Blockchain That Works: Supply Chain Talk

Explore the practical impact of blockchain and smart contracts in supply chain automation. Hosted by Bill Wohl, this episode of Supply Chain Visibility Stories features insights from ACSIS Chief Strategy Officer John DiPalo and blockchain expert Rob McGee. From immutable data to machine-to-machine payments, this discussion separates speculation from applicable strategy.

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Narrator:
Welcome to the supply chain visibility stories, the podcast for supply chain managers, brought to you by ACSIS, the 100% supply chain visibility cloud solution provider. Supply Chain Visibility Stories is hosted by Bill Wohl, a technology industry veteran and enterprise software professional.

Bill Wohl:
Thanks everyone for joining us. Today marks the next in a series of discussions exploring the intersection of technology and business. Our discussions are designed to be brief and focused, and we're hoping this podcast format inspires our audience to think about how technology impacts their own organizations and to engage with us as our series continues. I'll have information about how to engage with the series and our guests at the end of today's discussion. My name is Bill Wohl and I'm honored to be the host of this series brought to you by ACSIS. I'm always fascinated by the business challenges faced by companies and how those challenges can be addressed by technology. We started our series exploring some of the macro trends facing companies today and including the sort of fascinating world of supply chain, which is suddenly back in focus again somewhat because of the pandemic but somewhat because of systemic changes in how business is being done in today's global world. So we've been digging a bit deeper on these topics today. Again, we welcome two guests. John DiPalo ACSIS's chief strategy officer, and Rob McGee a blockchain and serialization expert. So, John, let's start with you and welcome back to the program.

John DiPalo:
Thanks, Bill. Thanks for having me again.

Bill Wohl:
So, let's set the stage. We've been talking in our podcast series about a range of different industries and business challenges and how companies are addressing the unique challenges of say the food industry, or the chemical industry. But today, we want to go back to talking about technology and, in particular some of how new technologies are making solving these problems possible. I've learned as We've talked to you through this series that not all technology works for all people. So when I raise today's topic, blockchain, it strikes me that it may work for some business challenges but may not work for all. Is that correct?

John DiPalo:
I think that's a great point, Bill. You know, when we look at blockchain, you know, and blockchain is an interesting world. You know, it's a word that has taken technology by storm.  You know, everyone is looking at it in different ways. You know, and blockchain if you listen to the hype, you know, is all things to all people. And the reality is that blockchain is a fantastic technology and it needs to be applied at the right point in time for the right use case. You can't use it for everything. It won't solve all of the different problems around visibility in your supply chain, but it will solve some very specific problems where you need to have immutable evidence of a docent or a transaction or something else with in your supply chain that you want to make sure that when you share it, it is the correct information done at the correct time and you can rely on that. So blockchain as a technology is fantastic, but we need to apply it in the right point in time and for the right use case. So that's my opinion on blockchain and you know I I think that there is a lot of confusion, and it you know, the more we can get a handle on simplifying the use cases, I think the better off we'll be. 

Bill Wohl:
All right, sounds good. That gives us a great opportunity to welcome Rob McGee to the program. Rob, thanks for joining us today. Tell us a little bit about your background, help our audience understand how you come into this issue of blockchain.

Rob McGee:
Sure. So, I've been in supply chain technology for roughly 20 years. , I'm also working with a company called Vantage Consulting Group, which that is our specialty as well, whether it's packaging line integration or software engineering around that space. And then in addition to that, I have a background in blockchain as well, which is consulting for a company does Bitcoin mining and then just in general as a as a hobby I've built some ethereumum miners and things like that just to kind of learn about the space and get an intellectual foothold on what's been going on in this whole you know revolution that that that we're witnessing. Right. So that's my background.

Bill Wohl:
Well, it's great to have you on the program. Rob, one of the things that I've discovered about technology is people get really sort of caught up in technology for technology's sake, but in the end of the day they have business problems that need to be solved. So,  let's maybe start there. What are some of the challenges that companies are facing in making their supply chains really work more efficiently where blockchain might be appropriate? What are the typical scenarios where it fits in?

Rob McGee:
So, going forward, right, I mean, if you look at smart contracts, right, where you have self-executing code on the blockchain. Where you can predefine a relationship between two entities and you can have an automated intelligent transaction take place without hans being involved, right?  So you start looking out and I don't want to sound like Kathy Woods or Elon Musk or anything, but when you look start looking out into the future. You could see fully automated supply chains and what I mean by that is like self-driving trucks pulling up to automated warehouses. You have smart contracts executing in place, you know, maybe consulting off-chain articles for such things as inventory and other types of data that might not be appropriate to be on-chain.  You could start to see how this really makes sense in specific areas of you know very far in the horizon supply chain scenarios.  I don't think so much in the space that we typically talk about it where we're talking about serialization or kind of product authentication or track and trace like that. I think that's probably something that'll be supplied by an off-chain oracle. I don't know if people are familiar with that term. I'm happy to go into that a little bit more, but because there are systems that are just better at supplying simple things like a serial nber list and and you know relational databases do great jobs at certain things and I don't think they're going away anytime soon but  I think that might be a long-winded answer to a short question, but you know I hopefully hit the the topic there.

