Blockchain technology a solution for supply chain traceback issues
Exclusive interview with IBM’s Bridget van Kralingen, senior vice president, IBM Industry Platforms
To learn more about Blockchain technology, the technology behind the Walmart/IBM/Tsinghua/Chinese food safety project, FE spoke one-on-one with Bridget van Kralingen, senior vice president, IBM Industry Platforms. She has been instrumental in IBM’s Blockchain efforts, working with The Linux Foundation to make Blockchain technology enterprise ready.
FE: Is Blockchain (or IBM’s version of it) open source?
Bridget van Kralingen: Blockchain is a technology category, and so within Blockchain, there are a number of open source options. There are also some non-open source options. One of the things that IBM is a strong supporter of is the Linux Foundation type of ledger, which is both open source and open governance.
Linux is the gold standard on open source, open governance. When we were choosing what we wanted to support as an open Blockchain standard, [The Linux Foundation] seemed a necessary approach. We worked with them and other companies in helping kick off the Hyperledger Project—because we thought it wasn’t an enterprise-focused Blockchain open source option.
FE: So, how does Blockchain work? How do you share information between two or more parties?
van Kralingen: I find the best way to talk about Blockchain is actually an analogy that’s non-technical. I’m a huge New York Times Crosswords puzzle person. Every Sunday I sit down with my friend, David, and we do the NY Times Crossword puzzle, and the first thing we do is read a question, and it’s something like “what’s a four-letter word for a bright object in the sky?” Well, it could be star, nova; it could be moon, but we decide that we think the answer is star. So the first thing that you do is reach a consensus on what the information is that you as two transacting parties agree to. Then, when you are doing the crossword puzzle—now that you have an answer, you have a choice.
Do you want to write it in pen, or do you write it in pencil? You can do it in pen, but then if it were moon instead of star, you’d have to write little Xes through it. And it was like, wow, you’re a genius, you did it, even though there were changes and updates, others can see what you did to the data.
Somehow people think (because you wrote [the crossword puzzle answers] in pencil), they can’t trust the data. That’s really what Blockchain is. By using Blockchain technology, we’re making data immutable. You can’t go back and change it. You can update it (you can say it wasn’t star, it was moon), but everybody has to agree to each change. So you’re giving people back visibility—that confidence, that immutability of the information. What Blockchain does—it provides a trusted, shared system-of-record. And that is really transformational. We’ve seen in the supply chain for decades, if not millennia, people have been trying to solve the same three problems: Data visibility, process optimization and demand management.
How do I solve these three big problems? How do I make the whole chain more efficient in doing so? And the limiting factor turns out not to have been the ability to digitize information, but to share information.
We’ve [had the technical capability] to share information a long time, we’ve been able to transfer it, protect it…and yet we still don’t have true system-wide data visibility or process optimization. And it’s because that trust is missing.
And so people don’t share information. IBM estimates that 80% of the world’s data is sitting in silos in companies around the world. And now we have these analytic tools to do traceability, cognitive analysis, machine learning, predictive analytics and big data. With all of these things, it’s increasingly important to take advantage of this [data] by looking not at what happens in my company with my data, but what happens across end-to-end, for food—from farm to fork—with the entire transaction.
But the only way to do that is to have the trust among all of the transacting parties that they can share the information in a way that is not going to disadvantage them. And that’s what Blockchain does.
FE: How did IBM’s Blockchain come to be?
van Kralingen: About two or three years ago, we decided that Blockchain was going to be transformative. Our CEO has said that she believes that Blockchain will transform transactions in the way the Internet transformed communications—fundamentally rethinking how business is transacted.
We made some pretty significant investments, which included standing up a new group dedicated to Blockchain. In that, IBM was focused on three main areas around Blockchain. One is building out a platform so companies and people can build Blockchain solutions. So that’s our IBM Blockchain platform, and it allows you to develop, govern and run Blockchain solutions. We also have our Blockchain services, which are for those who need help with support in Blockchain technologies. And the last is the food safety work and global trade digitalization that we’ve been working on in America, which is building out actual business solutions on top of the IBM Blockchain platform.
FE: Is IBM Blockchain a platform?
van Kralingen: The IBM Blockchain platform is a platform. The IBM Blockchain group incorporates all of three of these: the platform, the services and the business solutions.
FE: Could it then be offered as a Platform as a Service?
van Kralingen: Yes.
FE: There are a lot of supply chain system providers. There are a lot food companies out there. They obviously don’t use all the same supply chain systems, and some probably use SAP, which has some supply chain functionality built into it, etc. Is there a way to pull all these together? For example, how about an olive supplier from Italy that’s brings olives into the US via a foreign supplier and/or importer, which then goes to a processor? Let’s say the importer has one software system, the food processor another, and the producer has yet another system. How does it all play together?
van Kralingen: We’re not trying to re-invent systems that already exist. What we’re saying is there is a real gap in being able to look across the food ecosystem and provide an end-to-end traceability view. In order to do that, you need the trusted share system-of-record that Blockchain gives you. That’s the basis of what we’ve built—with the assumption being that people will have data sets from a variety of places. Some of it will be in SAP, some of it will be on paper, some of it will be sitting in an IoT device. Everybody will have data that exists that they’re either using or not using that would be helpful in doing traceability.
