Blockchain technology offers solutions to challenges and risks in complex supply chains, reducing costs, preventing fraud, and increasing transparency and efficiency throughout the supply chain ecosystem.
2. 02
During the COVID-19 pandemic, the equilibrium of
global markets was disrupted. There was a surge in
consumer demand as individuals, confined to their
homes by lockdowns or the shift to remote work,
frequently resorted to online shopping. Conversely,
on the supply side, production was hampered by
border closures and lockdowns. We recognized that
the situation was complex, with multiple contributing
factors, indicating that no single remedy could
alleviate the strain.
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The pandemic laid bare the fragility of supply chains, leading many companies to acknowledge the necessity of
incorporating the lessons learned from these disruptions into their operational strategies. It is time for firms to more
fully integrate digitalization and technological advancements across their supply chains.
The latest upheavals in supply chains are accelerating the embrace of technological solutions. Robotics in
manufacturing and the use of automated guided vehicles in warehouses exemplify how innovative technologies
can streamline production, enhance efficiency, and reduce expenses. In the realm of logistics, technological
advancements are shortening delivery periods, while innovative transport methods are cutting down on shipping
costs. Cutting-edge tools like artificial intelligence and machine learning are enabling businesses to expedite
product development and market introduction with greater efficacy. Moreover, the digitization of processes and
documents is playing a crucial role in maintaining the seamless operation of supply chains.
In Manufacturing and Warehousing, while humans still perform 72% of manufacturing tasks, the use of robots is
on the rise, including Automated Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs). Lower costs and
higher speeds can be achieved through technologies such as Robots-as-a-Service (RaaS) subscriptions and 3D
printing. While warehouses are still largely manual, the use of Automation Storage and Retrieval Systems (AS/RS) is
growing.
In Delivery and Recycling, automation at container terminals remains low despite evidence it increases
throughput and reliability while reducing costs. Other technologies such as autonomous trucks, hyperloop transport,
automated parcel sorting, and automated last-mile delivery technologies can produce further efficiencies in
logistics.
DIGITAL SUPPLY-CHAIN: EFFICIENT, RESILIENT AND TRANSPARENT
The subsequent military conflict between Russia and
Ukraine compounded these difficulties, imposing
additional strain on supply chains and presenting
fresh challenges to the world economy. These events
prompted a reevaluation of pre-pandemic supply
chain management strategies, questioning the
resilience, cost-efficiency, and reliability of global
supply chain structures, as well as the previously
assumed stability and predictability of goods
demand.
3. 03
In Decision Making, the Internet of Things (IoT) provides greater visibility over supply chains and enables better
decision-making through artificial intelligence (AI) tools. Greater connectivity from 5G enhances these capabilities,
with quantum computing expected to further optimize supply chains. As sensor costs fall, the number of IoT-
connected devices is expected to rise significantly.
In Digitization and Documentation, less than 10% of trade documents are fully digitized, but this is changing with
the Digital Documentation Initiative (dDOC). Interoperable Digital ID systems and digital payments (including
blockchain and tokenization) in the supply chain may bring further change, helping to improve supply chain
resilience and increasing transparency to stakeholders.
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TCorporations may require some time to evaluate their supply chains and implement adjustments based on the
lessons learned from the pandemic. Some potential areas to prioritize include adopting digital solutions, placing
increased importance on forming long-term alliances and partnerships with suppliers, maintaining larger inventory
reserves, and considering the relocation of supply chains to closer proximity. Technology can play a crucial role in
driving these reconfigurations.
Over two decades before the pandemic, industrial companies initiated a trend of outsourcing production to
emerging markets while reducing vertical integration. This phenomenon was a manifestation of globalization. It
was primarily driven by the increasing demand in emerging economies like China and had several positive
outcomes, including reduced asset intensity for manufacturers, lower production costs, and improved returns on
capital for numerous U.S. and European firms. Over the years, production continued to be outsourced as
companies either reduced their vertical integration or refrained from it altogether. This strategic shift allowed firms
to lower production expenses by relocating to low-cost countries and transferring assets to supplier balance
sheets.
While occasional events, such as natural disasters, briefly highlighted the risks associated with these global supply
chains, the widely adopted just-in-time inventory management model, which minimized on-hand inventory, was not
seriously questioned until 2018. Subsequently, this model came under scrutiny, especially in the aftermath of the
post-pandemic recovery, when inventories in many cases swelled due to component shortages, leading to longer
lead times and increased backlogs.
