Nicko Guyer, Software Engineer at Kaleido and Hyperledger FireFly maintainer

One of the few benefits we have seen emerge from the recent COVID-19 pandemic is an amplification of focus and desire for accountability around corporate and government sustainability, or “ESG” (Environmental, Social and Governance) metrics.

However, sustainability must move beyond commitments and transition into action. Sustainable action. Sustainable from process, technology and commercial standpoints; and helping those in a position of power (who have not traditionally been used to prioritising investments based on ESG metrics) to make difficult choices to drive action.

Furthermore, as we look at “earth system” trends like CO2 emissions, surface temperature, ocean acidification, tropical forest loss and many others we see exponential increases in harm and damage over recent years. In other words, acceleration.

Speaking of action, if we are to make any dent in these exponential trends, we need to aim for a more profound impact than incremental improvements to individual corporate metrics such as a10% reduction in plastic packaging, 15% increase in use of recycled materials or move to hybrid vehicle fleets. Aiming higher and working together across entire value chains is key and so is creating systems that enable collaboration, tracking, reporting and remuneration. The latter is important as businesses must remain commercially sustainable, or we will not see participation and investment amongst small and medium-sized enterprises.. 

Despite what some vendors say , there is no “single app” that addresses the wide spectrum of sustainability requirements as the use cases are varied and more will emerge. 

Many corporations are embarking on internal “data gathering” exercises to assess their Scope 1 emissions (direct emissions from owned or controlled sources) so they can have a fact base from which to then take action in a couple of years. Often they are quietly hoping Scope 3 emissions (other indirect emissions that occur in a company’s value chain) will go away. In my opinion, this approach is far from the immediate and meaningful “action” needed to drive change.

At the core, we need to enable more connected supply chains from which we can develop and co-create applications that share, automate, track and integrate with a multitude of different processes and IT systems. 

Blockchain and distributed ledgers have proven themselves to be appropriate architectures for these multi-party platforms as they bring together identity, standards, automation of activity, aggregation of data, scalability, transparency and, importantly, incentivisation. That’s a lot more than just a “fancy data store.”

We can re-use or take inspiration from existing multi-party systems that are already addressing known climate and social issues, work together as networks of companies to have greater impact. And we can start today, not in two years’ time when we’ve completed our internal data audit.

Here are some examples of where distributed ledgers, and Hyperledger Fabric in particular, are already being used to address ESG issues that are cross-industry, cross-border and can be used as impact accelerators.

• Waste Reduction – Nearly half of all fruit and vegetables produced globally are wasted each year (source: United Nations): IBM Food Trust originated as a platform for managing food safety, but the data stored on the platform across farmers, transport companies, manufacturers and retailers allows for more granular tracking of freshness, dwell time, conditions in storage and transit, which can be used to optimise distribution, reduce waste, and even extend shelf life.
• Material Circularity – Production of materials we use every day account for 45% of the CO2 emissions (source: EuroParl): Plastic Bank has created a circular economy platform around collection, processing and sale of “Social Plastic” to large manufacturers, with a focus on empowerment and financial reward for collectors in developing countries. Mitsui and Asahi Kasei have also recently announced development of DLT-based circularity marketplaces to record, track and incentivise their suppliers and customers to increase re-use of plastic and chemical feedstock and provide transparency to regulators where taxation of imported plastics is coming into force.
• Social Impact – Almost half of consumption-related emissions are generated by just 10% of people globally (source: Project Drawdown): Farmer Connect has its origins in traceability of commodities such as coffee and cocoa and provision of self-sovereign identity applications for farmers. Interestingly, Farmer Connect is using its  “first mile” digitisation expertise to bring customers (and brands) closer to social impact projects in developing countries and enable crowdfunding of local projects.
• Renewable Energy Consumption – Share of renewables in global electricity generation was 29% in 2020 (source: IEA): Renewables present an opportunity for low-cost, abundant energy but have challenges in scaling, particularly in balancing supply and demand. Equigy is a multi-country “crowd balancing” platform comprising energy companies in the Netherlands, Switzerland and Italy. Equigy uses blockchain technology to access, via aggregators, new sources of electricity from the owners of consumer-based devices and is working towards incorporating use of decentralised storage with private or commercial vehicles and batteries.
• Carbon Capture – In practice, some sectors will simply not be able to achieve net-zero emissions without carbon capture (source: IEA): Newlight Technologies recently launched a range of “regenerative, carbon-negative” fashion products made from air-captured carbon, and with the origin of the carbon capture and authenticity of individual products stored and traceable on a distributed ledger. While manufacture of sunglasses is not analogous to all sectors, the ability to track, certify and share material properties in increasingly regulated supply chains is becoming a critical core competence and can be a further step towards scaling voluntary carbon markets.

The important factor here is not that blockchain applied to these domains solved a problem but rather that these climate and social issues are multi-party problems that require entities, activities and processes to be supported by technology to drive and sustain change. 

Hopefully, in this article we have demonstrated that the problems are clear, real and addressable; that multi-party collaboration platforms are feasible to implement; and that there are technology accelerators available to enterprises and governments that are proven and scalable. So there should be no further cause for inaction…

Cover image by Tumisu from Pixabay 

Challenges in Supply Chain

Supply chain processes are complex and involve many players, heavy documentation and large data sets. Businesses across supply chains work in silos and communication between them is largely through email or phone calls causing issues related to efficiency and costs, data availability and redundancy, transparency and  reconciliation, and fraud and trust.

