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Chainyard, a digital services provider specializing in blockchain, named its network Trust Your Supplier for a reason. The company aims to deliver the secure, trusted nature of blockchain technology to the supply chain, bringing rivals together to cooperate for the greater good.
“What Trust Your Supplier does is bring parties together in a trusted manner, because that supplier needs to behave, be compliant, and adhere to policy of all the characteristics of the buyer, the procurement organization,” Gary Storr, general manager for Trust Your Supplier, told VentureBeat.
For example, he explained that if he’s General Motors and buying a semiconductor, he needs to make sure the supplier isn’t operating in an embargoed country, using child labor, or employing a C-level executive with a questionable history.
“All of these things are very important in establishing trust, credibility, and transparency between organizations selling and buying goods or services,” Storr said.
In discussion with VentureBeat, Storr not only detailed why blockchain is so useful for supply chain — avoiding the near-daily ransomware attacks hitting enterprises, and helping with compliance, fraud, and counterfeiting — but also lifted up the hood, describing step-by-step how Chainyard built Trust Your Supplier.
This interview has been edited for brevity and clarity.
VentureBeat: What makes supply chain a good use of blockchain?
Gary Storr: Well, supply chain is really all about relationships. A chain implies there are links, and those links are typically parties, partners, organizations, or businesses. And so anytime partners want to do business, there’s information being exchanged. Blockchain excels in taking information from one organization and putting it in a format that allows participants to access, utilize, and process it to achieve their objective within the supply chain.
VentureBeat: So why haven’t more businesses adopted blockchain for this purpose?
Storr: Even though it’s been around for over 10 years, blockchain is still in its infancy. I think it’s the shiny new toy that’s widely misunderstood. It’s a shared ledger of information that an organized group of entities can participate in, but because that group typically needs to be in an enterprise world, these are organizations that are typically competing with each other. If I was building a blockchain to service the soft drinks supply chain, for example, I would want both Coke and Pepsi on that network. Those two likely aren’t used to dealing with each other in a consortium where they have to share information, establish common standards, and work together to establish that blockchain and make it go. So I think it’s more of a cultural challenge than it is a technology challenge, but we’re starting to see that change. I think at some point blockchains will be pervasive in the enterprise space, because it’ll be a necessity of doing business.
VentureBeat: Let’s talk about your platform, Trust Your Supplier. What was step one for building it?
Storr: There’s the technology of building the blockchain, and then there’s building the network and the business around that. So there are multiple legs to the stool, and the technology is actually the easiest piece. That’s just establishing architecturally how you want to embody that network, how many nodes, how many channels, how your data is going to be structured, and how information is going to move among the blockchain.
But the more interesting and challenging exercise, as is true with any network, is participation. I think it was Marc Andreessen who famously said “People are on Facebook because people are on Facebook.” You have to drive participation, so you have to consider how to bring participants to this network, how organizations can be engaged, and what’s going to make it compelling for them. What’s the value proposition? What are they going to get out of it? How do you monetize and how do you operate it? And you can’t figure that on the fly. So we went out to bring the top-of-the-food-chain organizations in various industries on board, so they can help establish the inertia for the network to take off. So step one is having a plan to drive participation, and you typically do that by establishing governance of major constituents.
VentureBeat: And sticking with the technology side, where did it go from that first step? There isn’t typically a lot of transparency around how to build the blockchain, so I’m curious about the most crucial steps and overall strategy.
Storr: It goes back to the architectural understanding of what you’re trying to build. It’s like framing your house. How big do you want it to be? How many bedrooms do you want? You have all these architectural considerations within the blockchain itself. And so once you understand characteristically how you’re going to architect the solution, then you have to look at how it’s going to work operationally, how you’re going to scale it, how many participants you’re going to have, and what level of data storage you’re going to require. There may be some regulatory concerns you need to architect a solution for. How are you going to deal with data and data rights? For example, if you’re storing natural person information in the blockchain, you’ve got yourself a problem to account for architecturally. All these factors need to be taken into consideration once you build your foundational level.
VentureBeat: Aside from those major considerations, what small details were important to the build? What might people not think of?
Storr: One of the things we ran into early on was that we wanted to establish a digital identity in our blockchain, and that identity would be portable so it could traverse to other blockchains or even outside of the blockchain. So if you’re on our network as a supplier, you would be able to take that identity and, almost like your driver’s license, show it to a buyer elsewhere and say, “These are my qualifications.” But the ever evolving standards, or I guess lack thereof, made that very challenging. So we had to make certain architectural decisions that were assumptions or guesses about where the technology and standards bodies might be in a year or five. Some of those we hit, some we missed, and some of those we don’t know yet.
VentureBeat: This is a Hyperledger Fabric blockchain network that runs on the IBM Blockchain Platform. What does that look like? What are the components of the network, and how do they fit in?
Storr: Technically, it’s a fairly standard ledger. It’s resident on the IBM Cloud and made up of a series of nodes that are owned by what we call our anchors, or our governance members. Those nodes are managed by the network but also by the participants themselves. But recently, we looked at using some newer capabilities and how channels might help us overcome issues in countries like China, or where there’s a need to have data populated in countries because of the privacy policies that are becoming more prevalent. Unless you architect it differently, the data is everywhere in blockchain. Channels offer the ability to overcome that in certain architectural ways.
VentureBeat: And IBM itself was using the platform to fix supply chain shortages during the pandemic, is that right? Tell me about that.
Storr: IBM wanted to help with the shortage of PPP, and so they partnered with Chainyard and used Trusted Supplier Platform to mitigate some of the immense fraud that was going on. We spun up an instance of Trusted Supplier we called RAPID and added the suppliers very carefully, so that if a hospital or a health care organization was looking to purchase equipment, they had a trusted partner that they may not know, but they could use the platform to understand the credibility and characteristics of that supplier before they committed any business.
VentureBeat: The ability to help with compliance, fraud, and counterfeiting, as you described, is obviously a really attractive case for blockchain, and that’s a great use case you described. Is there anything else useful or important to know about how blockchain and Trust Your Supplier can help with those issues?
Storr: Well, blockchain is all about trust, and that’s kind of where we got the name. It’s about the integrity of the data, and that it can’t be erased or changed. It’s generally accepted that blockchain has the most robust standards for security. This creates an environment where data is felt to be safe and secure. Every day it seems like somebody is getting hacked. We just had this whole situation with the gas pipeline on the East Coast, and I guarantee you that solution wasn’t on blockchain.
VentureBeat: How does this integrate with sales/inventory systems and supplier management platforms?
Storr: Well, our system doesn’t. It isn’t a transactional system per se. Trust Your Supplier is the conduit that establishes the relationships between parties, but it doesn’t carry inventory or transact billing or invoicing. It’s simply about establishing the trust and relationship between the parties. There are other solutions on the market that do a fabulous job with the rest of it, and we just didn’t feel like we wanted to get in that space.
VentureBeat: What’s most important for a business considering incorporating blockchain technology into its supply chain to know? We touched on the benefits, but what else?
Storr: If a business is contemplating blockchain, they’re contemplating partnerships. They need to make sure the team is equipped to deal with that. This goes back to the Coke and Pepsi analogy, right. They need to reach across the aisle. It’s not a science project in terms of just being technology. Blockchain at its essence is really about bringing people together. It’s a cultural shift.
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