In the globalized supply chain paradigm, production was typically moved to locations with the lowest marginal
cost, often involving the pursuit of the lowest labor rates worldwide. However, unexpected challenges, such as
U.S./China trade tariffs in 2018 or incentives to produce locally, as seen in the semiconductor and green
technology sectors, can disrupt this approach. The COVID-19 pandemic further called into question the viability of
the "sole source" model when supplier production sites became inaccessible. Earthquakes, wars, and other crises
have also exposed hidden risks within these complex supply chains.
As supply chains extend across greater distances, the risk of a "bullwhip effect" amplifying and delaying demand
and supply imbalances down the chain increases. COVID-19 triggered an unprecedented bullwhip effect in certain
markets, where demand rebounded quickly, but incremental supply additions lagged behind. Notably, the
semiconductor industry continues to grapple with the consequences of this disruption.
While disentangling supply chains may prove challenging due to their complexity and integration, technological
disruption can serve as a catalyst for change, as seen in the transformation of flat-screen television supply chains
compared to their cathode ray tube predecessors. Emerging green technologies present opportunities for
reshaping supply chains, particularly in areas where these chains have yet to fully mature or establish themselves.
4. Today, we are entering a new era characterized by domestic support and the rise of national champions. Sectors
like semiconductors, green technologies, and critical materials are receiving focused attention, notably in the U.S.
and increasingly in Europe, with initiatives like the U.S. Inflation Reduction Act (IRA) being prominent examples of
this shifting landscape. Protectionism and the need for supply security are the primary drivers behind this era of
domestic support, but they also create a ripple effect, making it challenging for one region to remain open and
free from trade barriers if others do not follow suit, as exemplified by Europe's response to the U.S. IRA.
Despite the changes, local ecosystems for raw materials, suppliers, and know-how matter and make production
and supply chains sticky.
The supply chain for the coming decades is undergoing a distinct transformation compared to the previous few
decades. This shift is not characterized by reshoring or onshoring, which involves moving capacity from one region
to another. Instead, it involves the establishment of new capacity to support emerging industries. These structural
changes are serving as catalysts for the automation and digitization of supply chains. These supply chains are
evolving to become digitally designed, tested, produced, transported, and utilized.
While geopolitics and domestic support play significant roles in driving these changes, it's essential not to overlook
demographic shifts. In China, the total population has reached its peak, and the working-age population has
already passed its zenith. China's massive internal migration from rural to urban areas, which once provided a
substantial source of additional labor, cannot be replicated. Not even in India where skills, and infrastructure may
take decades to mature. In contrast, Western countries face challenges of high labor costs and limited labor
availability, which are likely to propel greater adoption of automation.
The potential for automation in supply chains is substantial. Approximately 80% of warehouses still lack automation,
and during the early stages of post-pandemic economic reopening, delays in port throughput were influenced not
only by port capacity but also by issues related to warehousing and trucking. Data is also playing a crucial role,
especially in an era of "Scope 3" carbon emission measurements, where companies must report on CO2 emissions
not only from their own operations but also throughout their value chain, from the supply chain to consumers using
their products. Digital supply chains are pivotal in addressing these challenges.
Even in areas where automation has made significant inroads, there remains untapped potential in enhancing
connectivity to the cloud.
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5.
6. 06 liveplex xyz
MANUFACTURING & WAREHOUSING
The industrial robot market experienced a growth rate
of approximately 5% in 2022, following a robust
expansion of 35% in 2021, despite facing challenges
such as chip shortages.
Handling tasks, such as loading and unloading,
continue to be the most prevalent use case and
witnessed rapid growth in robot adoption However,
we anticipate a shift over time as machine vision
technology, sophisticated end-of-arm tooling, and the
associated software continue to penetrate the robot
market, enabling robots to take on more intricate and
varied tasks.
The demand for "cobots," which are robots designed
for human interaction, saw remarkable growth of over
30% in 2022, surpassing the overall industrial robot
market's growth rate
LIGHTS OUT MANUFACTURING
The entire production process, from the delivery of raw materials to the creation of finished
goods, is fully automated. This concept represents an advanced stage of the Fourth
Industrial Revolution, often referred to as Industry 4.0. However, in practical terms,
complete independence is not yet achievable due to the ongoing necessity for human
involvement in maintenance and inspection tasks.
