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A Tale of Two Chains: The Synergy of Blockchain and Supply Chain · Speaking of Supply Chain

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You're listening to Speaking of Supply Chain, a meboch podcast. This is a
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show for logistics professionals looking to learn more about the latest innovations in supply chain.
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Each episode will feature a conversation on topics such as mitigating supply chain disruption
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and reducing risk, current automation trends, sustainability initiatives, and more. Let's
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dive right in. Hello, and welcome to Speaking of Supply Chain, where
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we explore trends, current events, and innovations impacting the logistics and supply chain
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industries. I'm your host, Ellen Wood. Today I am excited to be
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joined by Alan Bay from Adventists, and our conversation today is going to focus
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on blockchain technology and its application to multiple industries and areas of the supply chain.
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Welcome Alan, Hi, Allen, thank you for having me. Excited
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to chat a little bit more on yet local things blockchain. Yeah, I
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think it's going to be a great conversation today. We're talking about blockchain and
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for our listeners who may not be as familiar with the concept or with the
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idea of blockchain, can you break it down into its simplest form. Yeah,
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So this is something that we've had to do quite a lot, and
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hopefully my pitch has been refined over the years. I think to understand blockchain,
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it's understanding the evolution of the Internet and where we're kind of seeing the
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latest innovations. So when the Internet started, we had what was called Web
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one, which was basically the ability to readdocuments that were hosted in service,
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right, plain and simple. Then we got Web two, which led to
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kind of reading and writing, putting content back out there onto the internet very
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easily. This is sort of the user generated content era of Facebook and social
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media and all of that. We saw user interface innovations where the Internet became
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more dynamic and colorful, and the websites moved around and it felt a little
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bit niceet to interact with compared to the world of Web one, and Web
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three is now the sort of next innovation, and that's where we are today.
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And it's not just read and write, but also the ability to own,
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to natively sort of own something in the digital context. So some people
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may have seen NFTs or people something pictures of monkeys for a lot of money.
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All of these were just kind of initial fads, should we say,
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or applications of this technology and that notion of digital ownership. Now the term
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blockchain refers to the technology that enables us to create this digital ownership, digital
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scarcity, and therefore digital value. So we're no longer storing a digital representation
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of something physical. So if you think of your bank account, it says
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you've got one hundred dollars, but really the bank's holding the money on your
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behalf and that's just digital representation. If you've got a one hundred bitcoin,
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you actually own that hundred bitcoin within your owner wallet without any to me ories.
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So hopefully that's helpful. This blockchain is the technology, and what it
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has done is it has new properties that previously didn't exist in technology, and
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these properties can be applied to different use cases. But it doesn't apply everywhere
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like people try to sort of shoehorn it into in the early days. But
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it does give us different tools that we can now solve problems with that previously
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weren't solvable. Okay, so talking about some of those problems, what industries
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have the most to gain from using blockchain technology in their supply chain? And
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is it as simple as you make it sound, because you did simplify that
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very well, But I'm sure that it gets a lot more complicated when you're
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actually trying to do something with it. What industries are utilizing this to their
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benefit? Yeah, so it can get very complicated when you get into the
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weeds of any technology, right, But at the end of the day,
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the goal here is to see how some of these properties that we never before
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had can be utilized. And these properties are greater transparency, immutability, so
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the ability for various parties to agree on something and then not change that record
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afterwards. Right. Sometimes people refer to it as an depend only ledger,
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which means you can never kind of rub out a mistake you make. You
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just have to keep adding entries to that ledger. Now, where does it
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apply best in supply chain? I guess that let's start with the definition of
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which supply chain we're talking to it. So, if we're looking at goods
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and services kind of moving around the world geographically, if that's kind of the
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notion of supply chain we're going for, then I would say this can be
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really valuable in any industry that is lacking in transparency or needs to give greater
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trust to the process. So one example could be carbon credits. People saying
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green fuels or whatnot. There have been many controversies we've seen over the years,
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obviously within that space where people have claimed to all setting or using something
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that is certified as green, but you take a bit deeper into that certification
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and some question marks may arise. The technology like blockchain would allow you to
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track from the source until the destination and kind of every step in a way
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what has happened in a fully transparent manner, so that anybody could go and
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look and verify that that is the case. So it's typically very valuable in
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situations where they are multiple parties interacting in an ecosystem together who can't necessarily trust
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each other, but need to find some kind of agree interoperable backbone to communicate
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fire. Okay, So even if it's not trust each other, it's such
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a complex relationship, multiple vendors, multiple steps throughout the process. I don't
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think it's as much an issue of trust as that just reliable data that isn't
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going to have a change implemented from this language to that language as it goes
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through the process and through the supply chain. They have to trust each other.
