Real World Asset Tokenisation - 3/10

NFTs in Supply Chain

NFT solutions have become increasingly important in logistics and the supply chain, due to its trait of traceability and the tracking of a specific product.

With the help of tokenisation, the?metadata, for instance- current owner, location, attributes such as?weight, size, and certifications etc. can be ascertained. This information is updated in the NFT, which remains stored in the blockchain network as the product advances along the supply chain. When the goods arrive at their destination, it’s possible to access a reliable, detailed history of the entire journey of the product, from its provenance to the moment it’s delivered.

-??????The advantages that NFTs would bring to logistics are as follows:

a.?????Security. NFT data are stored in the blockchain network in the form of a smart contract, preventing the information entered from being destroyed, eliminated, or reproduced without authorization. Everything is recorded in each of the nodes comprising the network thus the transfer of information between the various supply chain components is extremely secure.

b.????Traceability. When working with food, pharmaceutical products, chemicals, and/or perishable items, it’s important to know what logistics and manufacturing processes the goods have gone through, where they have been, and for how long. NFT technology offers total transparency, so anyone can obtain complete product traceability informational-time time.

c.?????Responsibility. Who’s responsible for the goods in the various stages across the supply chain? With NFTs, we can find out who’s in charge of a product at any given time. In addition,?to issue an NFT, both parties must enter into a liability agreement. In other words, an NFT can’t be sent if the counter party doesn’t agree to receive it, just as the goods won’t be delivered if the responsible party hasn’t received the NFT.?

-??????The main advantage of NFT technology in logistics has to do with?security, agility, and transparency?when consulting and transferring all information relating to a specific product.

• Applications in Supply Chain

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a.???Their primary function in the supply chain is individually authenticating goods, ensuring their quality and origin. Not only does the token authenticate goods, but it also serves to remove counterfeits, secure traceability in products along the supply chain, and ensure uniqueness and maintain provenance.

b.???Product authentication: NFT can be used to authenticate products of their originality eg. Luxury fashion brand,?Louis Vuitton, launched a blockchain platform that would use non-fungible tokens to authenticate the origin of high-priced goods.

c.????Transportation: The average vehicle has around 30,000 individual parts. Whether manufactured in-house or sourced from a third-party provider, NFTs will provide you with enhanced insights into each material and component used in a given end product. By assigning real-world materials to digital forms such as tokens, you can track their digital identity. In every step of the supply chain, you will have access to every material used, from its current location to its origin. This can also be applied to understanding manufacturing costs.

-??????Competitive advantage:?The use of NFT adds an edge to the potential of technology. Uniqueness and provenance are significant competitive advantages to organizations. Digitizing?your supply chain is key to keeping up with the ever-increasing pace of?Industry 4.0. While you may have already implemented largely beneficial technologies, innovation never stops – and neither can you. Integrating blockchain technology such as NFTs will provide your organization with a significant competitive advantage – authenticity like never before.

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-??????Top Companies using Blockchain Technology in supply chain

a.???Walmart is utilising Blockchain technology to advance the food supply ecosystem by digitising the entire food supply chain process. With the help of hyper ledger fabric, the company can make the process transparent, traceable, and reliable.?Employees can track products for the others, and it only takes a few seconds to scan a dozen of products to know where the fruit came from and where it is stored at present. Technology helps Walmart employees in tracking the origin of food in just a few seconds instead of days. Moreover, it reduces paper waste, automates the entire process, and accelerates supply chain transparency.

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c.???Ford?

In late January 2020, it was announced that Ford Motor Company is preparing to utilize Blockchain to trace supplies of cobalt. Cobalt is considered to be an essential ingredient for electric car batteries. Ford, with IBM, plans to track its raw materials like cobalt from the suppliers. Utilising Blockchain, the motor company wants to ensure that they are getting an authentic product to maintain its quality. When cobalt is mined, it will get on the ledger, and then the company can track where it’s going from there.

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d.???De Beers, the world’s biggest diamond producer by the value of its gems, is also utilizing Blockchain technology to track every natural diamond from the mine to the retail counter. The blockchain platform, known as Tracr, helps in verifying the authenticity of diamonds and ensures they are not from conflict zones where gems may be used to finance violence. Bruce Cleaver, chief executive of De Beers, once noted that Tracr, the blockchain-based network, can track a diamond across the supply chain, offering asset traceability assurance in a way that was not possible before.

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e.???UPS, which stands for United Parcel Service, is another one of the companies using Blockchain in the supply chain. In November 2018, this logistics giant joined the Blockchain in Trucking Alliance (BiTA) to bring increased transparency in the supply chain among all organizations. In March 2019, it was announced that UPS and e-commerce technology company Inception collectively rolled out a blockchain-powered platform to enhance merchant supply chains.?Apart from that, UPS has also filed a patent for a blockchain system that would store package destination, movement, transportation method, and other crucial information, thus ensuring efficiency and transparency.?

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f.????FedEx, which is one of the largest shipping enterprises, is seeing a single, standardised ledger, Blockchain, as an innovative technology to guard their chain of custody. To track it's shipments, the shipping giant has adopted Blockchain. Moreover, the enterprise has joined BiTA and launched a blockchain-powered pilot program in the hope that the program will make clear what data should be stored on Blockchain to best rectify customer disputes.

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g.???Implementing Blockchain will enable clients to receive information in a faster and more reliable manner and their customer service people to answer queries in a prompt manner