KNOWLEDGESTREAM AT-A-GLANCE
The Future of Blockchain in Retail & CPG Supply Chains
ABSTRACT
The future of blockchain in retail & cpg supply chain -- exploring best practices across the industry
PARTICIPANTS
OBJECTIVES
1. Solutions: Understand what Blockchain solutions are out there for Retail and CPG supply chains
2. Use cases: Understand what Blockchain use cases would help retailers and CPG improve their supply chains
3. Practicalities: Explore the practicalities of Blockchain solutions for retailers and CPG supply chains
4. :
End Date: Oct 30, 2018
CONTRIBUTIONS
ACTIVITY
182 Days
9 Themes
35 Contributors
990 Posts
715 Comments
309 Followers
OUTPUTS
8 Slide Deck
5 Video
THEME #1
How will Blockchain impact Retail and CPG supply chain?
THEME SUMMARY
Blockchain impacts in Retail and CPG Supply chain are complex, and the first theme has shown many benefits of blockchain technology for all parties within the supply chain, including the end customer
- Traceability, Provenance, authenticity, safety, compliance, legislation - better product information for all parties within the supply chain, at all stages
- Simplification of the supply chain, speed of tranasctions and information flow through the supply chain
- PLM will improve and Significant savings can be achieved
Blockchain Use Cases are varied and complex
Simple, specialty and high value/high risk products will be the first affected/experimented with DLT, with more heavily integrated/aligned companies, industries and consortiums for CGP supply chains leading any expansion into DLT.
I strongly believe Blockchain technologies will dramatically impact Product Lifecycle Management (PLM) for either retailers or CPG brands/companies. PLM goes beyond the idea of a singular Supply Chain.
Blockchain Benefits and significant
What benefits can been seen from using Blockchain technology? Immutability , Automation, Cost reduction, Auditability, Security
-Significant cost reduction in tracking each material as compared to the current system -No reconciliation needed since everybody will using the same ledger, this enables faster payments within the system & vendors
THEME #2
What Blockchain use cases have you seen in Planning? Pilot? or Rollout? Lets explore these in detail and please keep to Supply chain cases
THEME SUMMARY
The variety of Blockchain use cases has grown over the last few months, and there are a few great use cases happening in the Supply chain for Retail and CPG.
- Most use cases centre around provenance and traceability - a big benefit to any retail and CPG supply chain
- Few use cases are focusing on the end customer and their needs - as this stage the use cases focus on business benefits in terms of better information and more efficient process
Use cases are happening now and there are some great potential use cases being tested
'Material Provenance'- global study with Wrigley (part of Mars, Inc.) to look at lineage of product, the auditing and the warehouse acceptance through a multi-tier supply chain and track/trace of materials across the supply chain (with Hyperledger Fabric [a private distributed ledger] with IBM).
Given that seafood is a relatively higher end food product, it can really benefit from a robust and easy to implement traceability technology through platform such as blockchain.
Use cases in development
Samsung Electronics, a leading Consumer Electronic Brand, is considering to use Blockchain technology to streamline its global supply chain. Samsung Electronics global shipments are in tune of tens of billions of USD PA, and they are estimating around 20% cost cutting
Global auto giant BMW is piloting a Blockchain platform to track mileage in leased vehicles through its startup innovation program.
THEME #3
Can the "back office" morph to become "Blockchain back office"?
THEME SUMMARY
Theme #3: looked at a number of areas regarding practicality of Blockchain Back office - The discussions were around a fit for purpose first approach and then to replace/transform one by one
- Blockchain can replace parts of the back office and make them more efficient and productive, but they need to be looked at one by one
- Replacing the back office, piece by piece as part of an overall transformation strategy makes the most sense and best approach
Blockchain adoption piece by piece
I would start with a portion of the “back office” that is a relatively closed system that deals with financial transactions possibly involving the processing or exchange of funds (either receivables or payable's) using digital currency.