Bill Wohl:
No, I hear what you're saying. So if I put it in somewhat simplistic language, what you're suggesting looking into the future is that as shipping systems, logistics systems, supply chain systems get ever more sophisticated.

Rob McGee:
Right..,

Bill Wohl:
Behind them the requirements for data and documentation will increase in some models in order for those systems to work autonomously, the data systems have to work autonomously, and that's where blockchain has the best opportunity to have value. Am I saying that the right way?

Rob McGee:
correct and it also has an internet native  behind you know you know when you look at cryptocurrencies and things like that it also has internet native financial pathways as well right so that's that's kind of what the internet been lacking for the last 20 years, right? Is is kind of a native  currency so to speak. I'm not saying it has to be Bitcoin or ethereum or whatever, but when these smart contracts execute, you know, the transfer of funds and the, you know, the existence of wallets on blockchain and things like that, those types of things, if you look out and you really do think we are going to get to a very automated future, which most people do agree that's where we're heading. You're going to see things like what I just described or a smart contract where you know, potentially one automated machine, let's say a truck, is paying another automated machine, let's say an automated warehouse. The contract executes at the point where the goods go on the truck, and then and then the funds flow from one organization to another, one wallet to another, however you want to see it. I do believe that's where we're headed, and I do believe that's where you'll see the first really kind of disruptive blockchain implementation inside of supply chain. I could probably, you know, I could be wrong about that, but that's you know, from everything I'm seeing and how, you know, the development of smart contracts and as they get more sophisticated and onchain articles become more available for different types of things.  I do believe that's where we're headed.

Bill Wohl:
So what you're suggesting again I'm going to say it in a more simplistic fashion just to make sure the audience picks up on it is, you know we've been talking in this podcast series about the transfer of information. You know the where there are gaps in supply chain management whether it's location of product or where it is in work in progress or is it actually in inventory or is it in workflow that's the capture out at the edge IoT based data capture, but I think what you're describing is in addition to the data moving seamlessly system to system the associated payments have to as well. So blockchain is a technology that makes it possible for those data and finance flows to seamlessly work together across systems is that the way to think about it?
Rob McGee:
Yeah, everybody thinks about blockchain they mostly about Bitcoin, right? Or they think about like, you know,  you know, there's there's a hyperledger like business blockchains out there. But really, I do believe the revolutions coming in smart contracts where it's exactly what you just described where the details around the transactions like lot, batch, things like that, maybe purchase order, all that type of information is bundled into the smart contract executed in an automated fashion. And the payment rails are there too, right? The payment rails have been missing from all this stuff because we do have systems that do things like I just described like if you look at like EDI or something like that you can you can you can have these types of interactions from business to business. But having a full automated system like I just described where you have these contractual agreements declared on the blockchain and then executed in an automated fashion from like machine to machine you know and then there's no third party trusted system for the payment rails like the bank you know whoever your bank is and maybe you're transferring maybe there's you know, it's goes on the Swift network or whatever, you know, you end up with third trusted party system is gone and the payment rails become blockchain internet native. That's less interesting to me in when you look at the United States or you look at, you know, domestic trade; when you look at international trade, payment rails
really, they're really important, right? So, when you're shipping when a boat arrives with all the these goods on it, you know, and and if you can imagine an automated dock, an automated boat, you know, an automated systems for handling all these things. If you can execute these smart contracts and have the payment rails execute in a somewhat automated fashion with no risk of roll back, much like you have on the Swift networks and things like that, you can see how this might be a really revolutionary area in supply chain. And again, not so much where I think people are focused, which is like traceability and things like that, but I think in those types of  scenarios it's more likely to see disruption from blockchain.

Bill Wohl:
Good that you mentioned that because in in the previous podcast where we've been talking about things like traceability the use of RFID technology the verification of you know food temperature there's any range of issues that we talked about those data points are absolutely essential if an automated blockchain is going to work the the system has to have these feeds that assure products in the right place at the right time. It's in the steady state that it's supposed to be in. So if you're ever going to get to ultimately what blockchain deliver, you've got to clean up all of those information gaps in your supply chain really as a precursor step, right?

