IBM expects a 50% decrease in supply chain administrative costs with Trust Your Supplier (TYS) blockchain

Posted: 7 August 2019 6:40 pm
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A lot of time and money goes into building trust. Blockchain can manufacture trust faster and cheaper.

IBM has announced a new blockchain network, Trust Your Supplier (TYS), built by Chainyard.

IBM is a founding member of the network, along with a cross-industry sample of some of the world's biggest names, including Anheuser-Busch InBev, Cisco, Nokia, GlaxoSmithKline, Vodafone, Lenovo and Schneider Electric.

The problem

Many supply chains are extremely complex and can be pictured as a process of gradually turning raw materials into incrementally less-raw materials. By processing raw materials a sufficient number of times, you can eventually turn dirt and metal into essentials like electronic devices, medication and beer.

At each step in this process, you have a company getting materials from its suppliers.

The process of vetting these new suppliers is typically slow and expensive because you need to make sure they are legitimate, appropriately qualified and certified, don't pose an unreasonable financial risk depending on the circumstances of the commercial arrangement and are able to deliver in a way that consistently meets your specifications. The onboarding process is also slow because you need to exchange a lot of documents and collectively do a lot of paperwork.

"Traditional methods of managing suppliers often involve cumbersome manual processes, which make it difficult to verify identities and track documents like ISO certifications, bank account information, tax certifications, and certificates of insurance throughout the lifecycle of a supplier," IBM's press release says.

The solution

"By using a decentralised approach and an immutable audit trail built on blockchain, Trust Your Supplier is designed to eliminate manual time-consuming processes and help reduce the risk of fraud and errors, ultimately creating frictionless connectivity across supply chains," the press release says.

According to Marie Wieck, general manager for IBM blockchain, speaking to Reuters, IBM is expecting a 70% to 80% reduction in the time it takes it to onboard new suppliers and a 50% reduction in its own administrative costs when doing so.

It will be a gradual rollout though. IBM has 18,500 suppliers around the world and will initially be bringing 4,000 of its own North American suppliers into the system. TYS is scheduled to be commercially launched in the third quarter of 2019.

How it works

The blockchain lets suppliers carry around digital passports, which they can use to prove their identity, qualifications and other information on the blockchain. Third parties, such as Dun & Bradstreet, EcoVadis and RapidRatings will provide verification and audit services directly onto the network.

Blockchain brings a lot of benefits here. Primarily, it ensures the passports can't be forged and that those third-party verifications, ratings and other passport information can be theoretically guaranteed to be genuine.

The idea is that you don't have to go through the time and effort of verifying any of those digital passport details because they simply can't be forged or lied about.

Trust Your Supplier is another piece of the quickly expanding IBM blockchain ecosystem, which also includes an insurance payout "supply chain" blockchain, an international trade settlement blockchain, the Stellar-based IBM World Wire blockchain payment system and more.

With IBM observing the world moving towards more wholesale "blockchain-ification", the ability to provide a comprehensive set of industry solutions might put IBM in a solid position.



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