Blockchain technology and its impact on the supply chain

ECG Academy 2020
Thesis
Blockchain Technology
and its impact on the Supply Chain
Delivery date: Warsaw, 04.03.2020
Gowin, Artur
Mostva Ltd.
Warsaw, Poland
+48 661 954 433
artur.gowin6@gmail.com

2
Table of contents
INTRODUCTION ...................................................................................................6
1. UNDERSTANDING BLOCKCHAIN............................................................8
1.1. Reinventing the Business of Trust ................................................................................ 8
1.2. What is blockchain........................................................................................................ 8
1.3. How blockchain works................................................................................................ 10
1.4. Key challenges of blockchain ..................................................................................... 13
2. BLOCKCHAIN APPLICATIONS ACROSS INDUSTRIES ....................13
2.1. Financial services........................................................................................................ 13
2.2. Blockchain in Supply chain - Overview ..................................................................... 15
2.3. Blockchain in the Automotive Supply Chain.............................................................. 16
3. Mostva - an FVL supply chain services provider analysis (AS-IS) ...........18
3.1. Hypothesis................................................................................................................... 18
3.2. Mostva - Current business model analysis.................................................................. 18
4. Mostva - Implementing blockchain - Case Study (TO-BE)........................20
4.1. Solution canvas ........................................................................................................... 23
4.2. Test-pilot Simulation................................................................................................... 26
5. Final conclusions and summary....................................................................29

3
List of Figures
Figure 1. A brief history of blockchain technology; Source:
https://www.logistics.dhl/content/dam/dhl/global/core/documents/pdf/glo-core-
blockchain-trend-report.pdf................................................................................................ 9
Figure 2. Types of databases. Moving from centralized to a decentralized and distributed
system with blockchain; Source: "Blockchain in Logistics. Perspectives on the upcoming
impact of blockchain technology and use cases for the logistics industry," DHL Trend
Research, https://www.logistics.dhl/content/dam/dhl/global/core/documents/pdf/glo-
core-blockchain-trend-report.pdf, (February 20, 2020), 3. .............................................. 10
Figure 3. “Blockchain Technology for Supply Chains-A Must or a Maybe?”
McKinsey&Company, www.mckinsey.com/business-functions/operations/our
insights/blockchain-technology-for-supply-chainsa-must-or-a-maybe, (February 20,
2020) ................................................................................................................................... 11
Figure 4. Key differences between public, permissionless blockchain and private,
permissionless blockchains; Adapted from this source: Karen L. Jones, "Blockchain:
Building Consensus and Trust across the Space Sector,
"https://www.spacefoundation.org/wp-content/uploads/2019/07/Paper-Jones-Karen-
Blockchain-Technology-%E2%80%93-Understanding-its-Place-in-Space.pdf, (February
20, 2020)............................................................................................................................. 12
Figure 5. The advantages of trade finance using blockchain; Source: Hirofumi Nagano,
Yuuki Hara, Satoshi Oshima, Ippei Nishida, Toshiya Cho, "Creating Blockchain-driven
Financial Services and Business Models," Hitachi Review Vol. 66 (2017),
https://www.hitachi.com/rev/archive/2017/r2017_01/pdf/26-30_R10-03.pdf, No. 1,
(February 20, 2020), p. 27................................................................................................... 15
Figure 6. International trade involves heavy information flow, complex documentation
and many parties. Source: "Blockchain in Logistics. Perspectives on the upcoming
impact of blockchain technology and use cases for the logistics industry," DHL Trend
core-blockchain-trend-report.pdf, (February 20, 2020), 3. ............................................. 15
Figure 7. Key advantages of using blockchain in logistics. Source: "Blockchain in Logistics.
Perspectives on the upcoming impact of blockchain technology and use cases for the
logistics industry,"DHL_Trend
core-blockchain-trend-report.pdf, (February 20, 2020), 4................................................ 16
Figure 8. Mostva Communication Channels ....................................................................... 20
Figure 9. The blockchain decision tree. Source: "Blockchain Beyond the Hype A Practical
Framework for Business Leaders," World Economic
Forum, http://www3.weforum.org/docs/48423_Whether_Blockchain_WP.pdf,
(February 20, 2020), p. 6. .................................................................................................. 21
Figure 10. Collaboration scheme on the Vinturas platform. Source: ................................. 24
Figure 11. Mostva. Pre-blockchain vs as a member of Vinturas......................................... 25
Figure 12. Mostva on the Vinturas blockchain - Benefits for key stakeholders ................. 25

