Five Supply Chain Disruptions Blockchain Will Cause
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Blockchain technology will disrupt global supply chains in 5 key ways: 1. Data exchange will move from EDI to distributed ledgers, ending centralized data control. 2. Cryptocurrency will disrupt traditional money flows between supply chain participants. 3. Invoices and purchase orders will be securitized and traded on new markets. 4. Decentralization will allow demand to flow more efficiently between parties. 5. Transparency around sustainability, risk, and ingredients will become priority competitive factors.
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Five Supply Chain Disruptions Blockchain Will Cause
- 1. Payson Johnston, CEO | PaysonJ@crowdz.io | +1.408.910.1975 | www.crowdz.io Bain’s Annual Americas Leadership Team Meeting Blockchain & the Coming Supply Chain Disruption
- 2. THE OLD SILK ROAD Imported Ford Cars to China in 1920
- 3. The Physical Infrastructure is Changing
- 4. zenomarket
- 6. zenomarket 300 Documents across 20 Companies Purchase Orders Invoices Bills of Lading Certificate of Origin Bill of Lading Certificates of Origin
- 7. zenomarket 5 Disruptions to the Supply Chain That will be caused by Blockchain Technology
- 8. zenomarket Blockchain: The Technology That’s Changing the World Connecting Via the Blockchain A distributed global network of computer systems Operates without a central governing authority Manages vast volumes of information & transaction records In permanent, tamper-proof databases called “digital ledgers” August 2017
- 9. zenomarket The Hype? --------- 20% -------- ------ 40%+ -------- --------- 5% -------- --------- % -------- User Adoption
- 10. zenomarket Implications to Industry – CIO Responses 23% Will Adopt
- 11. zenomarket Disruption #1 Data Exchange will Move to the Blockchain (The Death of EDI)
- 12. zenomarket Dividing Business Documents Business Rules Money Movement
- 13. zenomarket Revolution of the blockchain: combining the documents, biz rules, and money movement Documents Money Business Rules SMART Contract
- 14. zenomarket "A lot of companies are interested in blockchain for creating more efficient workflows, but supply chain management is one of the "big, killer apps,” -Vipul Goyal, an associate professor in the Computer Science Department at Carnegie Mellon University (CMU)."
- 15. zenomarket Disruption #2 Crypto will Disrupt the Money Flow
- 16. zenomarket Implications to Banking & Beyond Financial = 55%
- 17. zenomarket Crypto Types “Currency” “Utility Token” “Stable Coin”
- 18. zenomarket China Timeline on Crypto vs. Blockchain China Outlaws ICO China Considers Blockchain China Blockchain Explosion Sep 2017 Nov 2017 May 2018
- 19. zenomarket Disruption #3 Invoices and Purchase Orders will be Securitized
- 20. zenomarket Revolution of the blockchain: combining the documents, biz rules, and money movement Documents Money Business Rules SMART Contract
- 21. zenomarket "Finance attracts most of the headlines in the blockchain world, but the biggest long-term opportunity may be in managing supply chains, which are now traced on pieces of paper, Excel spreadsheets, and incompatible computer systems.” – Barron’s Magazine Aug 17, 2018 Source: https://www.barrons.com/articles/blockchain-is- starting-to-show-real-promise-amid-the-hype-1534554901
- 22. zenomarket A Market for Invoices & Purchase Orders • Improves the money flow throughout the supply chain • Enables a fair market rate to buy invoices and POs • Allows for non-traditional money to enter the market: hedge funds, asset funds, and corporate treasury
- 23. zenomarket Disruption #4 Demand will Flow Between Parties because of Decentralization
- 24. zenomarket Chain Reaction - For example, a blockchain’s immutability and distributed nature would seem perfect for streamlining supply chains. A widget manufacturer in one country, its shipping agent, its customer in another country and customs authorities on both the sending and the receiving end could all use the same database to track the widget. – The Economist Aug 30th 2018 Source: https://www.economist.com/technology- quarterly/2018/08/30/what-to-make-of-cryptocurrencies-and- blockchains
- 25. zenomarket Fixing the Bullwhip Effect Customer Demand Retail & Resellers Distributors Brands Raw Material Suppliers Component Suppliers Original demand signal Without Blockchain: Slow, Inefficient, & Unsynchronized Supply Chains
- 26. zenomarket Disruption #5 Transparency will Win in the Areas of Sustainability, Risk, and Ingredients
- 27. zenomarket The Crowdz SMART Score Finding & Eliminating Risk in Trade Finance
- 28. zenomarket 5 Disruptions to the Supply Chain because of Blockchain #1 – Data Exchange will Move to the Blockchain #2 – Crypto will Disrupt the Money Flow #3 – Invoices and POs will be Securitized #4 – Demand will Flow Between Parties #5 – Transparency will Win
- 29. zenomarket Can all this be done without the Blockchain?
