Module 7_ Use Cases_ Blockchain Certification Training Course.pptx
- 2. Tools
- 3. Table of Contents Supply-chain ● Vendor Payment ● Inventory Management ● Asset Tracking ● Regulatory Audit & Security Manufacturing ● Raw Material Tracking ● Invoice & Receipt Management ● Production Tracking ● Regulatory Audit & Security
- 4. In this module you will- ● Understand Vendor Payment and Inventory Management ● Learn Asset Tracking and Regulatory Audit & Security ● Understand Raw Material Tracking and Invoice & Receipt Management Learning Objectives
- 6. You might think, what has blockchain to do with Supply chain, vendor payments, asset tracking and regulatory audit. Right?
- 7. Let us first understand what is Supply Chain?
- 8. A supply chain is defined as the entire process of making and selling commercial goods, including every stage from the supply of materials and the manufacture of the goods through to their distribution and sale. Successfully managing supply chains is essential to any company. Supply Chain
- 9. Supply Chain
- 10. American Express says: “Blockchain technology promises to facilitate fast, secure, low-cost international payment processing services (and other transactions) through the use of encrypted distributed ledgers that provide trusted real-time verification of transactions without the need for intermediaries such as correspondent banks and clearing houses” Vendor Payment
- 11. Bext360 is using blockchain technology to better track all elements of the worldwide coffee trade—from farmer to consumer—and thereby boost supply- chain productivity. Using cryptocurrencies, this application of blockchain in the supply chain ensures payment directly to the farmers immediately after their products are sold Example
- 12. ● There has been a good deal of interest around blockchain and supply chain finance solutions because it can increase the efficiency of invoice processing and provide more transparent and secure transactions while increasing the efficiency of invoice processing ● The ability of blockchain-based cryptocurrencies to enable cross-border funds transfers without the need for banks and clearing means blockchain technology in the supply chain can speed payments while reducing the incurred fees Vendor Payment
- 13. ● However, the development of smart contracts–such as through the Ethereum platform–means that many supply chain operations can be triggered automatically through the smart contract ● For example, a smart contract may set out the agreed delivery of a product and what should happen if the delivery is late or missed. Vendor Payment
- 14. ● The contract can monitor the delivery and automatically trigger actions where the terms are breached. This significantly reduces costs, especially where third parties had been previously used to conduct part of the process. Vendor Payment
- 16. Let us see an example of a transaction showing the difference in conventional and Blockchain system The Participants Inventory Management
- 23. Asset Tracking
- 24. FAST TRANSACTION SETTLEMENT Transactions are processed directly from peer to peer with fewer intermediaries and ledgers get updated automatically Asset Tracking
- 25. ANTI-COUNTERFEITING Blockchain asset tracking can combat counterfeits. RFID tags can track and trace assets throughout the entire supply chain until they reach the consumer’s hands Asset Tracking
- 26. IMMUTABLE & RELIABLE Blockchain technology is resilient and does not have any single point of failure. Transactions processed in the blockchain are immutable and irrevocable Asset Tracking
- 27. LOW COST Automated smart contracts to validate transactions, Less use of intermediaries, no reconciliation of work help to reduce the supply chain cost overall Asset Tracking
- 28. ● Many companies are exploring the use of blockchain technologies to help track detailed information about materials, components, and ingredients ● Blockchain technologies can track the origins of raw materials and follow domestic and international supply chains to help meet the increasing demand for consumer information about globally produced goods ● This provides more transparency and accuracy about a product’s long journey to the store Asset Tracking
- 29. Top Use Cases in Supply Chain Supply Chain Finance There has been a good deal of interest around blockchain and supply chain finance solutions because it can increase the efficiency of invoice processing and provide more transparent and secure transactions while increasing the efficiency of invoice processing
- 30. Top Use Cases in Supply Chain Supply Chain Logistics The promise of blockchain in supply chain logistics, according to DHL, is that transactions can be verified, recorded and coordinated autonomously without third parties–eliminating an entire layer of complexity from global supply chains.
- 31. Top Use Cases in Supply Chain Supplier Payments Blockchain technology promises to facilitate fast, secure, low-cost international payment processing services (and other transactions) through the use of encrypted distributed ledgers that provide trusted real-time verification of transactions without the need for intermediaries such as correspondent banks and clearing houses
- 32. Top Use Cases in Supply Chain Food Safety Many food safety issues, such as cross-contamination, are difficult to track and isolate. The lack of data and supply chain visibility leads to slow action when an issue arises and well as unnecessary waste and the economic and reputational cost of recalls.