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It's better if they do trust each other, but it still gives benefits
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to the entire ecosystem. Of course, it just simplifies and ensures that the
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data is accurate from beginning to end without interruption. Yeah, exactly, can't
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be tempered with. Everybody can see it, and it's done without a trusted
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intermediary directly between the parties. Okay, So it's not just supply chain that
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can benefit. I was looking at your website. There are a lot of
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industries that you work with. What are some of those other industries we talked
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supply chain, We talked a little bit about green energy, and the one
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that comes to my mind that I know I've seen interest in is the fashion
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industry. Is that the only other industry? What other areas of business could
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benefit from this unbreakable chain of information. Yeah, So there's an emerging term
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called sort of real world tokenization or real asset tokenization, and this spans it's
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a fifteen trillion dollar opportunity as estimated by BCG and Blackrock and a bunch of
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different players. So that this kind of evolution of blockchain in the Internet is
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arguably as impactful to how we're going to interact with each other as the original
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emergence of the Internet, so industries that this does touch, and obviously banking.
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It has massive implications for the banking sector, how money has moved around
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cross border transactions, efficiency in dealing with kind of legacy banking infrastructure. And
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we've seen that the cryptocurrency is one use case of blockchain which has obviously shown
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promise and some difficulties when it comes to the sort of financial industries. Then
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we've got fashion is a great example, but I would wrap it into a
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wider sort of sector classification of royal because that's really what most of the fashion
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use cases are. There's now this new ability to represent if you're looking at
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more of a cash back type model where if I purchase an emerchant, I
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get some kind of reward back from that, you can create these closed payment
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economies that can function much more efficiency. We've supported clients and reducing debt by
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thirty percent, increasing margins by twenty percent in that realm. But then there's
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also sort of new acquisition channels. I think users that are required viral web
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through a blockchain kind of strategy, whether it has to do with NFTs or
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tokens or any kind of digital gamified representation of royalty are four to five times
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stickier than traditional customers, which is obviously massive, and I would say as
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one last point, so obviously that touches on many different industries. But I
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think one of the most fundamental pieces to the Internet that is changing is in
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the world of advertising as cookies. With global data laws right GDPR and the
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variety of different laws that exist within the States, it's getting harder and harder
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for companies to track users as they move between the different websites, and the
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mechanism to do that previously was called cookies. Apple obviously they do not track
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nowadays their variety of different people cracking down on this. Wallets gives the ability
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to track. So whallets are the concept of ownership within blockchain, whilets are
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the new cookie. Essentially they give businesses the ability to track customers again but
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only on the terms that the customer is happy with. So it puts the
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power back with the individual and I can share my data to get better product
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recommendations or whatever it is that I'm looking to leverage from it. But I'm
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much more in control of my data and so zero party data people are calling
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it where I can share data actively, so that infrastructure obviously touches advertising and
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therefore probably every industry. It's just marketing within any business. Right. One
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other industry that you had mentioned when we talked previously was baggage handling, and
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I feel like this is something that every single person who travels has dealt with
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before, where it's my bag is lost, and maybe the airline can help,
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maybe they can't. I've seen where people put air tags in their luggage
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just so they can have some visibility to it. And I imagine this is
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somewhat similar in use case to use blockchain for baggage handling. Absolutely, so
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this is one of the great use cases we have lived. This is at
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Heathrow Airport that we've done this with a variety of different airlines and actually bone
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Phone that's getting involved in that as well. And what we're looking at is
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combining a variety of technologies Internet of things with blockchain and artificial intelligence, and
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what we're able to do exactly to your point at any point in time actually
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staggering how many items get lost so uil these unit load devices or the kind
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of pods that go into aircraft and that carriage the bag edge of a mail
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or whatever that goes in the aircraft. Right five to ten percent of those
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are missing at any point in time. Mostly they find them eventually, but
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there are certain guarantees that have to be provided, especially for freight moving around
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the world, on how quickly something will move from a to B even a
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passenger moving from one aircraft to another. An airport has to guarantee that within
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nineteen minutes you can get the baggage off or one aircraft to the other one
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to be able to sell a kind of connecting flight. What our system does
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here is it plugs onto zlds. You have THIM enabled Internet as Things device,
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so essentially like a little similar to an air tank, just different technology.
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Where you're connected to cell phone networks. It will be able to say
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status of this item, and it can even be complex for things like medicines
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moving around the world that have to be kept at a certain temperature or not
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shaken. So it can give you a bunch of data around what's happened with
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this item as it's gone through its supply chain. The blockchain sits underneath this
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kind of gathering this data record, but also acting as an authentication mechanism.