4
Figure 13. Vinturas dashboard. Source: Vinturas demo December 2019..........................26
Figure 14. Outbound vehicles. Source: Vinturas demo December 2019 ............................27
Figure 15. Incoming Deliveries. Source: Vinturas demo December 2019...........................27
Figure 16. Track, trace and upload documentation. Source: Vinturas demo platform ......28

5
List of Abbreviations
AI - Artificial Intelligence
DL - Distributed Ledger
DLT - Distributed Ledger Technology
EDI - Electronic Data Interchange
ETA - Estimated Time of Arrival
FVL - Finished Vehicle Logistics
IoT - Internet of Things
LSP - Logistics Service Provider
MVP - Minimum Viable Product
NSO - Numeric Stockage Objective
OEM - Original Equipment Manufacturer
VIN - Vehicle Identification Number

6
Glossary
A token is a representation of a digital asset. It typically does not have intrinsic value but it is
linked to an underlying asset, which could be anything of value.
Distributed Ledger Technology refers to a novel and fast-evolving approach to recording and
sharing data across multiple data stores (or ledgers). This technology allows for transactions and
data to be recorded, shared, and synchronized across a distributed network of different network
participants.
A ‘blockchain’ is a particular type of data structure used in some distributed ledgers which stores
and transmits data in packages called “blocks” that are connected to each other in a digital ‘chain’.
Blockchains employ cryptographic and algorithmic methods to record and synchronize data
across a network in an immutable manner.
Distributed ledgers’ (DLs) are a specific implementation of the broader category of ‘shared
ledgers’, which are simply defined as a shared record of data across different parties. A shared
ledger can be a single ledger with layered permissions or a distributed ledger, which consists of
multiple ledgers maintained by a distributed network of nodes, as defined above.
DLs are categorized as permissioned or permissionless, depending on whether network
participants (nodes) need permission from any entity to make changes to the ledger.
Distributed ledgers are categorized as public or private depending on whether the ledgers can
be accessed by anyone or only by the participating nodes in the network.
Digital currencies are digital representations of value that are denominated in their own unit of
account, distinct from e-money, which is simply a digital payment mechanism, representing and
denominated in fiat money.
Cryptocurrencies are a subset of digital currencies that rely on cryptographic techniques to
achieve consensus, for example, Bitcoin and ether.
Nodes are network participants in a distributed ledger network.
IoT are objects with computing devices in them that are able to connect to each other
and exchange data using the internet.

7
INTRODUCTION
Disruptive technologies such as Artificial Intelligence (AI), Blockchain,
Virtual/Augmented Reality, or Internet of Things (IoT), have already revolutionized almost every
industry in the world. The four main trends in the automotive sector are diverse mobility,
electrification, autonomous driving and connectivity. [1]
Driver shortages, rising competition,
costs, taxes, stricter laws and regulations are the main reasons pushing companies to seek cost-
effective solutions. Organizations aim to unlock the trapped value in logistics. It is estimated that
by reducing supply-chain trade barriers, global GDP could increase by nearly 5% and global trade
by 15%[2]
. To stay competitive, companies must effectively address changing consumer habits.
E-commerce and order tracking has become a standard element of every purchase. Digitalization
and connectivity are now a must-have for every major logistics provider in the finished-vehicle
sector as well.
Blockchain has been one of the most disruptive technologies in recent years. It offers
a promise for a more secure global supply chain. Current use cases have shown that blockchain
can significantly improve transparency, efficiency, and simplify cross-border supply-chain
operations. IBM is one of the most popular blockchain providers for commercial purposes. For
Maersk, a single container of tulips shipped from Africa to Europe generates over 200 documents.
Together with IBM, they have created an environment that provides a faster flow of documents
which is crucial for avoiding delays. [3]
Another example is Walmart. They use IBM’s technology
to track food products through its supply chain.[4]
It allows the company to identify any food
safety threats within minutes, not days.
In the automotive sector, DHL, together with BMW, is developing a proof-of-concept
private blockchain technology. The BMW group relies on its logistic suppliers (including DHL)
from pre-production through to delivery of replacement parts to the dealership on demand. By
creating a mutual platform, they aim to reduce human intervention to the minimum. Using
blockchain, they can share critical data and restrict access to only the information each partner
needs. Real-time order tracking and transparency increases efficiency and improves customer
satisfaction. This proof-of-concept leads to reduced manual reporting, allows partners to resolve
[1]
"Automotive revolution – perspective towards 2030,"
McKinsey&Company, https://www.mckinsey.com/~/media/McKinsey/Industries/High%20Tech/Our%20Insights
/Disruptive%20trends%20that%20will%20transform%20the%20auto%20industry/Auto%202030%20report%20J
an%202016.ashx, (February 19, 2020)
[2]
“Blockchain: DHL.”, https://www.logistics.dhl/sg-en/home/insights-and-innovation/insights/blockchain.html.
(February 19, 2020)
[3]
"IBM and Maersk demo: Cross-border supply chain solution on blockchain",
IBMBlockchain, https://www.youtube.com/watch?v=tdhpYQCWnCw (February 20, 2020)
[4]
"Walmart's food safety solution using IBM Food Trust built on the IBM Blockchain Platform,"
IBMBlockchain, https://www.youtube.com/watch?v=SV0KXBxSoio, (February 20,2020)