Rob McGee:
Yeah. Exactly. And and that's when I started talking about onchain oracles and if you look at like the the chain link project where they're putting like weather data onto the chain and they're putting, you know, they're allowing you to put anything you want onto the chain so that when you execute a smart contract, you can do it contextually, right? And that's to say like maybe I'm looking for inventory for a specific produc  that's closest to me geographically, and maybe you're you're looking for weather patterns that are not disruptive to a shipment or something like that, right? So that your smart contract can execute pull data offchain like you were saying temperature data maybe from sensors or things like that, so maybe the contract doesn't execute if it notices the temperature data pulled into the contract was not it destroyed the product or made it, you know, possible for a recall or something.

Bill Wohl:
One last question because I think we could probably dedicate more than a few podcasts on these topics. There's a lot of ground.

Rob McGee:
it's a broad, yeah.

Bill Wohl:
Who in the value chain from the manufacturer to the ultimate customer and there's shippers and distributors in between who typically would own the requirement for setting up and building the blockchain? Where in the supply chain is the ownership of that process? Is it should we asse that that's going to be the the smart progressive manufacturer who's going to say I got a better way to service everyone down the supply chain. I'm going to own that.

Rob McGee:
I mean, I'm taking a guess here, but I think this is going to end up, you know, on the on something close to what ethereum looks like now. Building your own blockchain, getting a consortium of companies together to build a useful blockchain, I think, is less likely than using a useful blockchain that's already there. The security mechanisms and anonymity are already there. So, , you know, there are security concerns around smart contracts being hacked, right? So contracts are technically they're like wallets. They do carry a balance or can carry a balance rather. So there's issues with that when it comes to the payment rails I talked about, but I think I think ultimately and you're starting to see it now, companies are starting to put, you know, automated  they're starting to put these smart contracts out there and they're starting to leverage them. And I think you get a network effect. One of the networks is going to win. It's like will it be the best one? It's like VHS versus Betamax, right? Whichever network wins, I think that's going to be the smart contract platform. And there's there's another reason I I feel that way and it has less to do with the technology or, you know, really anything like that. I think the brain trust, if you look at technology, it evolves and you look at web 3.0 and smart contracts and ethereum and these kind of ecosystems and chain link and these things that we're talking about, I mean, all the brightest minds are heading into that space. So, it's going to be hard for like an industry like pharma, which you know, pharma's great at making chemical compounds and drugs. You could argue that their IT departments aren't the best, you know? So, I think when you look at technology, you also have to follow the developers, right? So, the developers and the biggest minds in the space are moving into that area, into the Ethereum area, into the Bitcoin area. Bitcoin will be less of a less of a it won't be, I don't believe it'll be the smart contract platform that I was referring to. But in any event, that's another reason, I feel that way that it's going to end up being one of these more, for lack of a better term, a public blockchain.



Bill Wohl:
That's really helpful. And Rob, it sets up our last question. John, we don't have a lot of time left, but I'll throw this one to you quickly. We often end these podcasts with the Okay, that sounds like a lot. How do I get started? What's your best advice to companies in thinking about how they should plan for the implementation of smart contracts and blockchain?

John DiPalo:
I think in and like all things you know when we talk about this particular subject I think you know you learn by doing.  and I think that you need to really start to look at you know can I put a a contextual pilot together that allows me to start to know how to talk to the blockchain and receive information from the blockchain and integrate it into my ERP environment. Right? And you know once you do that you should then take those learnings, and model out a supply chain process that is important to you and that is important to your partners and start to integrate the blockchain technology and and the blockchain processes that you have done those learnings on into that process and I think that's key for getting started. And once you get that and you can get it into a repeatable fashion then you'll start to see other areas where the blockchain will become important to your business or to your partners or to your supply chain and you should expand appropriately based upon your learnings and what others are doing and also keep track of what's going on with the technology because as it changes and as it matures, you need to be able to adjust. So that's you know how I think about how to get started.

Bill Wohl:
Lot lots of stuff lots of stuff John

Rob McGee:
I agree with that completely.

Bill Wohl:
Yeah lots of stuff to talk about, and I think John, where we are is that between you and Rob we've got a lot of material here to talk about this next level of technology and advancement will make  the business of supply chain ever more interesting. I'd like to thank our blockchain expert Rob McGee for being with us on this program and of course our repeat guest John DiPalo, Chief Strategy Officer at ACSIS. Guys,  thanks very much. That wraps up today's podcast. My thanks to Access for making this podcast series possible. We welcome your comments and questions about the discussions on these podcasts. You can engage with us at the official ACSIS’ Twitter and LinkedIn accounts, and please be a part of the discussion. I'm your host, Bill Wohl. And for everyone ACSIS. Thanks for joining. We look forward to our next podcast. Talk soon.

Narrator:
Thank you for listening to Supply Chain Visibility Stories brought to you by ACSIS, the 100% supply chain visibility cloud solution provider. Visit us on the web at acsisinc.com. That's acsisinc.com. Or join the dialogue on social media. Look for ACSIS, Inc. on LinkedIn and Twitter. Join us next time for supply chain visibility stories brought to you by ACSIS.