Assignment 1: Pitch Blockchain to your CEO

[Alexlane8]

Enterprise blockchain technology in combination with sensors and Internet of Things (IoT) devices is a cost-efficient foundation for supply chain transparency. This shared, near-real-time record can now be recorded and accessed by members of an ecosystem and shared with customers. This allows verify the authenticity of products.

Centralized systems use barcodes, unique electronic product codes (EPC), and RFID technology to track items through the supply chain. These systems, however, rely on centralized certificate authorities and centralized databases and so are fundamentally insecure since they have single points of failure that make them susceptible to cyberattacks and insider fraud.

Decentralized and immutable blockchain systems allow product tracking to its origin (traceability) and through every step of the supply chain (authenticity). The dApp enables a user to scan a QR code on the product which provides a full trace and validation of the product’s authenticity.

Such an approach tracks the product or a product’s components through every step in the chain, for example via an embedded RFID or NFC chip. At each step in the chain, the RFID chip is scanned, a smart contract is executed, and then multiple trusted nodes verify the information is correct before it is written to the blockchain ledger. Each entry in the blockchain ledger is cryptographically signed and encrypted which deters fraud and reduces the chance of hacking. Since the entire supply chain process becomes transparent, it becomes possible to quickly and inexpensively validate product authenticity. Any product that doesn’t enable dApp-based authenticity then becomes suspect which disincentivizes fraud.

Provenance takes authenticity one step further by also providing information about the entire history of a product through the supply chain. So, for example, the location history, the custody history, and the environmental conditions during the journey can be tracked and stored immutably on the blockchain. This type of information — GPS coordinates, custody IDs, temperature data, accelerometer information (for damage assessment) — is typically provided by Internet of things (IoT) devices. These devices send out data streams that in combination with decentralized consensus are then written to the blockchain. Since blockchain technology reduces verification costs it will likely gain widespread adoption and so make checking product authenticity and provenance commonplace.

By streamlining and automating these processes with blockchain, transactions can be completed faster and more efficiently. Since record-keeping is performed using a single digital ledger that is shared among participants, you don’t have to reconcile multiple ledgers. And when everyone has access to the same information, it becomes easier to trust each other without the need for numerous intermediaries. Thus, clearing and settlement can occur much quicker.

I am interested to hear your thoughts on how implementing blockchain would benefit this company.

[marsrvr]

Dear [Director’s Name],

I am writing to highlight the significant financial advantages that blockchain technology can offer our organization. As we continuously strive for innovation and efficiency, it is crucial to explore technologies that can substantially impact our bottom line.

1. Cost Reductions through Streamlined Processes:
Blockchain introduces unparalleled efficiency in operations. By automating and streamlining processes, especially in supply chain management and transaction processing, we can expect a substantial reduction in operational costs. A study by Gartner forecasts that blockchain will generate an annual business value of over $3 trillion by 2030. [Gartner Study Link]

2. Enhanced Security, Reduced Fraud:
Blockchain’s inherent security features can drastically lower the costs associated with data breaches and fraud. The decentralized and tamper-proof nature of blockchain minimizes the risk of centralized data attacks, potentially saving millions in cybersecurity expenses. According to a report by IBM, blockchain can reduce the costs of data breach incidents. [IBM Report Link]

3. Improved Transparency, Increased Customer Trust:
Blockchain’s transparent nature can significantly enhance customer trust, leading to increased customer retention and acquisition. This trust translates into customer loyalty and long-term revenue growth. A survey by Deloitte indicates that customers are increasingly favoring companies that offer transparency in their operations. [Deloitte Survey Link]

4. Revenue Generation through New Blockchain-Based Services:
Exploring blockchain allows us to offer innovative services, tapping into new market segments and revenue streams. For instance, tokenization of assets and the development of smart contracts can open up new business models and services.

5. Staying Ahead of the Competition:
Adopting blockchain technology positions us as a forward-thinking leader in our industry. This not only enhances our brand image but also keeps us ahead of competitors who are slow to adopt this technology.

Conclusion and Recommendation:
The potential for cost savings, enhanced security, increased customer trust, and new revenue streams makes blockchain an investment worth considering. I recommend conducting a thorough feasibility study and pilot project to explore specific applications of blockchain in our operations.

Thank you for considering this proposal. I am confident that blockchain technology can significantly contribute to our organization’s profitability and market leadership.

Sincerely,

[Your Name]

[TNP]

The model that we have chosen for the company caries with it advantages but is also costly for us to maintain. Furthermore, we are in a heavily regulated industry where the regulator has effectively outsourced some of the burden of policing and adjudicating justice to us, according to our Chief Legal Officer. Again, this is an inconvenience but it can also be fruitful for us because we can help define the norms that will govern our market and therefore be at the forefront, defining the rules everyone will have to play by. The challenges that we are facing today are:

• Gathering at scale all the events that are tied to a parcel, and then sharing that with all relevant stakeholders (the depots involved in delivering the parcel, across borders and business units, other internal stakeholders, the clients that are shipping the goods, the consumer receiving them and the regulator, especially with all the specialist deliveries, like healthcare or food, our fastest growing segments)
• Normalizing the data so that from “gathering data” we can move on to “gathering intelligence” and improve our overall performance leveraging Data Science techniques
• Comply with all the local regulations regarding data privacy
• and like every other company: improve our performance in challenging times.

We have chosen to deliver on those by developing a suite of inhouse solutions that can be used as backbone for the management of all the local systems that are developed in very different ways by our subsidiaries. The development of the backbone system cost at least 20M EUR “and then after that we stopped counting” according to internal sources. The development, hosting and scaling of this solution could be vastly more efficient were we to use a blockchain:

• Blockchain demands that the data is formatted according to the specifications that we have set, thus foregoing the normalization challenges we face
• Applied correctly we could much more easily and cost effectively share data that is critical to moving costly processes along, as I mentionned, food and healthcare, which are our fastest growing segments, but also hazardous materials which demand specific reporting
• We could store our data safely and thus be able to recuperate from a hack, or any other type of issue we may face like the one our BIOPHARMA subsidiary faced, from which they would have gone bankrupt if we hadn’t bankrolled them
• We could control the activity of our subsidiaries as well, making sure that the 9 figure fine we are facing in the South is a one off and not a real risk to manage and mitigate.
• By being at the forefront of the technical innovations, we could attract talent more easily

To ease the transition I suggest we take part in an open source protocol based on a public blockchain (it’s hard for those to go under or be bankrupt) and start with our hazardous material branch before exploring other verticals:

• It’s small enough and not business critical
• It is heavily regulated and requires the participation and data sharing of a plethora of stakeholders

I look forward to hearing from you on this and remain at our disposal for any questions