We’ve built our systems very much based on standards. That’s part of the announcement in China—making sure that as we’re all thinking about food safety traceability in Blockchain that we’re fundamentally starting with a standards-based approach. As we looked at building our solution, we said leveraging the existing GS1standards as a core part of what we’re doing is incredibly important. That’s something that most of the people in the industry are using, and it provides an easy way to have a common language for everyone that’s putting data into [the system].
If you think about your example, the olive producer and importer, if everybody’s using a common language like GS1, we’re going to be able to share information, and then the way that IBM is thinking about building systems, it’s very much based on interoperability and APIs. How do we make it easy for folks to upload data from an SAP system or to upload data from a smartphone or from a printed list? Whatever it is, how do we make it as easy as possible to be interoperable with existing data sets that are out there?
Obviously, the more popular a data set is, the easier it is for us to build in that interoperability. But the goal is, we want everybody to be able to easily put data in—making it as easy as possible, making it user-friendly to enter the data and by leveraging standards, APIs, interoperability, etc. That’s our goal.
FE : Do the four companies involved in creating this overall track/trace/supply chain food safety system expect to create a model for a new standard—or will it define the technologies to be used for real-time traceability in the supply chain? Are you hoping this becomes a de-facto standard?
van Kralingen: We’re not actually building a system together. We’re doing more of what you’re saying [in the second half of the question], which is, let’s work together to ensure that everyone who’s talking about food safety and Blockchain in China is thinking about standards as a starting place… That we’re making sure those standards are a key part of how the whole industry is evolving.
Clearly, we’re working very extensively with Walmart globally on the things that we’re doing. The intent of the China announcement is to try to create the momentum around standards for food safety.
FE: I think Walmart has a lot to say when it comes to standards worldwide. Who are the supply chain providers that the four participants will work with? It could be any supply chain provider, right?
van Kralingen: Exactly. From an IBM perspective, our whole point is: We want to make this as open as possible so that all of the technology companies that have a stake are connected. The farmers, suppliers, regulators…everybody finds this an easy way to share information because the whole point is, let’s create a trusted system-of-record. Let’s look holistically at the food’s ecosystem. Let’s share information in a way that people feel comfortable with. The goal for that is as much openness as possible.
FE: Are the regulators mostly Chinese government-related in the China/Walmart/JD/Tsinghua effort?
van Kralingen: Yes, for this effort we’re working with the [latter] three. We’re very focused on how we make this work for the Chinese market. Obviously, there are going to be things that we learn and that we apply in other countries, but regulations and standards do tend to be a little bit country-specific. We want to make sure that we’re acknowledging the differences in different countries as well as looking holistically at a solution that will work globally. So it’s a balance that each of the solution providers will take on. This effort is to try and make sure that we do it the best way.
FE: Let’s say a major grocery chain other than Walmart wants to get involved. How does it get into this? Do they call IBM, or what?
van Kralingen: The IBM Blockchain platform is not what the grocery retailers would go after. They would go after the food safety solutions, which is more of a SaaS. It’s that layer on top of the [IBM] platform. If they wanted the IBM option, they would come and talk to us.
But, from a standards perspective, assuming there will be competitors in the space who will also be using standards, we’re fostering that kind of interoperability in the market. From an IBM perspective, we are building this solution that is readily available so that all the different participants from farm to fork, and all the competitors can all join with confidence that they’re sharing information with their trading partners, and they’re not exposing their information to their competitors. It’s that introduction of trust that Blockchain allows that changes the game of what is possible by adding Blockchain into traceability.
FE: That makes a lot of sense. Keeping data private is really crucial.
van Kralingen: You get it in a way that a lot of people actually haven’t, which is phenomenal because I think one of the things that is so important here [is data security]. There are a lot of people who start coming in, and they say they can build a Blockchain solution that is going to create this trust, but they forget about the security of the entire stack. That’s an important consideration as well, so when I talked about Hyperledger at the beginning (with our system), we need to make sure we have something that is architected for the enterprise from the beginning.
If you think holistically about it, one of the reasons we’re running on the idea of the Blockchain platform…obviously, it’s an IBM product, but it’s also that we feel that it is the most secure way to run a Blockchain solution. It’s got hardware storage of keys. Not all Blockchain platforms have that.
To your point, if this data is business critical, it’s great to use the technology and push the envelope, but not at the expense of your business controls and your business-critical data. You need to make sure that you’re not just pushing the envelope from an innovation perspective, but that you’re responsible for enterprise-class, full-stack auditability, reliability, scalability, and security that you need.
FE: Are Microsoft or Oracle competitors on Blockchain?
van Kralingen: What we’re seeing is different people playing in different places in the Blockchain space. Some of the companies are playing in the platform space where we are as well; some are playing in the solution areas. It’s still evolving. Supply chain is one of the hottest areas to Blockchain. The transformation potential I think is—people get it—that Blockchain can solve a lot of these systemic problems that we have in the supply chain. I expect competition only to get more intense as more and more people try to solve these important problems.
FE: Finally, what kind of results can this system deliver?
van Kralingen: The public information is the pilot we did with Walmart around mangoes earlier this year. Where does this lot of mangoes come from? With conventional traceback systems in place, it took six days, 18 hours and 26 minutes, to get a trace back with limited information. That is among the better response times in the industry to do a traceback. When we ran it with our system, in two seconds, we had infinite traceability (every processor, shipper, and storage facility).