Suku: Blockchain supply-chain-as-a-service vs traditional models
The right piece of software can change the world.
Supply chain management is frequently described as one of the main applications of blockchain technology, with typical promises including the ability to track everything immutably, simplify information sharing, cut costs and generally get a significant competitive edge over anyone who's not on the blockchain.
The findings are quite boggling. Samsung's explorations into blockchain logistics have come back with potential supply chain cost savings of 20% by reducing overhead and eliminating existing bottlenecks. Beyond the direct cost savings, says Seoul university professor of industrial engineering Cheong Tae-su, this extra responsiveness gives businesses a keen advantage.
According to the World Trade Organisation (WTO), streamlining global shipping supply chains could increase worldwide GDP by 5%, and increase the total volume of goods shipped globally by 15%. Supply chain is one of those areas where the widespread application of blockchain technology could very literally change the world.
One solution at a time
This sheer potential is one of the reasons for Suku, says Eric Piscini.
Piscini is the former blockchain lead at Deloitte, where he grew the team from just 3 people to over 1,200. He's now the CEO at Citizens Reserve, a development company whose goal is to transform businesses with blockchain "one solution at a time".
"We are starting with supply chain because it's really one of the largest opportunities to think about what blockchain can do," he said.
There are staggering commercial benefits of the kind that Samsung is exploring, macroeconomic impacts like the kind mentioned by the WTO and human impacts like the estimated 1 million lives lost each year to counterfeit pharmaceuticals.
And with so much world-changing potential up for grabs, it's worth going big. This is what Suku aims to do by creating a new blockchain "supply-chain-as-a-solution" way of thinking about the space.
You can't have ceilings getting in the way when you're aiming for the stars though.
"What was interesting to me is I worked at a fantastic environment at Deloitte, where innovation was the core and we were building extra efficiency," he said. "The challenge I was seeing was we were limited by structure itself – the structure of Deloitte was limiting... When you build a blockchain platform you actually bring companies together from the same industry and ask them to work together. Deloitte being so big, it was hard to bring users together without touching on clients of Deloitte... and you have the traditional limits of moving an organisation of 300,000 people over 45."
Enter Citizens Reserve.
Piscini describes it as a company that starts with the goal of using new technology to change the world for the better, then works back from there to work out how to make it happen.
Suku is designed to do everything supply chain-related.
"The vision is to deliver everything in supply chain," Piscini says. "Forecasting, planning – supply planning and demand planning – everything. [But] it's a really big endeavour to try to do everything at once, so what we decided to do is start with what we called Suku Core"
Piscini describes two features in Suku Core, the version intended to go live first. The first is a B2B marketplace and the second is the ability to track and trace.
Once those core features are ready, the marketplace will be opened up for those who want to use it, as well as those who want to build on top of it. This model, where anyone can build and use it, is crucial for any platform with goals as ambitious as Suku.
As such there are two key groups of people who will be using Suku. The first is the users themselves come to take advantage of its functions, and the second is the developers. The developers who build on it will be helped to a certain extent by Suku's own developers, while also having a great opportunity to monetise their work like an app developer in an app store.
This "ecosystem" approach, which welcomes third-party developers to build on the platform, is not only very blockchain-esque but also very necessary.
"We very, very quickly said one of the concepts is to build everything, and the only feasible way is to build an ecosystem."
"A service could be insurance when you ship products from one place to another – you can actually buy that on the platform – or you need financing, or when two bodies are in need of dispute resolution. The sky's the limit. That's why we need an ecosystem, because the service range is so wide. It's also very true to blockchain values."
Traditional supply chain solutions are individual services, or a single company that provides a range of different supply chain-related services. What a company can do with these provided services depends largely on how much they can afford.
Supply-chain-as-a-service, by contrast, refers to the idea of having anything and everything supply chain all on one platform, to deliver an affordable solution to anyone who needs it. Many of these solutions will be cheaper alternatives automated through the blockchain, and many more will be provided by other businesses on the platform.
It has to be accessible though, Piscini says. This level of accessibility is key to properly unlocking the full benefits of blockchain supply chain solutions and seeing it get widely adopted. To that end, Suku will be adopting a freemium model, where core features are available free of charge but more advanced or specialised services are paid for. Many small and medium-sized businesses don't have access to complex information technology, he notes.
Piscini also sees a moral imperative in making sure the technology is accessible for all, rather than just the higher bidders.
"With this platform we are hoping to open supply chain to the world, let anyone run an efficient supply chain. It's not easy, that's for sure. We don't think it's going to be easy... I think it's worth spending the next few years on that, for sure."
"There's an obligation to deliver something significant as well, not just for those who can afford it but also everyone. We have to do something meaningful with this platform."
Building out Suku and seeing it become widely used is partly about delivering the desired features, but also about keeping everyone happy. In this case, that means both the users and the developers, kept happy by distributions of the SUKU token.
"Tech partners", as Piscini calls them, can basically just be paid a certain amount of tokens for developing certain applications. After that, they can also sell their app on the app store and decide how they want to monetise it.
"The way we incentivise them is by really signing an agreement with them saying you should build an application using the token, you will get rewarded in tokens and also benefit from revenue generation, and decide how you want to monetise the application you're building into the 'app store'."
Tech partners will have a very flexible range of monetisation models, Piscini observes. There are the usual options to let users charge one-off fees or invite users to subscribe, as well as alternatives like a transaction-fee-based solution or a (still under consideration) freemium model.
"Compare that to an app store, you have a lot of options to generate revenue."
While tech partners have a lot of potentially profitable options, the plan is to gradually bring more and more services into the free Suku Core version, to keep it free while making it more useful over time. The exact features to be introduced will be influenced by the community, with token-holders being able to vote on new features and their votes being weighted by the number of tokens held. These votes and updates are planned to happen quarterly, so Suku features will be ticking along and evolving more quickly than a traditional piece of software.
The new risk, then, might be unintentionally – or intentionally – cutting off a tech partner's revenue stream by folding their creations into the free core version.
"If you remember the beginning of the iPhone, the app store was very empty," Piscini explained. "One example was a flashlight. One day Apple decided to move that feature into iOS and the core of the platform, and developers lost their revenue. What we are planning to do is avoid that situation, if at one point their feature moves to the core, we will also reward the developers for providing that code into the core."
Other users will also be incentivised towards certain actions in different ways. On the more basic end of the scale, anyone can get rewarded for completing their onboarding into Suku. Closer to the other end, people are incentivised to hold certain token stakes to unlock extra platform features as part of the freemium model, in order to better maintain SUKU value.
"When you adopt blockchain you have to embark on a journey to where you are decentralised," Piscini says. "When you're a large organisation its hard to go from being the network to being a participant. It's a big change of mindset. That's going to be the main challenge, I think, to organisations who want to adopt the technology."
The same journey might be seen in how Citizens Reserve created Suku with the intention of being more like a participant than an owner, relative to any other software company creating and selling subscriptions to a piece of software.
The advantages of this kind of design are tremendous. It frees up a lot of resources to use more wisely elsewhere and allows for the creation of platforms like Suku, which go far beyond the scale of anything previously possible.
In that respect, the invention of blockchain can do to network architecture what cranes and elevators do for physical architecture. Or to use a more apt analogy, what the invention of the railroad did for supply chains.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC, ADA