To enhance resilience and reduce vulnerability to supply chain disruptions, manufacturers,
particularly in Western countries, are exploring the idea of moving production closer to the
point of consumption. This shift provides manufacturers with an opportunity to reevaluate
their manufacturing processes.
The lights-out manufacturing concept is particularly applicable in process industries like
pharmaceuticals or food and beverage, where human presence can contaminate products
or where the environment poses risks. However, discrete manufacturing sectors such as
automotive, electronics and electrical components, general manufacturing, and logistics
and warehousing are also increasingly striving to achieve fully automated lights-out
manufacturing.
ROBOTS
7. Various technologies are instrumental in progressing toward lights-out manufacturing, including artificial
intelligence (AI), machine learning, the Internet of Things (IoT), sensors, machine vision, edge computing, cloud
data, additive manufacturing, and digital twins.
Certain manufacturing tasks, like manually picking parts from a container, are still predominantly performed by
humans, even in highly automated factories and warehouses. A survey conducted by Kearney and Drishti
Technologies revealed that humans are responsible for 72% of manufacturing tasks. Additionally, specific
characteristics of certain manufacturing operations and industries, such as short product life cycles, output
variability, customization, and short production runs, may make the application of lights-out technologies less
practical in those cases.
WRobots-as-a-Service (RaaS) represents a subscription-based business model that allows manufacturers to rent
robots, thereby augmenting automation levels within their factories. Typically, manufacturers can also benefit from
bundled offerings, which may encompass robot algorithms, user-friendly operating interfaces (UIs), and routine
maintenance. The advantages associated with RaaS are akin to those offered by other "XaaS" (Everything-as-a-
Service) solutions such as SaaS (Software-as-a-Service) and PaaS (Platform-as-a-Service). These benefits include:
1. Minimal upfront capital investment, as there's no need for infrastructure setup.
2. Flexibility and scalability in deployment, accommodating evolving needs.
3. Access to ready-to-deploy and continuously updated solutions, often customized for specific use cases.
4. Hassle-free hardware maintenance and system upgrades.
RaaS robots are capable of performing a wide array of repetitive manufacturing tasks without experiencing
fatigue, operating 24/7/52. They can undertake tasks such as assembling or welding components, loading
machines, packaging products, palletizing items, and more.
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ROBOTS-AS-A-SERVICE
8. 3D printing provides four key advantages to supply chains:
1. Enhanced Product Customization: It enables greater flexibility in tailoring products to specific customer
needs.
2. Cost Reduction: It lowers production costs, even negating the advantage of cheaper labor costs.
3. Waste Reduction: 3D printing minimizes waste in the manufacturing process.
4. Streamlined Supply Chains and Faster Time-to-Market: It simplifies supply chain logistics and
accelerates the time it takes to bring products to market, which can involve relocating manufacturing
closer to end markets (reshoring).
Automated Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs) are specialized robots
that are being increasingly used in factories for material handling and transportation tasks. Unlike
AGVs, which can only follow predetermined routes, AMRs are more intelligent and can navigate
the factory floor independently.
The key to the intelligence of AMRs lies in Simultaneous Localization and Mapping (SLAM)
technology. SLAM empowers each robot to navigate through unfamiliar and constantly changing
environments by continuously creating maps of the surroundings while simultaneously tracking its
own position through real-time data. Current industrial solutions primarily employ visual SLAM,
where robots are equipped with advanced cameras and AI processors to facilitate vision-based
functions and automated decision-making, such as route planning and collision avoidance
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AUTOMATED MOBILE ROBOTS OR GUIDED VEHICLES
3D PRINTING
9. 3Automated Storage and Retrieval Systems (AS/RS) in warehouse automation in the context of
the e-commerce boom is important for supply chain resilience.
E-Commerce Fulfillment and Supply Chain Resiliency: Initially, warehouse investments were
driven by a surge in e-commerce sales due to pandemic-induced lockdowns. However, as e-
commerce sales growth has stabilized to around 10% annually, the focus has shifted towards
enhancing supply chain resilience.
Warehouse Automation: Automation in warehouses is still in the early stages but is seen as a
critical factor in reducing order fulfillment lead times and enabling a more flexible supply chain.
This flexibility is essential for handling demand fluctuations without the need for corresponding
changes in employment levels.
Warehousing Process Stages: The warehousing process involves several stages, including
depalletization, sorting, storage and picking, packaging, and transportation. AS/RS systems are
particularly involved in the storage and picking stages, which are crucial for efficient warehouse
operations.