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You can see exactly who has scanned what at which airport when it moved between
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the different parties. I As you know, there's depending on the airport,
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there can be anything from five to twenty different entities that touch upon from one
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aircraft to another aircraft, and so it really helps streamline that process and then
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generate the required documentation. Of course, the aviation industry is a highly regulated
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industry. It can help generate the documentation and save time and doing that so
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we have proven a net cost reduction of seven percent to the parties we have
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helped at Heathrow, which if extrapolated across the industry, equates to about a
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one point two five billion dollars saving. That's a lot. So one of
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the things that came to my mind while you were explaining that was how is
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this going to change the integrity of information? And the I don't even know
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how to explain it. Like I'm thinking of when I order something online and
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I get the shipping information and I'm watching, oh, it was checked in
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at this airport, and now it's checked in at this airport, and it's
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been shipped to this location and it's in transit, and you know, getting
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all of that information is handy as the consumer to understand what is happening with
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my package. But when it comes to whatever guarantee I was given at the
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time of purchase in terms of how long it would take, or the promises
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that were made by the shipping companies to be able to say, yes,
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this is out for delivery, but it's not actually on a truck yet.
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So how does that come into play when someone an end user is asking for
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verification of this data and wanting to understand. I mean, that's going to
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come back on a lot of these other companies to say, you know,
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maybe not fudging their details or over promising and under delivering. I mean,
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this is going to make some changes in the way that they have to honor
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the promises that they've given to their customers. Is that a good thing?
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Is that a scary thing? How does that work? Absolutely? So,
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I mean it's a great example, right. I think it's worth exploring one
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more blockchain concept to illustrate the power of this, which is smart contracts.
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So a smart contract is basically a blockchain based contract that can automatically execute various
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contractual clauses based on the information contained within that blockchain system. So, for
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example, let's say there are certain promises made through the supply chain of when
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something will have arrive, you have to prove that it has arrived at that
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time your payment is triggered or delayed, deductions not triggered based on something not
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arriving in time. You can make a much more efficient supply chain that doesn't
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have work the complexity of the financing and all of that associated with it,
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which allows I would argue the efficient and the better players would greatly benefit from
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something like this because if they're going to be able to grow much faster without
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increasing their cost right However, those who maybe indulge a little bit more in
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some of the obfuscation you're talking about would be quite resistant to that. Now,
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of course, it's a question of cost and time to help evolve in
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creating the right steps along the way and the security around the data as well.
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Right when you get a delivery from delivery or whatever the equivalent one is
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in America, doesn't really matter if you know where your burger is alive.
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When there's sensitive cargo traveling in an aircraft, it's slightly different. Maybe the
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end user should be seeing that, but smart contraction just be regulating that.
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So building the system slowly but surely to ensure the right privacy protections around that
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data, whilst being able to leverage concepts like smart contracts and blockchain to really
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create more efficiency. I think ultimately that the leading innovative players will adopt it,
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be able to grow their businesses faster without baring their cost base because of
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it, and ultimately these things would become standards if widely adopted enough. So
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the companies that have already a good process in place are going to benefit better
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and faster from the technology just because they've already laid the groundwork and they've already
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established an understanding, maybe not to that degree of transparency, but are able
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to again just reap the benefits of having this technology underneath it, behind it,
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wherever you want to put it in perspective to say that this piece,
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this unit is going to be where I say it's going to be, absolutely
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and when you look at a world that's moving to artificial intelligence becoming so central
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to business processes, having such solid foundational data that you can trust and that
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is reliable to build these higher level kind of AI models on top of and
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optimize your business only helps you accelerate faster into kind of becoming that industry leader.
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Now, that doesn't mean that businesses that are still struggling with some of
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those concepts shouldn't try to include blockchain, because it's still going to help,
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but it's going to have a little more lift on the beginning to make sure
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that everything is what they think it is, or that their data is accurate,
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that their information that they're already using as their baseline has enough truth to
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it. That could take a little bit longer in an implementation. Is that
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fair to say that is accurate? From what I've seen in the aviation industry,
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at least some of the partners we've worked with, we're still just talking
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about digitization to a degree. Right, Some of it is plain and simple.
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Let's not write this down on a piece of paper and hand it around,
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but let's actually put it so there are massive benefits if somebody is following
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those kinds of processes and is a really competitive today, just imagine how much
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better it could be by streamlining some of it significantly, just from moving away
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from paper. And I am a paper person, so I understand I write
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everything down. If I write it down, it'll happen. If I type
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it in my computer, it might just because that's the way my brain works.