8
problems quickly, and improves transparency. “The blockchain platform offers a secure, cost-
effective and scalable plug-and-play system that can be extended across other networks and
contracts.”[5] [6]
Working as a Key Account Manager at Mostva, I’ve heard the word “blockchain”
multiple times from various sources. The technology is receiving more and more attention among
big and small players on the market. For the purpose of this thesis, I’ve decided to explore this
subject as much as possible. I have researched the latest facts, opinions, and analysed the latest
market trends. I’ve also interviewed industry experts and learned fascinating use cases that
I wouldn’t have discovered otherwise. This paper aims to answer the following:
1. What is blockchain, and its key challenges?
2. How is this technology already being applied across industries?
3. What opportunities could blockchain deliver to Mostva’s FVL operations?
1. UNDERSTANDING BLOCKCHAIN
1.1. Reinventing the Business of Trust
Looking back at history, our civilization has overcome many challenges. Over the last four
centuries, inventions such as Gutenberg's Press, combustion engine, the internet have
revolutionized people’s lives. Widespread access to knowledge, global transportation, goods and
information wouldn’t be possible without those innovations. For centuries, trust has been
a foundation for human interactions. It’s been a crucial element for businesses and, in some cases,
entire industries between multiple parties. As global trade grew, the distance between trading
parties increased. Therefore, institutions were invented with a unique role - to ensure trust and
security during long-distance exchanges of value. Good examples are digital marketplaces or
platforms such as Amazon, eBay or Uber. However, blockchain technology is about to disrupt
and revolutionize the whole business of trust. It allows us to trade 1-to-1 but at scale.
1.2. What is blockchain
Blockchain falls into the category of Distributed Ledger Technology (DLT) storage systems.
A DLT is a more general term and doesn’t necessarily include a structure of cryptographically
linked blocks. The ledger is stored on multiple servers which communicate with each other to
keep the most up-to-date record of transactions. Blockchain is a subset or type of DLT. It includes
[5]
“DHL x BMW Blockchain Proof of Concept," DHL, https://www.youtube.com/watch?v=KeMGcKn-EmI,
(February 20, 2020)
[6]
“Blockchain: DHL,” DHL, www.logistics.dhl/sg-en/home/insights-and-innovation/insights/blockchain.html,
(February 20, 2020)

9
cryptographically linked “blocks” - a “chain”. Those blocks include information such as a list of
transactions. Each block is later timestamped and added to the chain in chronological order.[7]
The history of blockchain is fairly short (Figure 1). It has gained its popularity as the key
technology behind bitcoin. However, it can be used virtually for everything we do, not only for
transactions. From a technical point of view, blockchain is a persistent, transparent, append-only
shared ledger. It’s near-real-time and peer-to-peer, which means there’s no need for a third-party
or a middleman. The proof of the transaction is in more than one place (distributed). The ledger
is immutable - once the file is created, it cannot be edited. Thanks to those characteristics, we can
increase trust, transparency and limit fraud for transactions that use blockchain. By using this
technology, companies no longer need to rely on intermediaries to verify, record and coordinate
transactions.
Figure 1. A brief history of blockchain technology; Source:
https://www.logistics.dhl/content/dam/dhl/global/core/documents/pdf/glo-core-blockchain-trend-report.pdf
Over the last few years, there has been a lot of hype around blockchain. Some say it’s just
a fad and will disappear over time. Others argue that cryptocurrency and tokens are the only use-
cases for this technology. However, very often such people hold large amounts of cryptocurrency.
Therefore, there’s some incentive for them to have that view. In the last two-three years, there’s
been a growing focus around blockchain from organisations. Their aim is to identify the business
value that underlies blockchain. It allows businesses to streamline their processes. For example,
nowadays, the physical supply chain is usually quite integrated. However, the supporting
information databases are often centralized. Since data is kept in “safeguarded silos”, it impacts
the information flow and complicates the whole process.
[7]
Karen L. Jones, "Blockchain: Building Consensus and Trust across the Space
Sector," https://www.spacefoundation.org/wp-content/uploads/2019/07/Paper-Jones-Karen-Blockchain-
Technology-%E2%80%93-Understanding-its-Place-in-Space.pdf, (February 20, 2020)

