Safmarine, Sealand, Seaboard Marine, Namsung, Boluda and APL.
When TradeLens launched in 2018, PIL was the only carrier other than Maersk. Early progress at recruiting additional carriers ran into headwinds, apparently because potential members were put off by Maersk being a part owner of the service and the way it was governed. While the ownership of the joint venture has not changed, the governance model has evolved to one thatensures data privacy, the publishing of application programing interfaces and use of common standards. The updated governance scheme made the service more palatable to other carriers, it seems.
In addition to ocean carriers, the TradeLens ecosystem comprises 3PLs, inland and intermodal carriers and ports/terminals, which need to interact with ocean carriers to provide end-to-end supply chain transparency. Around 100 entities are currently members of TradeLens, which recently signed an agreement with Russian authorities for the platform to operate in that country.
But TradeLens isn’t the only game in town. Last November, a group of nine carriers (including new TradeLens member CMA CGM) formed the Global Shipping Business Network (GSBN), tapping blockchain technology developed by Hong Kong-based CargoSmart, which is a subsidiary of Orient Overseas Container Line.
One commonality between TradeLens and the GSBN is that both are based on the open source Hyperledger Fabric platform, although TradeLens makes use of the IBM Blockchain service while CargoSmart uses Oracle’s variant.
Our take:Clearly this latest traction is good news for TradeLens and for blockchain’s use in supply chains in general. At the same time, the lack of updates coming from the GSBN is a little troubling. The key takeaway for those looking to form blockchain consortiums for supply chains is to get the governance right. However great the technology is, it won’t be adopted unless the supply chain participants, which are often competitors, are happy with the rules of engagement.
Another point: measured in TEU (twenty foot equivalent units), both TradeLens and GSBN currently account for single-digit millions each year, while the total market has been estimated at around 120 million. Even with these consortiums’ strong memberships, there’s a lot more to do and a lot to play for.
More at: https://www.tradelens.com,https://www.cargosmart.ai/en/blog/top-ocean-carriers-and-terminal-operators-initiate-blockchain-consortium/
Target Exploring, Bolstering Hyperledger Grid, Sawtooth Projects
Retail giant Target has begun to leverage Hyperledger blockchain technologies for various supply chain applications. For one project, it is working with the Sawtooth platform, while it is also contributing to the Grid supply chain framework. In both cases, it is looking to better understand data sharing and governance best practices.
Since mid-2018, Target has been working on a Sawtooth-based project dubbed ConsenSource, which it has also open sourced. The company has taken the open source direction in the belief that it will allow the platform’s participants to more readily agree on its governance and sharing of data.
The focus of ConsenSource is to help verify that products are sourced sustainably, with supply chain participants including standards and certification bodies, as well as factories and retailers. For its initial proof-of-concept, Target has focused on its own brand of paper products, working with forest managers and certification boards.
While it is not currently a Hyperledger member, Target has also become a contributor to the Grid supply chain framework, which is initially based on Sawtooth. Food processor Cargill – a major supplier to Target – has been leading the development of Grid, which also involves Intel and blockchain startup Bitwise IO. Target is apparently bolstering Grid by integrating identity functionality from another Hyperledger project, dubbed Indy.
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 the development of full applications.
For its part, Target believes that working with Cargill will give it insight into determining what data should be shared as well as the governance of a multi-enterprise blockchain platform.
Our take:Perhaps leveraging a second-mover advantage, Target is realizing from the outset that blockchain’s use for supply chains is as much about governance, data ownership/privacy and consensus verification of transactions than it is about the underlying technology. In Cargill it readily found a like-minded technology partner that also has a commercial reason to work with it. It’s an alliance that is likely to win the kind of corporate leadership approval that’s required to bring blockchain projects to fruition.
More at: https://tech.target.com/2019/04/22/exploring-the-benefits-of-blockchain.html.
Shipwell experiments with quantum computing– The Austin, TX-based TMS startup recently discussed its investigations into quantum computing for supply chain route optimization. The company wondered whether faster deliveries could be achieved and spent two months testing different routes with its own data on an IBM Q14 Melbourne quantum computer. It focused on shipments between Austin, Dallas and Houston and found that the quantum computer did in fact find faster routes.
Ripe taps R3 Corda and Microsoft for Food– Startup Ripe Technology is tapping R3’s Corda blockchain platform running on Microsoft’s Azure cloud for its food supply chain customers. While R3 is widely deployed in financial markets and trade finance applications, it has also recently begun to be used in healthcare, and now it seems for supply chain transparency. Having experimented with other blockchains, such as Bitshares, Ripe selected Corda for its scalability and data privacy features. In the future it will explore Microsoft’s AI tools.
Caroli turns to BlockSyte for olive oil traceability– Italy’s Caroli, which produces high quality extra virgin olive oil, is using blockchain technology from Nashua, NH-based BlockSyte to track its shipments to the U.S. It’s monitoring location, temperature, humidity and light exposure in real time to ensure they were optimized on the cargo’s long journey. Blocksyte’s platform combines IoT sensors with its own Hyperledger Fabric-based blockchain, which runs in an IBM Cloud environment.
Treum tracks organic hemp– Supply chain specialist Treum (a ConsenSys subsidiary formerly known as Viant) is working with Verified Organic, an ethereum blockchain startup focusing on transparency for organic goods, and Arizona-based producer Integrated CBD for seed-to-sale tracking of organic hemp. Using web and mobile user interfaces, the entire hemp supply chain is being recorded, including planting, fertilizing, organic pesticide application, harvesting, extracting and distribution. These recordings will later be corroborated by third-party laboratories and certification bodies, which will issue independent assessments of the product, from soil samples to the hemp plant material itself.
Walmart leverages VeChain in China– Despite its increasing use of IBM’s Food Trust system in the U.S., Walmart in China has implemented a VeChain Thor blockchain to address food safety concerns. The platform already supports more than 20 product lines, with another 100 planned, including fresh meat, rice, mushrooms, cooking oil and more. Walmart China customers scan product using a smartphone to find out information including the source of the tracked products and geographic location, the route the product took to the supermarket, product inspection reports and more.
Our end take: We believe that blockchain’s value in supply chains, especially for food and drugs, is being proven in front of our eyes. We are truly living in transformative times.
That said, a key takeaway is that getting the technology right is just one element of blockchain project success. What’s also needed is agreement on governance, on benefits and paybacks, and on how data is shared and secured – all discussions that should be undertaken early in any project.