Editor’s Note: In 2019, just about everyone in the technology world is talking about and writing about Blockchain distributed digital ledgers, including the supply management world. It’s not the cool new thing everyone’s talking about but hardly anyone’s doing — it’s not the Keto diet. It’s real, and it’s happening. When mated with other emerging technologies and innovations, like connected devices (aka, “The Industrial/Internet of Things”), digital currencies, mobility, and virtual assistants, the sky is literally the limit for Blockchain. It has enormous potential to disrupt supply chain, risk management, procurement, and finance/accounts payable operations. Because of this potential we’ve been following Blockchain’s rise, development, and news cycle carefully. That is part of my job here at Ardent Partners — a job that I embrace as our resident “Tech Futurist.” And so, it is with great pleasure that I present our first Blockchain for Supply Chain round-up for 2019 — sit back, relax, and enjoy!
SAP Launches Blockchain-Based Platform to Combat Counterfeit Prescription Drugs
Last month, SAP SE (NYSE: SAP), the Germany-based enterprise software solution provider, announced the release of SAP Information Collaboration Hub for Life Sciences, its newest Blockchain-based platform intended for use by prescription drug wholesalers to validate returned products and ensure they are not counterfeit, damaged, or expired before reselling them. According to SAP figures, nearly 60 million pharmaceutical units are returned annually, worth an estimated $7 billion. Much of this stock is eventually resold, presenting lucrative opportunities for fraudsters and thieves to return or sell counterfeit, damaged, or expired medications to pharmaceutical companies.
With SAP’s Blockchain-based solution, anyone in the supply chain — not just wholesalers — will be able to scan bar codes on pharmaceutical packaging to reveal embedded product codes, lots, expiration dates, and serial numbers to help them authenticate the product in hand and ensure that it is not counterfeit or part of a recall. The SAP Information Collaboration Hub for Life Sciences was developed in partnership with several major pharmaceutical companies — AmerisourceBergen, Boehringer Ingelheim AG & Co. KG, GlaxoSmithKline plc and Merck Sharp & Dohme, plus others. The release of the SAP Information Collaboration Hub for Life Sciences follows a new law, the U.S. Drug Supply Chain Security Act (DSCSA), that will go into effect in November of 2019 and require wholesalers to validate these products before reselling them.
IBM Announces a Pair of Blockchain-based Metals Supply Chain Management Partnerships
Also last month, IBM (NYSE: IBM) announced a pair of partnerships in which it has applied its Blockchain-based distributed digital ledger technology to global minerals supply chain management. The goals of the partnership are to digitize and automate the paper-based, manually-driven minerals global supply chain system — from mine to end product — a system that by its nature can be opaque, inefficient, and fraught with fraudulent and unethical activities.
First, IBM has partnered with a mix of mining technology companies (MineHub, Goldcorp Inc., Kutcho Copper Corp., and Wheaton Precious Metals Corp.) and financial institutions (ING Bank and Ocean Partners USA Inc.) to create a purpose-built global minerals supply chain management solution on top of the IBM Blockchain Platform. MineHub will host the platform, and will facilitate an initial use case to serve as a proof of concept for the whole business model before making it available to other partners in the global minerals supply chain. It will track the flow of mineral concentrate mined from Goldcorp’s Penasquito Mine in Mexico as it makes its way to market. Miners will be able to upload data, including data on ethical, sustainable extraction and sourcing practices, to the chain to allow verification by regulators and end users. All transactions will be automatically recorded on the Blockchain, and access will be permissioned to users in order to view and reconcile data. Smart contracts will also be integrated to facilitate financing and payment activities.
And second, IBM announced on the same day that it has launched a pilot program with Ford Motor Company and other major players in the automotive and consumer electronics manufacturing industries to use Blockchain to track, trace, and validate ethically-sourced minerals as they make their way through the global supply chain. IBM joins Ford, Huayou Cobalt, LG Chem, and RCS Global in the pilot program, which has already begun testing its proof of concept. Participants will use the Blockchain-based platform to track cobalt mined and smelted from the Democratic Republic of Congo by Huayou Cobalt, shipped to LG Chem’s cathode plant and battery plant in South Korea, and then shipped to a Ford assembly plant in the United States. Responsible sourcing standards developed by the Organization for Economic Cooperation and Development (OECD) will be applied to participants and their sourcing and tracking methods. The pilot program is set to be completed by mid-2019. The ultimate goal is to make this platform available to artisanal and small-scale miners to sell their products on the global market while becoming compliant, and expanding coverage to other minerals, like 3TG/conflict minerals.
OriginTrail Partners with BSI to Boost International Business Standards
Late last month, Serbia-based OriginTrail, which develops supply chain transparency and distributed ledger systems, announced on its blog that it has partnered with BSI, the UK-based business process improvement and standards company, to bolster BSI’s standards and certifications that it issues for products traded across global supply chains. The idea behind the partnership is to mate immutable, distributed digital ledger technology with internationally-recognized compliance and standards ratings in order to increase the fidelity and trust that businesses and consumers have in global supply chains. Together, OriginTrail and BSI will drive further transparency, traceability, accountability, and trust into the provenance and trade of goods from point-to-point across supply chains. BSI customers can gain early access to the initiative by applying to be part of its pre-release stage.
Citizens Reserve Partners with Smartrac to Integrate RFID into SUKU
In other news, Citizens Reserve, the San Francisco-area provider of the Blockchain-based buyer/supplier network, “SUKU,” has partnered with Amsterdam-based connected devices manufacturer, Smartrac, to integrate RFID signals to SUKU. Citizens Reserve seeks to solve a longstanding problem with using Blockchain for track-and-trace activity: linking physical assets in the physical supply chain with distributed digital ledgers. Products have to “change hands” at each stop along the supply chain, creating vulnerabilities for fraud, tampering, theft, and so on. But tagging products and parcels essentially gives them digital identities as they make their way across the physical supply chain.
When products are scanned at each stop, the RFID tag will automatically transmit the product’s location to SUKU and assign (or verify) its chain of custody. With the product’s provenance, location, and disposition digitally documented in a secure, permanent, and immutable distributed database, it makes it difficult to skirt the system and for materials and products to “fall off a truck,” so to speak. Conversely, RFID tagging also helps companies conduct consumer recalls quickly and efficiently because they would be able to more precisely isolate affected lots, saving time, money, wasted product, and potential illness or death. Kudos, Citizens Reserve!
Hyperledger Developing a “Grid” of Supply Chain Tools for Blockchain
Lastly, Hyperledger, the open source Blockchain project developed by the Linux Foundation, announced late last month that it is developing a set of Blockchain-based supply chain management tools, dubbed Grid. Hyperledger describes Grid as “an ecosystem of technologies, frameworks, and libraries that work together,” and are meant to be shared in the same open-source manner that has made Hyperledger famous. The idea is to create a set of shareable and reusable tools for Blockchain-based supply chain managers that have similar supply chain data needs and requirements. It seeks to increase interoperability and compatibility among other Hyperledger-based Blockchains, which do not necessarily “speak” the same language or recognize each other in the same way. The first go-round for Grid will be via Sabre, Hyperledger’s Web Assembly (WASM) Smart Contract Engine. By starting with Sabre, Hyperledger seeks to place Sabre and WASM at the center of supply chain-focused Blockchains moving forward.
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