10
By moving from a centralized to a decentralized and distributed system, all involved
parties can share and have access to up-to-date information (Figure 2). In case of vehicle logistics,
“every member in this network could monitor, access and share, and analyze consistent and up-
to-date information irrespective of where the vehicle is in its lifecycle.”[8]
Figure 2. Types of databases. Moving from centralized to a decentralized and distributed system with blockchain;
Source: "Blockchain in Logistics. Perspectives on the upcoming impact of blockchain technology and use cases for
the logistics industry," DHL Trend Research,
https://www.logistics.dhl/content/dam/dhl/global/core/documents/pdf/glo-core-blockchain-trend-report.pdf,
(February 20, 2020), 3.
1.3. How blockchain works
Blockchain preserves digital information and provenance. Data transparency, security, asset
management and smart contracts are the four key features of blockchain-based systems. The
embedded mechanisms ensure that stored records are accurate, tamper-evident, and from
a provable source. Traditionally, multiple parties maintain copies of their own dataset. Now every
network member creates a single source on a shared dataset. This gives all the stakeholders the
most recent, accurate and reliable set of information. From the security aspect, the embedded
mechanisms ensure that each transaction and message is cryptographically signed. This provides
solid security and effective risk management tool against everyday high risks of data breach and
manipulation. In terms of asset management, blockchain can be used in managing ownership and
transfer of digital assets such as land titles, diamond certificates or copyrights. Smart contracts
are a type of self-executing programs that are automatically triggered when a special condition is
met. As IBM explains, they do not “only define the rules and penalties for an agreement in the
same way that a traditional contract does, but they also automatically enforce those
obligations.”[9]
They can be used to exchange money, shares, property, or anything of value in a
[8]
"IBM Blockchain Car Lease Demo," IBM Developer, https://www.youtube.com/watch?v=IgNfoQQ5Reg,
(February 20, 2020)
[9]
Create and Execute a Smart Contract.” IBM Developer, https://developer.ibm.com/patterns/create-and-
execute-a-blockchain-smart-contract-ibp-v20/, (February 20, 2020)

11
conflict-free, transparent way. What is more, no intermediary is needed for a smart contract to be
completed. This facilitates self-execution and prevents potential disagreement about transactions.
The key elements underlying this technology are:
• Distributed database - information is not stored on a single server. Instead, it’s
distributed among multiple computers (nodes) all around the world. Therefore, it’s very
difficult to make unauthorized changes. This proves the technology’s incorruptible
nature. Every node on the network holds its own copy of the data on the “block”. Each
node updates whenever somebody submits a new transaction.
• Peer-to-peer transmission - The information is distributed in a network of computers
which determines the current state of the database. This means that it’s driven by
consensus. Compared to centralized databases, there’s no single point of failure here.
Participants (or nodes) record and interchange information on the network between each
other.
• Trust & Transparency - Stakeholders’ electronic signatures are added to transaction
data and transaction details are recorded to certify the participants’ agreement to the
transaction. As a result, a chain of transaction hash data is added which prevents
tampering with past transaction information. A fixed amount of transaction data is
grouped together as a block. Next, based on the consensus among the participants, the
block is added to the blockchain. This way only unique transactions can be added to the
network (Figure 3).
• Embedded logic - algorithms and rules enable autonomous consensus-based decisions.
Thanks to them, transactions between nodes are automatically triggered and executed.
Figure 3. “Blockchain Technology for Supply Chains-A Must or a Maybe?”
McKinsey&Company, www.mckinsey.com/business-functions/operations/our insights/blockchain-technology-
for-supply-chainsa-must-or-a-maybe, (February 20, 2020)

12
It’s work to mention that there are a few types of blockchain-based systems (Figure 4).
“Blockchains can be public, private or managed by a consortium of companies, and they can be
accessible by everyone (permissionless) or restricted (permissioned).”[10]
1. Public, (usually) permissionless blockchains - anyone can participate and manage the
ledger based on the applied consensus model. All transactions are broadcast publicly and
visible to everyone. Anyone can read, write or contribute computing power to the
network. There are different types of consensus models such as “proof work” or “proof
of stake”. The most prominent examples are Bitcoin and Ethereum.
2. Private, (usually) permissioned blockchains - Only permitted nodes can access the
network and make changes to the ledger. A central entity decides who can join the
network, contribute computing power and broadcast network data. Specific access
privileges can determine to which extent each participant can read, write or contribute to
the network.
Public, permissionless blockchains are open and can be used by many parties. This can lead
to faster innovation. However, private permissioned blockchains support a closed ecosystem of
participants. Its enterprise features such as privacy protection or strict access controls make this
type of blockchain more attractive to companies.
Figure 4. Key differences between public, permissionless blockchain and private, permissionless blockchains;
Adapted from this source: Karen L. Jones, "Blockchain: Building Consensus and Trust across the Space Sector,
"https://www.spacefoundation.org/wp-content/uploads/2019/07/Paper-Jones-Karen-Blockchain-Technology-
%E2%80%93-Understanding-its-Place-in-Space.pdf, (February 20, 2020)
[10]
Emmanuelle Ganne, "Can Blockchain revolutionize international trade?," World Trade
Organization, https://www.ibm.com/downloads/cas/KJDPQKBE, (February 20, 2020)