- 34. ● Execution errors such as mistakes in inventory data, missing shipments, and duplicate payments are often impossible to detect in real time ● Even when a problem is discovered after the fact, it is difficult and expensive to pinpoint its source or fix it by tracing the sequence of activities recorded in available ledger entries and documents Regulatory Audit & Safety
- 35. ● Although ERP systems capture all types of flows, it can be tough to assess which journal entries correspond to which inventory transaction ● This is especially true for companies engaged in thousands of transactions each day across a large network of supply chain partners and products Regulatory Audit & Safety
- 36. One common approach to improving supply chain execution is to verify transactions through audits. Auditing is necessary for ensuring compliance with contracts, but it is of limited help in improving decision-making to address operational deficiencies. Regulatory Audit & Safety
- 37. When blockchain record keeping is used, assets such as units of inventory, orders, loans, and bills of lading are given unique identifiers, which serve as digital tokens (similar to bitcoins). Additionally, participants in the blockchain are given unique identifiers, or digital signatures, which they use to sign the blocks they add to the blockchain. Every step of the transaction is then recorded on the blockchain as a transfer of the corresponding token from one participant to another. Regulatory Audit & Safety
- 38. Regulatory Audit & Safety Example Consider how the transaction looks when represented on a shared blockchain First, the retailer generates an order and sends it to the supplier. At this point, since no exchange of goods or services has taken place, there would be no entries in a financial ledger. However, with blockchain, the retailer records the digital token for the order. The supplier then logs in the order and confirms to the retailer that the order has been received—an action that again gets recorded on the blockchain but would not generate an entry in a financial ledger. Next the supplier requests a working-capital loan from the bank to finance the production of the goods. The bank verifies the order on the shared blockchain, approves the loan, and records the loan’s digital token on the same blockchain. And so on.
- 41. ● European grocery chain, Carrefour, uses IBM Food Trust to trace chickens from farm to grocery store ● In 2019, Carrefour reported that its blockchain-tracked chicken outperformed other chicken in sales growth ● Carrefour credits blockchain with sales increases because blockchain reassures customers of the quality of items they buy and assists them with avoiding products with genetically modified organisms, antibiotics or pesticides Raw Material Tracking
- 42. ● In fact, Carrefour tags certain products, such as tomatoes, oranges, fresh micro-filtered milk, and Rocamadour cheese, with QR codes that allow consumers to learn where their food originated by taking a picture of the QR code with their smartphones Raw Material Tracking
- 44. Blockchain works to track the provenance of a good thanks to digital tokens that are issued by each participant in the supply chain to authenticate its movement. Every time the item changes hands, the token moves in lockstep. The real- world chain of custody is mirrored by a chain of transactions recorded in the blockchain. The token acts as a virtual “certificate of authenticity” that is much harder to steal, forge or hack than a piece of paper, barcode or digital file. The records can be trusted and greatly improve the information available to assure supply-chain quality. Raw Material Tracking
- 46. Blockchain promises to eliminate pain points, such as invoice processing and supplier financing, that have plagued the manufacturing space for years Invoice & Receipt Management
- 47. ● When manufacturers and their suppliers use blockchain, they can add functionality that flags and resolves partial shipments, short shipments, or damaged goods. ● Instead of processing and verifying invoices, they can use an evaluated receipt settlement process that automatically posts and pays invoices based on the purchase order and the settled goods receipt record in the blockchain. Invoice & Receipt Management
- 48. ● The immutable blockchain ledger keeps both buyers and suppliers on the same page, eliminating the need to constantly reconcile data. ● It adds a level of transparency that the supply chain is currently lacking. Invoice & Receipt Management
- 49. Traditional payment processes tend to be opaque, based on paper, with little or no audit trail available. Debtors can easily delay payment by hiding behind bureaucracy or claiming demands are held up or lost. Request Networks, TallySticks and Applied Blockchain are just some of the companies seeking to change all this by shaking up business invoicing using blockchain. Invoice & Receipt Management
- 51. ● The physical production process is fully reflected in the blockchain ● It works across multiple entities, as they cannot proceed without the correct input ● Every step of the production process is accountable, and therefore traceability is not only provided for a single product, but also for its ingredients ● Depending on the interval in which new blocks are added to the blockchain, the block creation timestamp informs about the time and date when a given product has been manufactured. Production Tracking
- 52. ● As products are handled in batches, input information is available by batch. For example: A batch of edge-glued wood could be traceable to a batch of 100 logs. In order to accomplish traceability for single goods, it should be declared as its own batch. However, fine-grained traceability comes with the cost of higher transaction counts. Production Tracking
- 54. One of the most exciting features of blockchain from the compliance perspective is its practical immutability: as soon as data is saved into the chain, it cannot be changed or deleted. That is why blockchain is used as the document or proof for the transfer of any digital asset, for example bitcoins or other digital currencies. Regulatory Audit & Security
- 55. From sourcing raw materials delivering the finished product, blockchain can increase transparency and trust at every stage of the industrial value chain. Pain points it could help address include: ● Supply-chain monitoring for greater transparency ● Materials provenance and counterfeit detection ● Engineering design for long-duration, high-complexity products ● Identity management ● Asset tracking ● Quality assurance ● Regulatory compliance Regulatory Audit & Security