Blockchain

Will Blockchain Revolutionize Global Trade?

Problem Statement: Data Quality in Global Trade

Data quality is the Achilles heel of international supply chains. Is Blockchain the solution?

Research by HMRC (UK Customs) and Dutch Customs revealed that “many of the systems associated with international trade are disconnected from each other and designed for old, outdated, paper based processes and procedures”. Key elements in this challenge are to identify the parties involved in supply chains, as well as the nature of the goods.

In some industries (e.g. food, drugs) regulation requires full transparency into the supply chain, for public health reasons. If supply chain visibility is possible in these supply chains, why not elsewhere?

Benefits Of Supply Chain Transparency

Benefits of more transparency into supply chain parties will span across all stakeholders in the supply chain, e.g.:

  1. Sellers/manufacturers will be able to realize shorter and more predictable delivery times as well as higher agility of their supply chains, leading to more sales.
  2. Buyers will have more predictable supplies, thereby being able to plan their processes better, keep less stock and be agile towards their clients, thus reducing costs and increasing sales.
  3. Customs and other border agencies will be able to perform risk-based inspections. Thereby limiting unnecessary inspections of legitimate trade, focusing their resources in high-risk shipments and speeding up the logistic process for legitimate trade. The ultimate result: lower delivery times and lower costs for buyer and seller.
  4. Logistics Service Providers (LSPs) will be able to offer value added information services on top of their core logistics services, because the physical flow (cargo) and the information flow will be joined.

How do you know if parties have been involved in fraud, in modern slavery or in any other aspect that you – as a business – do not want to be associated with? How do you establish trust in them?

Blockchain Is A Solution

New technologies can tackle these barriers by sharing data and at the same time provide strong compliance capabilities, which are of essence in international trade. On the IPCSA Annual Conference, November 23rd 2017, we discussed a solution that might revolutionize global trade: Blockchain.

Why Blockchain?

Blockchain provides the technological means for parties operating in a network to share information in such a way that only authorized parties can read the information. In addition, it is practically impossible to falsify information (Blockchain provides immutability). But Blockchain is merely an IT solution; in order to realize benefits, the technology needs to capture high quality data to identify every entity you do business with, to meet compliance regulations and ultimately to benefit from a transparent supply chain.

Critical Success Factor: Uniquely Identifying Entities

Ensuring you know (and capture) the unique identification of every entity (company) in the Blockchain network is therefore a critical success factor.

Approximately 90% of the Fortune 500 companies already use the world’s leading global unique business identifier: the D-U-N-S® Number by Altares – Dun & Bradstreet.

In the not-too-far future, Blockchain solutions will record every step in the global supply chain, such that every business entity in the network is identified by its D-U-N-S® Number, and Altares Dun & Bradstreet offers its Due Diligence checks for these parties. All participants in the trade ecosystem will be able to see whether a supply chain is fully “green” (i.e. no risks were detected), even if they have no permissions to see the details of who these parties are (for competitive reasons).

Business Benefits

What will the benefits for customs be with Blockchain upcoming? Will companies on both ends of the supply chain finally be able to trust each other? Does the trade ecosystem really need to reinvent itself? What happens to companies and industries that fail to reinvent themselves as new technologies become available?

In the IPCSA conference we discussed how reliable data and Blockchain technology will accelerate global trade and open up new opportunities. If you have not been able to join our conversation during the “Globally Connected Logistics” IPCSA Annual Conference in Brussels on the 23rd of November 2017, get in touch with me to explore possibilities.

Supply chain transparency will be realized, so this is a wakeup call for the logistics industry:

Are you in, or will you be left behind?

 

This blog post was first published on my LinkedIn profile on November 15th, 2017.

 

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Ziv Baida

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