Option 3 | Getty 517815583 | A$90

BLOCKCHAIN IN SUPPLY CHAIN MDBC Explained & Practical Applications 23 May 2018 Supply chain leaders focus on THREE MAIN BUSINESS QUESTIONS for blockchain

Hype or not? Is it relevant 01 for me to investigate? • Blockchain Now • Supply Chain Issues

How can blockchain help my business 02 solve it’s key supply chain pain points? • Blockchain key attributes • Blockchain use cases

Where / how to start in this 03 very complex landscape? • Guiding Principles WHAT IS BLOCKCHAIN? Blockchain is a distributed model in which transactions are recorded and encrypted as un-editable blocks of , allowing for trusted information sharing across several parties.

Blocks are created by network participants and directly linked to previous blocks

Tx1 Tx4 Tx7 Tx10 Tx13 Tx2 Tx5 Tx8 Tx11 Tx14 Tx3 Tx6 Tx9 Tx12 Tx15

A ‘block’ is a collection of Consensus is formed on a single shared one to many transactions version of the transaction ledger

BEFORE BLOCKCHAIN WITH BLOCKCHAIN Transactions between parties are stored in New transactions are added to a decentralized database, central owned by a 3rd party once signed off by enough participants, through (bank, stock exchange, government). consensus: no more need for a 3rd party. Participants trust the authority to maintain the data, Data is immune to tampering and corruption, prevent tampering and provide access when required. as unauthorized changes are invalidated by cryptographic Completing transactions can be costly, & time techniques. consuming due to high reconciliations. Transactions are cleared near instantaneously and no more need for reconciliation as all participants share a single version of the truth of the transaction database: the Blockchain. BLOCKCHAIN IN SUPPLY CHAIN The supply chain is ripe for disruption and blockchain is here. Now.

MARKET INSIGHTS

A Blooming Market… … with high potential

“Investment and spending on “Accenture’s current projections Blockchain landed on Dubai has pledged to become blockchain-based technology for the blockchain services Gartner’s Top 10 Strategic a blockchain first economy have each topped more than market alone estimates Technology Trends list in by 2020, aiming to conduct a CAGR of more than 2018 – Gartner the majority of the Emirate’s billion, $1 %” business using blockchain and continues to accelerate” 60 Sweden is adopting – The Wall Street Journal – Accenture 2017 – Accenture 2018 “smart contracts” powered by blockchain for a land Spotify’s recently acquires registry system – Reuters Mediachain, to ensure it pays the right people for every track “The market for blockchain- “ Thales recently launched that is played via its service related products and % 60 a blockchain-backed proof – Forbes services will reach of executives state that of concept to help defense blockchain and smart billion enforce supply chain $7.7 contracts will be critical to their standards – Accenture in 2022, up from $242 million organizations over the next last year” – Bloomberg 2017 three years” – Accenture 2018 BLOCKCHAIN IN SUPPLY CHAIN Blockchain should not be a solution looking for a problem. It is important to understand the issues first.

ORIGINATE PROCESS STORE MERCHANDISE RETAIL AND PRODUCT AND REFINE AND TRANSPORT

Key supply chain issues Low data transparency and Mistrust between suppliers No single source of truth Costly and inefficient provenance resulting in weak and customers unwillingness in information requiring large contracting across the traceability and risk mitigation to share data or cede control amounts of reconciliation end-to-end supply chain

Opaque and complex industry Little incentive to disrupt Unreliable traceability of Lack of common industry structure with many brokers established ways of working products resulting in weak standards resulting in /middlemen increasing costs due to high costs of supplemental customer story telling increased complexity of technology solutions point-to-point solutions

Key blockchain attributes that can help solve these issues

TRANSPARENCY TRUST AND SECURITY AUTOMATION COST REDUCTION ACCESS CONTROL WHEN TO USE BLOCKCHAIN TECHNOLOGY Blockchain should only be used in alignment with a distinct business problem that it is uniquely positioned to fix

Do multiple parties need Is there mistrust between Is there disagreement on Do multiple parties need to update the data? YES the various parties YES a 3rd party everyone can YES to update or change the NO START viewing or interacting agree to trust? shared data? with the data?