From the applications I've been working with, we're seeing blockchain based ledgers as a means to augment existing databases. By this I mean that you would to decide what data could be shared with other trading partners or other systems for specific reasons.
Blockchain strategy for Apps and Infrastructure
The integration of Blockchain with ERP can creates additional benefits. The integration itself enables optimization of all operations of several different organizations, as well as trusted sharing data. It can potentially transform how modern business operates today, the possibilities are endless.
my takeaway is not that the back office PTP, OTC, CLM and RTR functions are afraid of analytics, change and transparency - in fact they are starving for it. These groups are passionate about using information to drive decisions, but current service and software providers often add complexity
Enterprise businesses need to transform the entire business piece by piece
Backoffice vendors like Oracle strategically plans its products realignment in line with emergence of Blockchain technology, then it opens up new revenue potentials for products/solutions vendors as well as for IT Services vendors.
However certain functionalities of your Enterprise Apps. to be re-architectured in form of DApps (Distributed Apps.) or to be re-launched as third party DApp with further integration with remaing Backoffice systems in order to leverage benefits of Blockchain technology.
THEME #4
We have established a number of use cases and Blockchain ideas within CPG and Retail Supply chain, but what about the Business case?
THEME SUMMARY
Various benefits emerged around the use in both supply chain and the retail setting. Points were made on improvements to the current models and services offered to optimize their respective systems
- Benefits of Blockchain in Supply Chain
- Benefits of Blockchain in Retail
THEME #5
Blockchain Versus Alternative Approaches
THEME SUMMARY
Blockchain vs. Alternative Approaches
- Alternative conventional approaches are available for near term implementation for distributed information sharing. Blockchain can be used to augment conventional database approaches in the interim.
- In the longer term, newer business models and declining price performance of legacy systems will drive the CPG market to utilizing newer technologies like blockchain.
- Such new business and technology models are related to the desire for democratization of supply chain information capabilities, such as improved consumer self-transparency of product provenance.
- Blockchain, and its derivatives, provide a more concise and consequently more cost-effective way of achieving the capabilities required for such newer business models.
Alternative Conventional Solutions
Blckchain is a sound solution, but at the a cost that is expensive and very slow as of today. Pure back up services are currently very economical from cloud providers and offering like Tarsnap.
Other companies are providing with a single cloud platform enabling selling, business and logistics in a CPG supply network
Examples of Preferred Uses of Blockchain
Self-authentication is seemingly the need for many consumers buying various products before making a purchase to avoid fake in a world of counterfeiting.
information would be accessible to consumers as well, giving them a simple way to track their warranties and make claims, and strengthening their relationship with the manufacturer.
New Technology Alternatives
there are many alternative DL protocols like Tangle, Hashgraph, RadixDLT. However if you mean alternative to DLT itself, then I can see conventional technologies itself getting implemented in fail proof distributed mode
RAIDA (Redundant Array of Independent Detection Agents), which is a distributed storage system that works as a Counterfeit Detection System and also provides fault tolerance, high availability and decentralized management in order to create trust in the Certificate of Authenticity
THEME #6
Hypothetical Case Study
THEME SUMMARY
How can blockchain be implemented as a provenance application in a consumer retail environment?
- Suited for high stake products, such as big ticket items, health and personal products, products with high safety liability, or high margin items.
- Leveraging of new technologies (AI, advanced analytics, IoT, sensors and tags, robos, chip hardware) and existing technologies (ERP, DW, cloud, mobility) is required.
- Realization involves committing key stakeholders for beta. MVP and later scale-up. Emphasis on building D-app based on process flows and integrating with blockchain core.
- Appraisal based on degree of positive disruption, increased brand visibility, connectivity with consumers, new revenue through premium models, reduced costs.
Prime Areas of Application
Other product categories include fine wine, art, luxury items etc. CPG companies can promote the "ethical fashion" with such application.