- 30. zenomarketDigitizing & Financing the Supply ChainDigitizing & Financing the Global Supply Chain Raw Materials & Goods for the furniture supply chain Flow of Financial and Documents The Businesses Involved Mines & Mills Small Medium Business + A Few Large Players Retail Stores Small Medium Business Small Medium Business Invoice PO POInvoice Invoice PO Invoice PO
- 31. zenomarket Revolution of the blockchain: combining the documents, biz rules, and money movement Documents Money Business Rules SMART Contract
- 32. zenomarket Payson Johnston, CEO | paysonj@crowdz.io | +1.408.910.1975 | www.crowdz.io ”A $9tn market for trade finance.” – Financial Times
Editor's Notes
- One hundred years, ago my family imported products in and out of China, as you can see from this actual photograph. It was a highly manual process, with a ton of paperwork.
- Today, China—the manufacturing hub of the world—has embarked on a $1 trillion project called “One Belt, One Road.” This ambitious program recreates the ancient Silk Trade Routes to deliver even more products, throughout Asia and into Europe, across 77 different countries!
- However, there’s a glaring omission in China’s program: this new Silk Road has no digital infrastructure. It still is a very manual process, with a lot of paperwork that my family would recognize 100 years ago!
- Let me make this concept a bit more concrete for you. Consider the chair you’re sitting in. It was bought by the Barclays Purchasing Department from a reseller in London called ARAM. These chairs come from a Swiss designer. The chair was manufactured in Germany. The plastics that the chairs are made from comes from a plastics facility in mainland China that uses raw materials mined from throughout Asia. This sounds like a rather complicated supply chain for a chair, and IT IS!
- In fact, at least 300 different pieces of paper from at least 20 companies were required to make the chair you are sitting on today!
- In Step 2 of our development, the blockchain pulls all of this together. But just what is the blockchain—this technology that PC Magazine recently called “The Invisible Technology That’s Changing the World”? There are four key characteristics of blockchain: It’s based on a distributed global network of computer systems. Unlike the regular Internet, it operates without a central governing authority. It manages vast volumes of information & transaction records. And it does so in permanent, tamper-proof databases called “digital ledgers.”
- Like Internet- it doesn’t have central authority, instead has a shared record of transactions distributed among vast network of users. Made of series of blocks of data each of which records a batch of transaction Blocks are electronically chained together and locked up with advanced cryptographic to get permanent and public records for every transactions
- Script The main problem in the current ecosystem is that the supply chain is slow and unsynchronized causing an imbalance in the marketplace. Additional Details The main problem most B2B supply chains face today is their inherent slowness & inefficiency. This inefficiency results from three key factors: The cumbersome, largely manual nature of most B2B sourcing; The difficulty of accurately & efficiently matching buyers and sellers at the product level; and The inability to synchronize supply & demand throughout the supply chain, with the differences in supply & demand exploding the further back in the supply chain you go.
- Our long-term opportunity is even greater than connecting the silk road. In the same way that the Internet became the backbone for ecommerce, Crowdz will become the backbone for all of global commerce. We look forward to partnering w/ you on this $9 Trillion market!