NO NO NO YES

Will all parties that update data be able to agree on NO MORE INFO REQUIRED the rules of who/how/when UTILIZE A NON-BLOCKCHAIN data can be updated? Additional information is required TECHNOLOGY on rules, participants, and/or (Shared Database) YES permissions to understand if Explore traditional data Blockchain is the best suited Will there be a sufficient technologies first as the benefits NO technology for your use case of Blockchain may not be fully number of network utilized for your use case participants to reach agreement on what are valid transactions?

YES NO If permissions are required on the blockchain, can UTILIZE BLOCKCHAIN agreement be reached on YES who/how user rights will Explore building a Blockchain be granted? solution for your use case BLOCKCHAIN USE CASES There are many tested blockchain use cases that can help tackle key supply chain issues

ORIGINATE PROCESS STORE MERCHANDISE RETAIL SUPPLY CHAIN ISSUE ALIGNMENT AND PRODUCT AND REFINE AND TRANSPORT Fair Trade / Goods Provenance

Counterfeit Prevention

Product Recall / Contamination

Export Controls

Identity Management

IT License Management

Sub-Contractor Management

Plant Maintenance

KEY Traceability Additional Transparency Trust and Security Automation Cost Reduction Access Control USE CASE 1: COUNTERFEIT PREVENTION Blockchain vision: blockchain traceability provides the opportunity to precisely target counterfeit products, eradicating counterfeit market and enhancing customer loyalty

BLOCKCHAIN ENABLED PROCESS KEY BLOCKCHAIN BENEFITS

Single source of truth allowing customer to know and believe in the validity of the product, enhancing brand loyalty and overall user experience Crypto-seal is added to Ownership is transferred handmade bag at point from transport company to Proof of ownership securely stored on a transparent of Quality Assurance; specific retail store. Store blockchain database preventing counterfeit product handbag is registered specific warranties or other resales and consumer theft on blockchain engagement add-ons Rapid counterfeit product identification utilizing IoT and blockchain technology to trace each product throughout the end-to-end product life cycle

End-to-end visibility allowing customers to know for the first time, exactly who made their product, where, with what materials etc.

Blockchain reduces the need for costly regulatory Ownership is transferred Ownership and audits and ownership validation through data from manufacturer to warranties transferred reconciliation through distributed ledger technology, transport company, from retailer to drastically reducing costs details on transport customer; access to captured for audit asset provenance Transparency Trust and Security Cost Reduction Access Control USE CASE 2: SUBCONTRACTOR MANAGEMENT Blockchain vision: contractors can reclaim ownership of their personal data and set the industry standard for subcontractors through the use of blockchain

BLOCKCHAIN ENABLED PROCESS KEY BLOCKCHAIN BENEFITS

The Blockchain’s distributed ledger provides auditability and compliance of vendor Former Employers Authorities contracts in real time Direct Application The Blockchain uses cryptography to ensure secure validation of highly personal data References Identity Blockchain technology creates permissioned access controls to ensure each party can only Client the information they should be allowed to view

The Blockchain’s distributed ledger provides decreased duplication of effort for the contractor and employer as the contractor has sole Diploma Criminal ownership of his/her information Sourced Record Applicant Blockchain technology exudes transparency of information to all nodes on the network, resulting in Schools Justice increased trust across the subcontractor ecosystem

Staffing Transparency Trust and Security Automation Access Control Companies BLOCKCHAIN GUIDING PRINCIPLES Four key guiding principles must be considered to leverage the power of blockchain in your supply chain and operations organization 04 03 Don’t bite off more 02 than you can chew Ensure adequate scoping Focus on Digital of blockchain initiatives by Ensure the solution is identifying the minimum adaptable and scalable 01 Transformation not just viable ecosystem Blockchain Technology Identify the key digital objects Blockchain enables digital across the supply chain Always start transformation /disruption – Ecosystem agreement, with a business it is not the transformation/ collaboration, enablement problem to solve disruption itself and governance will drive Focus on the value not the adoption of the leading Identify and explore use industry use cases cases focused on friction in technology or solution existing processes or new business opportunities Q&A