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So I am out there killing trees, recycle, but I understand the
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hesitation of getting rid of something written down on a piece of paper or keeping
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a piece of paper as a record, So I can relate a little bit.
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What advice would you give to other listeners out there who are intrigued but
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unsure if they're ready for implementing a blockchain technology into their supply chain specifically,
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but you know, into their business in general, whether it's baggage handling or
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the fashion and royalties as you mentioned, any of these other industries energy.
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If they're not sure, what would help them understand it? Better be more
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comfortable with the idea. So there's been an important evolution in the blockchain market,
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right Like we had the application crypto currencies, which are quite controversial.
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There were various cases of fraud and whatnot, but the world has kind of
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moved beyond that now to where Blackrock is the biggest holder of bitcoin right so
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we're in a phase of the market evolution with the protections put in place by
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the regulatory bodies. Have the regulatory bodies are basically caught up and it's a
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much safer playing field. So obviously number one is always risk mitigation. Nobody
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can take a solution that is ultimately going to damage their business. And the
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market has matured, but it's still about selecting the right partner, right,
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somebody who's done some work within the industry already, typically bigger players. Rather,
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then it also comes to how do you start. Typically what we see
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market participants doing is proof of concept, right, proof of concept and innovation
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department starts more. Do it with ten bag of chandlers and have them put
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it on their phones that they given and just add an all scan of the
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uovs and see how it works from there, dipping your tone slowly building from
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that, you can start saying, okay, where might the benefits he have
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be? Where wouldn't they be? And then that sort of scales up.
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Right once you build a relationship with a party, once you start seeing some
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early successes, then we roll into multi year contracts with a small slipper of
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functionality, and you can kind of grow on that by pre saying Okay,
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here is what we think we're going to be able to deliver in terms of
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value add and then you prove it and slowly but surely taking those steps and
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rather than just jumping in all the way and saying, okay, everything that's
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going to be blockchain now, that is very rarely the correct Well, I
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love that. That's one of the things that I know we do very often
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when it comes to you know, whether it's a network design or a facility
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design or a master plan. One of the first things we look at when
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proposing some of these very very large transformation projects to Meebok clients is quick wins.
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Where can we find the quick wins? Where can we prove that we
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know what we're talking about. Where can we show that there is value to
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the advice that we're giving and give that really quick, maybe not easy,
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but at least smaller in scale option to adjust something, to change something,
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whether it's a process or a workflow, and involve some sort of efficiency into
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the process so that then we can show, okay, yes, we can
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deliver some value, we can deliver some savings, and then move on to
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the next step of getting bigger and better and a larger scale transformation. So
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I love that that's an option because if you're looking at a big technology change,
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a lot of companies immediately their responses that's too much. That's too much
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all at once. We can't possibly do that. A rollout like that would
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cripple our operations. It's just not possible. So the fact that this is
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implementable in smaller steps that show the value and that can bring some of those
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savings to the table at the beginning is a huge opportunity for these businesses to
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get in and start utilizing blockchain technology in their business. I love it absolutely.
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Yeah, you can spend twenty million dollars on a big digital transformation project
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with one of the major consultants, all by selecting the right partners to the
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iterative approach. And if you can find that internal champion who benefits from the
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optimization and they're a little bit forward looking ambitious in their career, that's just
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a beautiful combination. Right. You need that key multiplier within the organization to
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get really excited to be your cheerleader and really promote that so that everyone wants
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to get a piece to that pie. Everyone wants to be in on the
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secret and whatever is going to help them catapult their careers or their business unit
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or whatever it happens to be. No, this is really fantastic, So
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thank you so much. For sharing your insights and technology with us. Where
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can our listeners reach you? Yes, so the best channel all about channels
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are on the website, so event to start out, I think our most
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active place where we did the most regular updates are on Twitter level now x
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so that's at this network, and I'm always in there as well, and
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in the blockchain for the real diet blockchain people who know about it. We're
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also in Telegram, so again that's at eventus network. Okay, yeah,
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that's that's not going to be me. Sorry, I will I will reach
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out to you on Twitter or your website. Thank you again so much for
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explaining some of this technology to us and giving us a little bit more of
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an idea of how accessible blockchain chain really is for supply chain and some of
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the benefits that it can read. That brings us to the end of our
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episode. If any of our listeners out there have a suggestion for a topic
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or would like to be a guest on the show, we'd love to hear
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from you. You can contact me anytime at podcasts at mebok dot com.
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As always, thanks for listening to Speaking of supply Chain. If you enjoy
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