Blockchain Use Cases in Supply Chain

With the advent of blockchain technology, CEOs and CIOs have paid increasing attention to mitigating industry challenges through technology adoption. Supply chain focus area are  

• Track and trace of assets through supply chain
• Provenance to find origin or authenticity of products
• Circular economy to reduce carbon footprint by secondary use or recycling products
• Customer engagement through loyalty programs using tokenization
• Financial transactions through crypto tokens and smart contracts
• Automation by capturing and recording data of physical movements using IoT or from different sources. 

Blockchain Success Stories in Supply Chain

There are various case studies and success stories that have proved the potential impact of blockchain technology across a number  of supply chain use cases:

1. Mumbai Transport implemented TradeLens to boost efficiency and cut costs

• ~50% improved communication efficiency of documents like commercial invoices, bills of lading
• Lower transport and logistics costs
• Shorter lead time and less frequent delays

2. Walmart brought transparency to food supply chain

• Time needed to trace their provenance went from 7 days to… 2.2 seconds!

3. Chainyard and IBM reduced new vendor risk and drastically cut onboarding

• Vendor onboarding cycle time cut from 60 days to 3 days
• For buyers: 50% less cost to verify and maintain a supplier’s information
• For sellers: much faster time to first sale

4. Honeywell Aerospace built an online parts marketplace

• $4 million in sales in less than a year
• Purchase time reduced from days to minutes
• Future boost to anti-counterfeit measures

5.  DLTLabs and Walmart eliminated the root problems that caused invoice disputes

• Reduction of invoice disputes from 70% to 1.5%
• The error threshold for each transaction went from $10 per invoice to $0 per invoice. 
• Timeline to approve carrier invoices from 6-8 weeks, but often extended over many months, went to less than one week.  

6. Mindtree reinvented its loyalty platforms and merchant onboarding

• Merchant onboarding time reduction from more than 20 days to one day
• Higher visibility to all parties in the transactions
• Eases merchant renewal processes
• Standardized AML & KYC processes
• Increased cost savings due to automation

7. Siam Cement Gp saw procure to pay process time cut by 50% and cost reduced to 70%

Blockchain Frameworks in Supply Chain

Most of the supply chain projects are implemented using Hyperledger frameworks, especially Hyperledger Fabric. Hyperledger Fabric is a blockchain framework implementation hosted by Hyperledger, which is part of the Linux Foundation. Hyperledger Fabric is a secure and scalable open-source distributed ledger platform developed with permissions and privacy as its core tenets. Unlike permissionless, distributed blockchains, Hyperledger Fabric leverages a modular architecture that provides enterprises plug-and-play solutions for private transactions and confidential contracts within a network of multiple vendors. This allows an organization to bring together all the stakeholders within its multi-partner ecosystem under one architecture to automate and implement universal workflows across the network. 

Hyperledger Fabric is a mature framework that is well suited to deliver low latency, high throughput, and fast send rates along with privacy controls needed for supply chain solutions.

Current State of Blockchain Adoption in Supply Chain

Blockchain benefits are quite visible in the above mentioned success stories. That is why there are many initiatives going on for supply chain-related implementations of blockchain across industries. But it is taking time for these projects to go into production. According to Gartner, “80% of Supply Chain Blockchain Initiatives Will Remain at a Pilot Stage Through 2022.” 

Snapper has been working with customers across industries for supply chain solutions.  We follow a robust process-of-implementation approach to blockchain, and use a design thinking process to identify the right use cases and the benefits the customer would get. We realized that the customers are very enthusiastic about the use of technology as part of their digital transformation. However, the understanding level of the technology is very limited for most of the customers before engaging with us. Through our design thinking process, customers get to have a good understanding of how blockchain works, what are the benefits and the implementation challenges. One of the major challenges supply chain leaders realize is that  building an ecosystem/consortium of stakeholders is a requirement for a blockchain network. As developing an ecosystem is a difficult task and involves high risk, customers are cautious about investing in such  solutions and thus delay the decision to  implement blockchain solutions. They are in a dilemma whether to take a lead in creating the network or be part of the existing network. Also there are only limited options available for an organization to join an existing blockchain network for their industry. Customers want to see more and more success stories to validate their decisions.

What is Needed For Faster Adoption of Blockchain Technology

Implementation of blockchain technology not only helps organizations achieve digitalization goals but also creates opportunities for new business models. An organization has to decide whether it  wants to grab this opportunity of taking the lead in creating a new consortium, driving new business models and increasing efficiency by adopting blockchain now, or wait for the technology to mature and be a follower.

Only large-scale enterprises can influence implementation of complex supply chain solutions. It is very difficult for medium and small-scale enterprises to create a blockchain-enabled supply chain network.  

Faster adoption of blockchain can be achieved through the network effect by inclusion of all sizes of enterprises, faster implementations, cost-effective solutions, more and more success stories and maturity of the technology. 

Snapper Future Tech is working on an innovative supply chain traceability solution designed  to help the community achieve faster adoption. Snapper’s supply chain solution, SnapChain, is designed to empower an enterprise to create its own network without any major investment or risk. Business networks can be  small or big, and can be led by any organization throughout the supply chain.  Onboarding a business partner on the network is easy and flexible. This is being achieved by creating a metamodel architecture with configurable modules, transactions types and transaction screens

SnapChain Architecture

SnapChain architecture gives an organization the flexibility to  host a node and have its own network of partners with a dedicated ledger using a private channel to maintain data privacy. Each organization has one endorsing, one committing peer and one ordering node. Each transaction is endorsed by Snapper peers and organization peers. Smaller organizations can be part of a common organization maintained by Snapper.

Cover image: pxfuel