On-demand visibility with blockchain
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On-demand visibility with blockchain
Visibility across the key supply chain pillars of procurement, However, in this change-constant economy, customers’
manufacturing, transportation and distribution networks is the expectations are to receive goods at the earliest.
strategic need of the hour. It’s well-known that all upstream and
With the rise of e-retailers, challenges increase for brick-and-
downstream supply chain processes can’t run independently
mortar stores to optimize their supply chain. e-retailers such as
and are at some level mutually dependent on each other to
Amazon offering two-day shipping to customers at increasingly
guarantee quicker and reliable delivery of goods. Today’s
competitive rates, it is becoming very important for companies
visibility is reported real-time in silos or is recorded after the
and retailers to solve the puzzle of, “How soon can we get the
event has occurred. The challenge lies in knowing the event’s
product in customers’ hands?“ To solve this puzzle, a couple of
occurrence in real time simultaneously by all involved actors to
key parts are how all actors in the supply chain process talk to
facilitate proactive action. Blockchain is the database and the
each other and how the latest information reaches the relevant
network that can bring various actors to be in continuous sync
and involved parties on the supply network quickly and reliably.
with the rest of the supply chain network using what is known
as a distributed ledger. Hence, it is not hype to state that a reliable, distributed, peer
network ledger — lifted by blockchain technology – is the apt
Blockchain is the buzzword in the market today, and even more
solution for complex real-world scenarios where we have
so with the financial and insurance industries, for its reliability
multiple actors with tons of transactions and deficiency of trust
and speed. Blockchain provides a secure and robust platform
in their supply chain process. Organized chaos indeed.
for sharing information quickly.
Exploring the need for
active visibility across
the chain of supply
and how blockchain
complements it
By Gaurav Malhotra,
Vikram Sriram and
Sindhu Nachimuthu
B | On-demand visibility with blockchain On-demand visibility with blockchain | 1
Integrated platform for procurement, manufacturing,
transportation and distribution
We will look at two
scenarios where
employing blockchain Manufacturing
network
Distribution
network
in the supply chain
planning and execution
space can add value.
Procurement managers, while obtaining raw materials from The shipper can then plan and communicate its schedule to
vendors and suppliers, can quickly update the quantity, the manufacturer, procurement and distribution teams pre-
material attributes and location on the transaction and share emptively for better planning. Based on the agreed route
with other actors such as manufacturers and shippers via the confirmation, warehouse operations can view the trail of order
blockchain platform. changes for planning the storing and/or re-routing of the
arriving inventory. Thus, ASN communication over a blockchain
The manufacturer then gets alerted about the shipment far in
network becomes real-time.
advance of it arriving at the destination. Any challenges and
special requirements can be communicated to procurement All this information exchange can be leveraged and fed to the
and shippers instantly via the blockchain network. For instance, customer as shipment LIVE tracking.
the manufacturer updates the warehouse receiving calendar
A blockchain-enabled process significantly enhances visibility,
and publishes to relevant parties in their blockchain-powered
thereby increasing the accuracy of transactions (such as
supply chain network. The shipper, as a participant of the same
customer lead time) and reducing the execution time based on
network, can then plan the shipment pickup and delivery dates
synced information from multiple parties on the blockchain.
much in advance of shipment execution based on business hour
updates from the manufacturer. The procurement team also Not to mention the benefits it brings in tracking the service
receives the changes and can take proactive corrective action, level agreement (SLA) adherence of actors.
thereby letting the shipper know of any impending delays or
challenges.
2 | On-demand visibility with blockchain On-demand visibility with blockchain | 3
Enabling smarter execution and planning first- Blockchain, with its enlisted attributes, thus is the baseline
and last-mile delivery network to establish such effective and distributed data sharing
For industries in which delivering to customers on time is what drives value for the company, this technology can help notify in
near real-time if the shipment that is en route should take an alternate route for optimal supply chain execution savings. Traffic
analysis by pattern recognition, for instance, can help trucks re-route to take a less-congested path.
Logistics tracking
(product trade history)
Location at point B2B
Chain of ownership Product recalls BC Customer PO | PRO NO | RRD | Event | Datetime Stamp | Source | Location Geo
in time
Multiple parties
TL
Cross-border trade Scanner data interface
Product Financial
tracking Multiple jurisdictions settlement
Customer
Numerous documents PO/PRO#:
12345
Provenance tracking
(product component history)
LA to Queens, NY
Composition Order FONTANA to DENVER to KEARNEY to
Source of origin Trade ethics LA to FONTANA
DENVER KEARNEY QUEENS
audit trail
Customer Unload Unload Unload Unload
PO/PRO#: POD
/load /load /load /load
Qualification: 12345
In this use case, we notice that there are multiple parties that blockchain by each party? Yes — the changes in the driver
BC Customer PO | PRO NO | RRD | Event | Datetime Stamp | Source | Location Geo BC Customer PO | PRO NO |
can benefit from the alternate route suggestion. For starters, arrival time is relevant to the goods receiver, and the change RRD | Event | Datetime Stamp |
there is the truck driver, who is the direct beneficiary of getting to route by driver is relevant to the service provider who hasn’t Source | Location Geo
the load on time. There is the customer, who benefits from yet transferred the ownership of goods to the next party in
knowing the near-exact arrival time of the load in order to the supply chain — and also to the consignor whose eventual
make arrangements to allocate a dock door, and then there financial payment depends on the successful execution of the
are other parties such as traffic data sources and shippers, shipment delivery.
who are both feeding relevant data to the blockchain network.