Market Penetration and Growth: The document cites a report suggesting that around 60% of
warehouses currently use limited or no automation, with only 1%-2% being fully automated, "lights-
out" facilities. However, the AS/RS market penetration rate is expected to grow from 15% in 2021
to 36% over the next decade, indicating a significant increase in automation adoption.
Micro-Fulfillment and Mobile Automation: Within the broader warehouse automation market,
micro-fulfillment is identified as one of the fastest-growing areas. Mobile automation products
are expected to see a compound annual growth rate (CAGR) of approximately 36% from 2022 to
2027.
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AUTOMATED WAREHOUSING
10. 10 liveplex xyz
DISTRIBUTION
The industrial robot market experienced a growth rate
of approximately 5% in 2022, following a robust
expansion of 35% in 2021, despite facing challenges
such as chip shortages.
Handling tasks, such as loading and unloading,
continue to be the most prevalent use case and
witnessed rapid growth in robot adoption However,
we anticipate a shift over time as machine vision
technology, sophisticated end-of-arm tooling, and the
associated software continue to penetrate the robot
market, enabling robots to take on more intricate and
varied tasks.
Port automation has a great impact on sea freight
rates and supply chain efficiency.
The use of robots for the loading and unloading of
containers from ships to the yard and from the yard to
trucks and rail is a means to increase throughput and
reduce ship dwell time—the time cargo spends in port
during loading and unloading.
There is a low percentage of automated container terminals globally and a significant
portion of costs are attributed to labor for port operators. Automation, such as the use of
loading/unloading robots, can enhance productivity and reliability while reducing costs.
LOADING ROBOTS
AUTONOMOUS TRUCKS
Embracing autonomous trucking technology has the potential to address the current driver
shortage, as drivers contribute to roughly 40% of the cost per mile in the trucking industry.
AV trucking companies intend to focus on the middle mile of freight transportation, which
excludes the first and last mile of the load’s trip from origination to destination. The AV
landscape can be broken down into the following applications: urban “RoboTaxis,”
commercial trucking, last-mile delivery and robotics, and consumer AV features and
applications. Drone technology presents a viable option for short-distance package
deliveries.
11. Parcel logistics infrastructure operators typically capture approximately 10% of the e-
commerce value chain. The increase in parcel volumes can be attributed primarily to the
growth of e-commerce. The implementation of automation in sorting hubs and fulfillment
centers is a key factor in reducing operational costs. The final leg of delivery, known as
last-mile delivery, stands out as the costliest segment within the supply chain.
According to data from Statista last-mile delivery accounted for approximately 41% of the
total global supply chain costs in 2018.
Automated last-mile delivery technologies can be categorized into four main types:
1. Drones: These are unmanned aerial vehicles designed for delivering packages and
goods, especially in areas where road access is challenging. However, drones face various
regulatory challenges and constraints, such as landing space, air traffic, security concerns,
and noise pollution. Additionally, they have limitations in terms of range, which makes them
less likely to be a scalable solution in urban areas.
2. Legged Robots: Legged robots are more suitable for use in other stages of the supply
chain, such as warehousing. Their limited speed and range make them unsuitable for last-
mile delivery over significant distances.
3. Wheeled Robots: These robots are typically deployed in pedestrian-friendly or cycling-
friendly environments, such as university campuses. They have also been effectively used
by companies like Talabat, Delivery Hero's UAE brand, at events like the Dubai World Expo.
Wheeled robots are small in size, with the five most well-known models averaging about
2.4 feet in height, 1.9 feet in length, and 2.4 feet in width. They operate at relatively low
speeds, usually less than 4 miles per hour, which is safe enough for them to be treated as
"pedestrians." On average, wheeled robots can carry loads of up to 30 kilograms of
goods.
4. Autonomous Vehicles (AVs), also known as self-driving vehicles, emerge as the most
promising automated solution for last-mile delivery. AVs offer cost-effectiveness in a wide
range of environments that have road infrastructure. Nevertheless, in densely populated
urban areas, it may be necessary to employ a combination of AVs along with drones or
robots to precisely fulfill customer requirements for home delivery.
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AUTOMATED PARCEL SORTING
13. 13 liveplex xyz
DECISIONS
Industry estimates put the number of active IoT
connections worldwide at 16.4 billion in 2022.
According to Statista, this number is set to grow
exponentially in the coming years while non-IoT
active connections stay constant. By 2025, we will
have 30.9 billion active IoT connections.