13
1.4. Key challenges of blockchain
Blockchain, as every emerging technology, is facing considerable challenges. It must
overcome them to achieve mainstream adoption. Enough users must be willing to explore this
technology and implement it. Limited budget and time make it sometimes difficult to prioritize
the right functionality for development. Getting enough financing without sacrificing
independence or compromising the neutrality of blockchain solutions is also a potential challenge.
There are also performance issues. Blockchain is inherently slower than traditional database
solutions. Therefore, scaling it globally requires careful design. Despite the fact that there are
still many challenges to overcome, blockchain is showing promise across many industries. Life
sciences and healthcare, retail, citizen services, automotive, energy and logistics are just a few
examples.
2. BLOCKCHAIN APPLICATIONS ACROSS
INDUSTRIES
2.1. Financial services
“The blockchain will do to the financial system what the internet did to media”[11]
. Blockchain
can give billions of people access to banking services around the world. That includes those living
in 3rd world countries who don’t have access to traditional banking.
With the rise of new technologies, more and more businesses aim to provide financial services
utilizing software and modern technology. Therefore, the traditional banks’ monopoly for
financial services is being challenged by FinTech companies. “One type of fintech that could play
a key role in the near future are the so-called neo-banks or challenger banks. These mobile-only
banks only offer an account and a debit or credit card as their own products.”[12]
All other banking
and financial services are offered through 3rd party fintech companies. Traditional banks are not
able to operate as flexible and fast in implementing new products based on changing demands as
Fintech companies. Mobile Payments (a good example of fast and innovative progress) change
the way people manage their finances. Tech-savvy customers, especially Millennials expect
effortless, secure and scalable services. They prefer to transfer money, lend, manage loans and
invest without human assistance or a visit to a bank. “One example is N26, one of the largest neo-
[11]
Ali, Joichi ItoNeha NarulaRobleh. “The Blockchain Will Do to the Financial System What the Internet Did to
Media.” Harvard Business Review, www.hbr.org/2017/03/the-blockchain-will-do-to-banks-and-law-firms-what-
the-internet-did-to-media, (February 20, 2020)
[12]
Esade Business&Law School, "The Fintech Revolution: Who Are The New Competitors In
Banking?," www.forbes.com/sites/esade/2019/07/30/the-fintech-revolution-who-are-the-new-competitors-in-
banking/#594b538b1161, (February 20, 2020)

14
banks in Europe, which allows transfers via TransferWise, savings management with the fintech
Nutmeg, and loans or investments in credits with the Lending Club platform – all in one app”[13]
.
Economic crises and the rising distrust towards banks and financial institutions inspired many
people to seek alternative forms of payment. In the 20th century, cryptocurrencies, thanks to the
underlying blockchain technology, turned out to be one of the best alternatives. Today there are
over 4800 cryptocurrencies with a market capitalization of over 200 bn. Euro.[14]
With the use of blockchain, AI and machine learning the market is expected to be transformed
even more. This transformation will continue making FinTech products an integral part of our
digitized life.
Banks and financial institutions are trying to catch up with the rising competition. The
common challenge in the banking sector is related to the settlement processes. After the trade is
made, capital can be tied up for a few days until they are released to the recipient. For banks,
moving money overseas is a very complex task. These processes can be greatly improved through
blockchain technology (Figure 5). Many banking corporations like Barclays are adopting this
technology to make their business operations faster, more secure and efficient. As Chief of
Technology Dr Lee Braine says “Barclays has explored many interesting uses for blockchain:
these include the simplification of payments infrastructure, the use of smart contracts to
standardise post-trade processes and efficiently connecting parties in trade finance and
syndicated lending.”[15]
The World Trade Organisation estimates that "up to 80% of global trade is supported by some
sort of financing or credit insurance"[16]
. There’s a lot of potential friction between the exporter
and importer. The first must take on the risk of non-payment, while the importer aims to alleviate
the supply risk. Trade finance companies act as a trust third party to reduce both the payment and
the supply risk. At the same time, they are expected to provide the exporter with accelerated
receivables, and the importer with an extended line of credit. The information visible in a supply
chain blockchain can help those institutions better evaluate companies for lending (Figure 5).
[13]
Esade Business&Law School, "The Fintech Revolution: Who Are The New Competitors In
Banking?," www.forbes.com/sites/esade/2019/07/30/the-fintech-revolution-who-are-the-new-competitors-in-
banking/#594b538b1161, (February 20, 2020)
[14]
“Global Charts.,” CoinMarketCap, www.coinmarketcap.com/charts, (February 20, 2020)
[15]
“How Barclays Is Exploring Blockchain: Innovation,” Barclays, www.home.barclays/news/2019/7/less-hype-
and-more-collaboration--how-barclays-is-exploring-bloc, (February 20, 2020)
[16]
Trade finance and SMEs Bridging the gaps in provision," World Trade
Organization, https://www.wto.org/english/res_e/booksp_e/tradefinsme_e.pdf, (February 20, 2020), 4.