Note how the custody and ownership of the goods as they
As noted, it’s obvious that establishing trust among these
travel the complex supply network is being recorded at every
parties is of primary significance. Establishing such trust can • Decentralized peer-peer network • Security — System is designed to prevent double counting
instance in time on the blockchain product transaction ledger.
be challenging, given that each party belongs to different of assets and record ownership and transfers, such as in the
This is the pertinent information that is on record to refer to • Trustless trust — Blockchains improve trust between
companies. Having a tamper-proof record of transactional number of shipments delivered and actual quantities whose
for any kind of reconciliation involving multiple organizations participants by providing multiple points of verification
and master traffic data is also relevant in this scenario, as that ownership is transferred from one to the next downstream
owning the product at different points of supply chain as each participating party also has a relevant interest in
is the main fuel that helps derive the information from the party
execution. For example, goods custody in cross-border trade, verifying the trust in data submitted by other parties
data inputs such as customer delivery date, time, location, • Transparency — Blockchains are transparent in design to
accidental claims, true-up of payment accounts and several • Immutability — Create permanent records that cannot be
route from shipper, shipping location. Do all these parties track the ownership or control of assets
import/export dealings in complex international trade across deleted or modified without another real transaction
benefit from a transparency of the information fed into the
nations.
4 | On-demand visibility with blockchain On-demand visibility with blockchain | 5How to quantify blockchain technology to customers and customers to their
senior leadership? EY can work with you to identify the value-add and lost
opportunities that can be reclaimed in using blockchain. At a high level, we
can start with answering questions and dealing with problems such as:
Q Q
Why does the payment process Which business entity owns and
take so long? approves it?
How to
quantify
Q Q
I am not sure if the information I don’t trust Vendor ABC’s data
blockchain? provided by a vendor is accurate! for SLA adherence data!
Why is this business process so Why are my business partners
Q complex and requires so
many hoops?
Q taking such a long time to
circle back?
Customer-Vendor dispute
Q Q
Vendors don’t prefer us on
resolution is manual, tedious and
priority, as our pay cycle is long.
nasty, and brings ill will between us.
Too much paperwork and manual
Q Q
I am frustrated with my supply
work in issue resolution…audit..
chain visibility!
audit...audit!
6 | On-demand visibility with blockchain On-demand visibility with blockchain | 7Customers must understand that even though blockchain is an apt technology for scenarios you
have read so far, it requires participation from all major stakeholders for it to succeed. Hence,
the question is not whether this technology will work, but how to prove the value-add to all
stakeholders and secure their buy-ins to participate in the blockchain network.
Understand the business use
case. Identify the “chaos.”
Determine if that “chaos”
revolves around trust.
Analyze if this process with
chaos has a long tail and
heavy involvement of actors.
Finally, does the client have
a controlling or majority say With process maturing for Expand and integrate
in the overall execution of meeting business need, with other platforms and
the process? If the answer involve external partners IoT technology/platforms
Adoption and is yes, then we have a from the marketplace to realize true value-
blockchain use case on hand in limited numbers to add of this blockchain
next steps to explore in detail. promote viability foundational technology
Step Step Step
01 03 05
Step Step
02 04
Talk about initiating a small Plan phased rollouts based
proof of concept (POC) on business and strategic
involving identified internal needs
actors using small use
case(s) — e.g., customer
manufacturing and its
private fleet departments
8 | On-demand visibility with blockchain On-demand visibility with blockchain | 9EY | Assurance | Tax | Transactions | Advisory
Contact About EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we
deliver help build trust and confidence in the capital markets
Gaurav Malhotra and in economies the world over. We develop outstanding
leaders who team to deliver on our promises to all of our
EY Digital Supply Chain & Operations
stakeholders. In so doing, we play a critical role in building a
IoT and Blockchain Leader, Advisory Services better working world for our people, for our clients and for
gaurav.malhotra1@ey.com our communities.
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each of which is a separate legal entity. Ernst & Young Global
Limited, a UK company limited by guarantee, does not
Vikram Sriram provide services to clients. For more information about our
EY Digital Supply Chain & Operations organization, please visit ey.com.
Manager, Advisory Services Ernst & Young LLP is a client-serving member firm of
vikram.sriram@ey.com Ernst & Young Global Limited operating in the US.
© 2018 Ernst & Young LLP.
All Rights Reserved.
SCORE no. 02404-181US
Sindhu Nachimuthu 1804-2652753
ED None
EY Digital Supply Chain & Operations
This material has been prepared for general informational purposes only and is
Senior, Advisory Services not intended to be relied upon as accounting, tax or other professional advice.
sindhu.nachimuthu@ey.com Please refer to your advisors for specific advice.
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