Collecting real-time location data in supply chains
goes beyond simply knowing the whereabouts of
items. In 2019, an estimated 107 billion parcel
deliveries were made globally, averaging out to
293 million parcels per day. When suboptimal
routes are calculated based on discrete location
information obtained through manual barcode
scanning at fulfillment centers, it can significantly
compromise delivery efficiency.
With comprehensive digital visibility across the
entire logistics process, the Internet of Things (IoT)
has the capacity to provide real-time location
updates and dynamically optimize transportation
routes based on current traffic conditions. This
optimization can lead to reduced truck mileage
and more efficient utilization of trucks' loading
capacity, resulting in lower costs for both vehicles
and drivers. The potential cost savings from
widespread IoT implementation in logistics could
be substantial.
Real-time location information of goods has the
potential to provide significant benefits not only
to logistics but also to warehouse management. A
“cold chain” — i.e., a low temperature-controlled
supply chain — requires extra attention in logistics.
For some food, chemicals, and pharmaceutical
products, the temperature needs to be kept below
a certain level or within a given range to ensure
they do not spoil during the transportation
process.
INTERNET OF THINGS
14. .The German Federal Ministry of Education and Research published a white paper in 2017
with recommendations for implementing its “Industry 4.0” strategic initiative that included
using IoT and related services in manufacturing. In the factory of the future, 5G enables
devices on the factory floor to communicate with each other with security, latency, and
reliable machine-to-machine communication.
By collecting data from connected devices, smart manufacturing can leverage data
analytics to optimize production and manage the inventory of raw inputs in the process.
Manufacturers can use wireless connectivity to monitor environmental factors, automate
changes, track inventory, and adjust accordingly. Connecting the entire supply chain
enables end-to-end tracking and monitoring, from raw materials to finished goods.
In essence, smart manufacturing represents the Fourth Industrial Revolution based on
cyber-physical production systems that can autonomously perform end-to-end activities
along the value chain.
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SMART MANUFACTURING
MACHINE LEARNING AND AI
Artificial intelligence (AI) and big data stand out as two highly essential tools for unlocking
the full potential of supply chain data. Within a company's operations, maintaining an
optimal inventory balance is crucial to meet customer demand. However, excessive
production can negatively impact working capital and cash flow. AI can provide a solution
to this challenge by accurately forecasting demand and planning production well in
advance. This includes the ability to adjust the size of raw material orders, enabling
companies to become more agile and responsive.
Another critical area within supply chains where AI and big data can drive optimization is
logistics. The global logistics network has become increasingly complex and susceptible to
disruptions. Traditionally, supply chain managers heavily relied on cumbersome
spreadsheets for handling supply chain data, which involved integrating various data
sources, data cleaning, and basic data analysis. Surprisingly, more than 70% of companies
still use spreadsheets as their primary tool for supply chain decision-making.
AI has the potential to automate much of the data processing tasks, enabling companies
to utilize data more efficiently and make more informed decisions. A 2021 report by PwC
on automating analytics revealed that even basic AI-based data extraction techniques
can save businesses 30% to 40% of the time typically spent on these processes.
15. AI-powered digital twins are virtual representations of physical products or production
processes, such as automotive or electronic components. These digital twins enable real-
time data transmission between their physical counterparts and the virtual models. Within
the virtual version, simulations can be conducted, and the results can inform product
design or automate production decision-making. Additionally, the vast amount of "big
data" feedback collected from the physical side is fed back into the simulation, allowing
the digital twin to learn from real-world experiences and continually update its predictions
and outcomes.
Digital twin technology, even before production commences, plays a crucial role in
identifying the most efficient allocation of production resources and scheduling
production lines. It considers various factors, including potential anomalies like machine
breakdowns or shortages of raw materials, to ensure optimal production planning and
execution. Digital twinning is identified as one of the fastest-growing AI-enabled
opportunities.
Five independent market sources estimated the TAM for Digital Twins to be $8.6 billion in
2022 and further forecasted it to grow at an average CAGR of 46.4% and reach $67.6
billion in 2027.
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DIGITAL TWINS
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DOCUMENTATION
The Digital Documentation Initiative (dDOC) is an
effort initiated by the International Chamber of
Commerce (ICC) Banking Commission with the
aim of promoting the digitization of trade finance
documents. The primary objective of this initiative
is to establish a standardized framework for the
exchange of digital trade finance documents. This
standardization is intended to reduce the time,
cost, and risks associated with handling paper-
based documents in trade finance.