I shall say Products Impacting Public Health, Public Safety, Public Convenience, Human Life, Environment (PPPHE) should be considered as Prime candidates for application of Blockchain.
Technology Solution
New Technologies: Mobile App Development, Public/Private Blockchain Platform, Crypto-Fiat payment gateways & wallets, Digital-Twins, Artificial Intelligence and Advanced Analytics, IoT Sensors, Robos & New Handheld device Hardware etc.
Existing Technologies: ERPs, Enterprise Data Warehouse, Integration Technologies, and existing e-commerce website if any
Assessing the ROI
enable direct interaction between brands and consumers. Reaching the next generation audience via data-driven mass personalisation.
[ Increased revenues from consumer demands & adaption + Premium fees consumer willing to pay + Reduced costs of supply chain operations - Total Investments & Costs (CapEx+OpEx)]
Implementation Process
Then build business and application logic with workflows that support the provenance functionality. Integrate the Blockchain core with back-end transaction systems and ensure seamless flow of information ensuring the data integrity and privacy.
Solution Architectures Envisioned
Application Logic: Build business and application logic with workflows that support the provenance functionality. This is the core platforms that developed and rolls out provenance application.
Atleast four layers - Application layer - DAPP , business use case layer. Blockchain infrastructure and the data with cybersecurity
THEME #7
Blockchain Caveats
THEME SUMMARY
Despite all the hype, there are significant caveats with deploying blockchain based applications in the CPG space, and wide-scale implementation will likely be in the longer term.
- Blockchain applications are vulnerable to rogue transactions. A blockchain based network is susceptible to vulnerabilities in the underlying network, endpoints and application software.
- In CPG, creation of a successful blockchain network hinges on forming seamless collaboration and interoperability between diverse players and systems, requiring governance and perhaps regulation.
- Blockchain is currently limited by real-time volume, efficiency and scalability due to consensus protocols and blockwise linear processing.
- A 5 year adoption for widescale deployments are envisioned. Friction is due to competing conventional delivery methods, ability to transition from legacy systems,
Underlying Network Infrastrcuture Threats
Routing Attack when we are talking about vulnerability of TCP/IP protocols getting used for Blockchain block transmission.
Using this method, a Blockchain network could be partitioned into two or more separate networks, exposing either side of the partition to double-spending attacks because they cannot communicate with the entire network to validate transactions.
Supplanting Legacy Applications
the lack of clarity about the improvements the technology offers over existing solutions may delay its adoption by businesses
The potential costs and perceived risks associated with early adoption of Blockchain, and possibility of disrupting existing practices may pose significant challenges to businesses.
THEME #8
Persuading the Retail Value-Chain
THEME SUMMARY
Factors for Persuading the Retail Value Chain to Adopt Blockchain Based Solutions
- Retailers play a prominent role in orchestrating and funding pilots, but must be influenced and supported by suppliers.
- The potential for new business models and operational capabilities involving enhanced customer visibility of product provenance will likely be the driving force.
- Mechanisms to reduce failure risk must be devised.
- A clear vision for such new models must be established.
Retailers play a prominent role in orchestrating and funding pilots, but must be influenced and supported by suppliers.
For large retailers with power, for example Walmart, they actively influence the adoption of blockchain from their suppliers.
With smaller profit margins they will be less keen to invest in pilots, but will be very open to engage in programs that are financed by their suppliers. Usually, suppliers engage with retailers both commercially and logistically.
The potential for new business models and operational capabilities involving enhanced customer visibility of product provenance will likely be the driving force.
Transparency in sourcing and ingredients helps shape brand value by deepening consumer trust. It guides consumers to products that feel tailored to their interests and worldviews. It’s through transparency – and the sense of belonging it creates – that CPG companies will achieve brand preference.
Sustainability and waste reduction will drop costs, food freshness increases the quality. Overall, these will drive profit with consumer happy to pay more for a better experience.
Mechanisms to reduce failure risk must be devised.
THEME #9
What does the future hold?