15
Figure 5. The advantages of trade finance using blockchain; Source: Hirofumi Nagano, Yuuki Hara, Satoshi Oshima,
Ippei Nishida, Toshiya Cho, "Creating Blockchain-driven Financial Services and Business Models," Hitachi Review
Vol. 66 (2017), https://www.hitachi.com/rev/archive/2017/r2017_01/pdf/26-30_R10-03.pdf, No. 1, (February 20,
2020), p. 27.
2.2. Blockchain in Supply chain - Overview
Traditionally, raw materials, components or finished products must be certified by a trusted
party as they move through a supply chain. Ensuring the successful flow of physical goods
requires complicated collaboration with others. It also involves managing a complex flow of
information and financial transactions. In many cases, companies must rely on manual data entry
and paper-based documentation to meet strict laws and regulations. Such processes are time and
money consuming and cause friction in the whole global trade (Figure 6).
Figure 6. International trade involves heavy information flow, complex documentation and many parties. Source:
"Blockchain in Logistics. Perspectives on the upcoming impact of blockchain technology and use cases for the
logistics industry," DHL Trend Research,
https://www.logistics.dhl/content/dam/dhl/global/core/documents/pdf/glo-core-blockchain-trend-report.pdf,
(February 20, 2020), 3.

16
Blockchain can help reduce or even overcome those frictions (Figure 7). For example, it
can be used to replace the need for trusted intermediaries. However, in logistics, it’s more about
facilitating trust and data transfer security between intermediaries, rather than eliminating them.
Every participant (node) holds a copy of all transactions. Every member can inspect all past
transactions in the network and detect if a product is not as advertised. As goods move through
the supply chain, a record of inspection is available and bound to each item. To preserve business
confidentiality, specific details such as quantity or identity of the parties transacting can be
pseudo-hidden in a blockchain.
There’s a growing trend of consumers expecting not only a perfect condition and timely
delivery of their ordered goods. They also want to know if the product is authentic, ethically
sourced and properly produced. With the help of blockchain, more and more companies can
answer to such high consumer expectations. Improved transparency, traceability and automation
of commercial processes leads to faster and leaner logistics.
Figure 7. Key advantages of using blockchain in logistics. Source: "Blockchain in Logistics. Perspectives on the
upcoming impact of blockchain technology and use cases for the logistics industry,"DHL_Trend
Research, https://www.logistics.dhl/content/dam/dhl/global/core/documents/pdf/glo-core-blockchain-trend-
report.pdf, (February 20, 2020), 4.
2.3. Blockchain in the Automotive Supply Chain
As mentioned above, one of the biggest challenges in logistics is the enormous amount of
hand-written paperwork. This creates a huge window for fraud, data manipulation and illegal
activities. In the automotive industry, both new and used car vehicle supply chains are directly
affected. In the new vehicle supply chain, there’s a lot of cars getting damaged during the process.
Due to the paper-based process, it’s very hard to determine who is responsible for the damage. In
many cases, logistics companies must cover such damages out of their own pocket.