1. Document Format: This aspect focuses on
defining the format of digital trade documents,
including their structure, content, and metadata.
The goal is to ensure that digital documents
adhere to standardized specifications and can be
seamlessly integrated with different digital
systems.
2. Digital Signatures: Within dDOC, there are
defined requirements for digital signatures. These
requirements encompass the type of digital
signature to be used and the method for
validating such signatures.
3. Data Security: dDOC outlines specific
requirements for ensuring the security of data
within digital documents. This includes provisions
for encryption and access controls, aiming to
safeguard digital documents from unauthorized
access, manipulation, and theft.
4. Interoperability: Interoperability is a key
consideration in the dDOC specifications. It
outlines the requirements for ensuring that
different digital platforms and systems can
effectively communicate and work together. This
aspect is crucial for the seamless exchange of
digital trade documents.
DIGITAL DOCUMENTATION dDOC
18. Global trade involves numerous parties, such as exporters, importers, banks, customs,
freight forwarders, insurers, and more. Trust is of utmost importance at every stage of the
supply chain. Establishing and verifying identities across the supply chain are critical for
trade security and efficient access to finance throughout a transaction's lifecycle.
Interoperability, the ability to use a single identity credential across different platforms
and venues, is becoming increasingly crucial. This relates to the Know Your Customer
(KYC) aspect of global supply chains, ensuring that the entities involved are who they
claim to be.
Historically, identity verification in trade has been a complex and cumbersome process
involving licenses and verification systems at various transaction stages. As commerce
becomes more digital, digital interoperability and identity credentials that work across
different platforms are gaining importance. Digital identity plays a significant role in
reducing transaction risks like fraud, money laundering, contract breaches, and legal
violations. It simplifies transactions, speeds them up, and reduces costs.
The market for digital identity is already substantial, with a Total Addressable Market
(TAM) of $32.8 billion in 2022, projected to grow at an annual Compound Annual Growth
Rate (CAGR) of nearly 70% by 2027.
While governments have traditionally been responsible for identity management, the
private sector is now playing a more significant role in shaping digital identity schemes.
The primary drivers of digital identity development are financial services, digital commerce
(with supply chains as a key component), and government initiatives.
As the use of connected devices and digital transactions continues to expand, the market
for identity authentication and fraud solutions is expected to grow from $12 billion in 2018
to $28 billion in 2023. Robust front-end verification, confirming the identity of individuals
initiating transactions, is crucial for minimizing fraud in the supply chain
Blockchain technology holds the potential to introduce trusted digital identity into the supply
chain as online interactions within supply chains increase. A trusted digital identity enhances the
security and reliability of distributed ledger technology (DLT), contributing to greater confidence
and safety in the digital world, particularly in supply chains.
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DIGITAL IDENTITY
19. Supply chains rely heavily on documentation, where settlement processes and
actual trade are often separate components. Ideally, payments should be a
secondary or even invisible aspect compared to the core trade activity.
Currently, most payment systems are digitized, using account-based money.
However, the infrastructure surrounding these systems, including messaging,
documentation, and payments, is often fragmented and isolated. This leads to
manual interventions and extensive paperwork, resulting in limited visibility of
outstanding risk instruments. Many companies still manage their financial flows
manually, relying on paper-based invoicing and payment systems. While there has
been significant innovation in corporate-to-consumer payments, corporate business
payments, such as customs, duty, and excise payments, remain paper-intensive,
albeit evolving slowly. Business payments have not kept pace with innovation and
are hindered by outdated regulations.
One of the challenges in global invoicing is the absence of a standardized format. With
various tax laws, diverse requirements for invoice receiving and archiving, and different
invoice formats, inefficiencies, delays, and increased costs are common.
Real-time payments in global trade have the potential to achieve an atomic settlement,
which means immediate payment upon the delivery of goods. Digital Money 2.0 refers to a
tokenized form of money that offers several key features, including 24/7 operability,
atomic settlement, programmability, and a shared global ledger. Digital Money 2.0 can
take the form of bank deposits, stablecoins, and central bank digital currencies (CBDCs).
When payments are made using tokens, the functions of messaging and settlement are combined
into a single step. The token serves as a digital bearer instrument, and once it moves to the
recipient's wallet, the transaction is considered complete. Tokenized value exchange eliminates
inefficiencies associated with the traditional account-based system, including errors, delays, and
reconciliation challenges.
