IBM Systems Magazine, Mainframe - May/June 2017 - 21

The Shipping News
International trade requires
an extensive network of
intermediaries to build trust.
According to a 2014 study by
Maersk, for example, a shipment
of refrigerated goods routed from
East Africa to Europe required
almost 30 intermediaries and
over 200 communications before
it reached its destination (ibm.
co/2nHMapC). Despite all of
those interactions, it's frequently
difficult to know exactly where
the goods in a given shipment are
at any one time, or even if they
are the right goods. According
to the Grocery Manufacturers
Association (tinyurl.com/
hdsdlh2), global supply-chain
fraud in the food industry alone
costs between $10 billion and
$15 billion annually.
The solution is to swap out all of
those intermediaries for a shipping
and supply-chain blockchain,
an effort now underway. The
immutable ledger would involve
the entire supply chain so that the
origin, status, processing, shipping
and location of any particular item
is always known by every member.
Suddenly, not just the shipping
process but the supply chain
itself becomes transparent. This
blockchain could largely eliminate
fraud by introducing complete
transparency from start to finish.
"You could use the technology
to identify the provenance of
something, from its point of
origin in a mine or a factory
through different points of
entry, different ports, different
customs officials, etc.," Tapscott
notes. "You can know that you're
receiving what you initially
ordered, that it came from where
you thought it was coming from
and that what you're receiving
has arrived in a legal way."
The value of the blockchain
approach lies in the fact that
it's not just transparent across

an ecosystem but can create better vertical
integration. Current approaches to supply-chain
management only deal with a subset of the data.
"You have the information generally from your
business but you don't necessarily have the
information from all the players in the supply
chain because they're each dealing with multiple

vendors and suppliers,"
McDermott says. "If everybody
had a complete view, they could
do a better job of optimizing
how supply chains work, and
that would eliminate a lot of
inefficiencies."

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ibmsystemsmag.com MAY/JUNE 2017 // 21

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IBM Systems Magazine, Mainframe - May/June 2017

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