17
In the case of used cars, one of the biggest challenges is fighting mileage rollback and VAT
carousel frauds. “Cars with rolled-back odometers are estimated to account for between 30% and
40% of the total number of vehicles traded across borders”[17]
. While odometer tampering leads
to buyer’s discomfort and financial losses, VAT carousel frauds cost billions in economic damage.
Moving all paperwork onto an electronic blockchain may dramatically reduce the
malpractices presented above. In the case of the new cars, each car gets a file on the blockchain.
As it moves along in its lifecycle, all activities are being recorded on the blockchain. This way
each vehicle has its own unique history of mechanical, logistics and damage records.
To make this happen, multiple companies and players in the automotive industry must
cooperate with each other. A good example is a consortium-led initiative developing a blockchain
solution for FLV in Europe. The project is led by Vinturas and IBM is the development partner.
Companies such as NVD, Group CAT, Axess, Koopman and a few others have joined so far.
According to Niall McNally (NVD), “the platform is in a test mode with Nissan related pilot,
testing track and trace visibility from the factory through to end dealer”. He also points out the
main advantages of this initiative which are:
• Process improvement - the ability to speed up certain administrative processes such as
claims handling or insurance handling,
• Cost reduction - by minimizing the administrative burden associated with legacy
systems, non-digital practices (which are everywhere in FVL),
• A mechanism to “go paperless”,
• Unlock supply chain value - the extra trade value that is generated through data sharing
can benefit all parties in the ecosystem.
There are also challenges that must be overcome to successfully run such a blockchain-based
consortium initiative. For FVL (and Vinturas) it is about convincing as many LSPs to join the
ecosystem. The solution is open to everyone to join, but some LSPs do not see the benefits yet.
To offer comprehensive services on the platform a critical mass of data is needed. Achieving this
requires onboarding as many active members as possible.
Another challenge is to accommodate the needs of each participant but at the same time
maintain the platform as generic as possible. It may be difficult to decide where to draw the line
when users such as OEMs or re-marketing companies may want some unique functionality. Since
the FVL processes are complex in many ways, replicating much of this functionality is very
[17]
TRT Trasporti e Territorio, 2017, Research for TRAN Committee – Odometer tampering - measures to
prevent it, European Parliament, Policy Department for Structural and Cohesion Policies, Brussels,
https://www.europarl.europa.eu/RegData/etudes/STUD/2017/602012/IPOL_STU(2017)602012_EN.pdf,
(February 25, 2020), p. 13."

18
challenging. It requires imposing certain standards whereas not every member necessarily wants
them.
The reluctance in the FVL sector to upgrade and modernise legacy systems is also hampering
blockchain adoption. For example, LSPs use different applications to interact with different
legacy systems. The FVL employees who handle cars need one app, not many for different OEMs
or distributors. As N. McNally says: “While, long term, blockchain may be the answer to prevent
the proliferation of multiple apps, there is a challenge in the short and medium-term in this
regard.”
As of February 2020, the members of the Vinturas platform can:
• supply track and trace messaging for OEMs/NSOs,
• track any unit from the factory through to end dealer,
• upload files such as damage details or other paperwork (eg. CMR).
The presented above features are the first of many development phases. In the future, the
platform will include comprehensive solutions for damage and on-hold management, data
analytics, optimisation, claims handling and insurance.
3. Mostva - an FVL supply chain services provider analysis
(AS-IS)
3.1. Hypothesis
The aim of this chapter is to describe Mostva’s current business model and activities. It is
required for the TO-BE stage where I will estimate the impact of blockchain implementation on
Mostva’s business relationships with stakeholders such as customers, suppliers, government,
technology providers and society.
3.2. Mostva - Current business model analysis
Value proposition. The company offers a wide range of automotive services for the FVL
supply chain. Mostva’s main value propositions are quality logistics, comprehensive vehicle
handling, maintenance and storage services. This allows clients such as OEMs, car leasing
companies and dealerships the ability to effectively scale their operations and satisfy their
customers’ growing needs.

19
Key activities:
• Transport
Transport services include both domestic and international flows. The fleet consists of over
250 car carriers. Clients are provided assistance during import, export, transit and customs
clearance. Each flow is always insured and equipped with satellite tracking on demand.
• Technical services
Mostva has 2 storage compounds (Mszczonow and Bytom). In Mszczonow and Bytom, they
offer comprehensive solutions for over 150 various equipment assembly options. They also
specialize in adaptations of vehicles for special purposes, auto detailing, body & paint repairs and
other special requests.
• Vehicle storage
Compounds in Mszczonow and Bytom can store up to 13 000 cars. There’s also a dedicated
double railway siding for loading and unloading cars and an unloading ground for 25 lorries. On
all 2 compounds, vehicle collection and dispatch is available 24/7.
• Key resources
Mostva’s key financial resources are generated by selling international and domestic
activities. The main stakeholders are car brands which outsource logistics and vehicle
customization operations to Mostva. One of the company key resources is the team composed of
industry professionals and business developers with extensive experience in FVL.
• Partners & Customers
Mostva delivers its value proposition through different ways of customer interaction (Figure 8).
As a services provider, it gives support to various players in the automotive value chain. Together
with stakeholders, it has access and co-manages a broad network of information and process
flows. Therefore, each stakeholder such as customers, service providers or regulators is
considered a strategic partner in all Mostva’s business operations. Every player in the logistic
chain is a potential customer for Mostva (OEMs, suppliers, logistics, retail, regulators, car
owners). However, the most common are OEMs, car leasing companies and dealerships
(considered both a customer and a partner).