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DIGITAL PAYMENTS
20. The advantages of tokenized digital payments include:
1. Overcoming Traditional Cross-Border Payment Challenges: Systems like SWIFT,
used for communicating money transfers between banks, are often criticized for
their slowness and lack of flexibility in an era of real-time atomic settlements.
Tokenized digital payments have the potential to revolutionize supply chain
transactions.
2. Enhancing Trust Among Intermediaries: Lack of trust among different supply chain
intermediaries often results in excessive documentation, leading to slow, costly, and
inefficient processes. Tokenized money, when combined with digital identity
solutions, can foster greater trust among counterparties.
3. Increasing Security and Reducing Fraud: Traditional paper-based processes are
susceptible to data loss and misappropriation. Tokenized digital payments can help
safeguard sensitive information and reduce the risk of theft and fraud.
4. Eliminating Slow Paper-Based Processes: Banks have traditionally issued letters of
credit to help supply chain participants secure financing, but these paper-based
processes are slow and prone to fraud, errors, and high compliance costs. Digital
payments using tokenized assets can eliminate the need for manual intervention.
5. Improving Transparency and Lowering Costs: Cross-border money movement
through traditional channels can take days before funds are received on the other
side. Tokenized payments can ensure payment-versus-payment atomic settlements,
enhancing transparency and eliminating the need for reconciliation. Automation
and speed brought by tokenization payments could lead to reduced bank fees and
foreign exchange charges.
6. Automation in procurement payments can be achieved through the use of smart
contracts and banking application programming interfaces (APIs). Smart contracts
are programs stored on a blockchain that execute predefined actions when specific
conditions are met. By utilizing smart contracts and APIs, the manual and error-
prone process of procurement payments can be streamlined.
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21. Here's how it works:
Smart Contracts: Smart contracts can be programmed to interact with existing
Enterprise Resource Planning (ERP) systems. These contracts automate payments to
entities based on predetermined conditions. For example, when goods are delivered
and verified, the smart contract can automatically release the payment to the
supplier.
Banking APIs: Banking APIs provide a way to communicate with financial institutions
and set standard payment instructions. This can include specifying payment
amounts, recipients, and scheduling. APIs enable seamless integration with banking
systems.
Experiments are currently underway to leverage smart contracts and payment APIs
for procurement payments. While the potential benefits are significant, mass
adoption of these technologies may still be some distance away.
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CHAIN BASED SUPPLY CHAIN
Blockchain technology, which is essentially a digital database, plays a crucial role in
modern supply chains by facilitating the flow of information among a distributed
network of computers, including individuals, businesses, banks, and central banks. It
is designed to provide real-time updates and information access to all participants,
creating a single version of truth that enhances transparency and efficiency.
Here's how blockchain can transform supply chains:
1. Ensuring Authenticity and Access to Documentation: Traditional supply chain
processes involve numerous documents generated at different stages, often leading
to manual data entry by various parties and the potential for errors and fraud. For
example, banks may spend a significant portion of their costs on manual handling
and verification of documents. Blockchain eliminates the need for duplicative
manual processes by maintaining a single, tamper-proof version of documentation
that all participants can access and update in real time.
22. 2. Tracking Product Provenance: Counterfeit and pirated goods are a significant
problem in global trade, accounting for billions of dollars in losses. Blockchain
technology enables the traceability of products to their origin, allowing
manufacturers, retailers, and consumers to validate product authenticity throughout
its lifecycle. This helps combat the counterfeit market and ensures consumers
receive genuine products.
3. Improving Transparency and Visibility of Shipments: Inefficient processes and lack
of transparency in supply chains can lead to bottlenecks at various stages, such as
ports, customs areas, and international borders. These bottlenecks are exacerbated
by the disjointed interactions between different parties involved in shipping
processes. Blockchain can enhance transparency and visibility by creating a unified
platform for logistics, ordering, and financing. This integration, known as embedded
trade, has the potential to streamline supply chains, particularly for small exporters
in developing countries.
Overall, blockchain technology offers solutions to challenges and risks in complex
supply chains, reducing costs, preventing fraud, and increasing transparency and
efficiency throughout the supply chain ecosystem.
Digital IDs and full digitization of documents using blockchain can help increase
supply chain visibility, build mutual trust, and improve authentication of ownership
and title.
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23. Contact Us :
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Palo Alto CA 94306
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