20
Figure 8. Mostva Communication Channels
4. Mostva - Implementing blockchain - Case Study (TO-
BE)
In chapter 3, I presented an analysis of Mostva’s current business operations. Now I am going
to present a theoretical scenario of the potential positive and negative effects of implementing
blockchain into Mostva’s business model. As a logistics provider for the automotive industry, we
see many challenges that must be faced in the coming decade. Some of them are significant cost
reduction, optimization of transport networks to deal with rising drivers shortages and the need
to continually improve the customer experience.
For example, we have observed a growing demand for data sharing. The clients want to know
the exact time and position of their loads at any time. Soon it may become a standard requirement
for companies such as Mostva to be accepted as an LSP provider. As a matter of fact, we have
been recently invited to join the Project44 (a free tracking platform) by one of our key OEM
clients. Joining the platform is voluntary, but Mostva must implement a Track&Trace feature as
a condition to continue the contractual cooperation.
To answer the challenges presented above and continually lead on the Market as a quality
LSP, we must develop innovative solutions and adapt to the current market expectations. Joining
Project44 could surely give us a competitive edge in one field - data sharing and tracking.
However, we could take one step further and implement a blockchain platform featuring an
additional layer of trust, transparency and data security. A platform where secure data sharing and
tracking is one of many other useful features.
Before implementing blockchain, every business should asses whether blockchain is an
appropriate and helpful tool for their business needs. We used a decision tree provided by the
World Economic Forum. The decision model is composed of 11 questions that helped me define
if blockchain is a correct approach for Mostva (Figure 9).

21
Figure 9. The blockchain decision tree. Source: "Blockchain Beyond the Hype A Practical Framework for Business
Leaders," World Economic Forum, http://www3.weforum.org/docs/48423_Whether_Blockchain_WP.pdf,
(February 20, 2020), p. 6.
(A) - Blockchain is presented as a tool to remove intermediaries or brokers. However, in
logistics, it’s more about facilitating trust and data transfer security between
intermediaries, rather than eliminating them. Answer: YES
(B) (C) - Mostva works with digital assets on a daily basis and creates a permanent,
authoritative record of them. Answer: YES
(D) - We don’t require rapid high-performance transactions. At least in case of those
operations that could be improved with blockchain technology. Answer: NO
(E) - There wouldn’t be a direct need to store large amounts of non-transactional data on the
blockchain. Answer: NO
(F) - Mostva operations do rely on trusted parties for compliance and liability reasons
(insurance, customs, various regulations), so the answer should be YES. However, we
should continue to the next questions as a part of the further research.
(G) (H) (I) - Mostva does manage contractual relationships and value exchange. Shared write
access is used mainly for internal/staff operations. However, a form of shared write

22
collaboration between key stakeholders would be useful. Contributors usually know each
other, with unified and well-aligned interests, but a trust-less trust environment is a must-
have. Answer: YES
(J) - The control over functionality is required. Also, transactions should not be public but
restricted/visible only those stakeholders involved in the Mostva operations. Answer:
YES
After answering the 11 questions above, I’ve come to the conclusion, that blockchain seems
like the right solution for the problems Mostva and its key stakeholders are facing. As blockchain
is still in its early development stage, we will adapt an MVP approach. The aim is to simulate the
implementation of a workable solution with core features available for 2020. The idea would be
to test its functionalities rather than introducing a complete solution. In the MVP stage, the aim
is to address the following key industry pain-points:
1. Scattered landscape, multiple EDI connections, limited standardisation,
2. Paper-based transactional processes (CMR, damage tracking),
3. Limited or no track and trace for dealerships and their customers.
Goal: The platform will be used by Mostva’s partners and stakeholders such as car
manufacturers, suppliers, subcontracted logistics providers, retailers and regulators. The
blockchain-based platform will provide the following solutions:
• Real-time supply chain management,
• Secure, standardised data sharing,
• Unlocked supply chain value through data exchange and collaboration.
Platform: There are quite a few blockchain platforms available on the market. However, the
platform provided by Vinturas seems like the most accurate and promising solution for many
different business applications in the FVL industry. It is a growing consortium of FVL service
providers in Europe. It is already supported by more than 7 large FVL/LSP companies in the
market, such as Axess Logistics (Scandinavia), NVD (Ireland, UK), Koopman (Dutch) or Groupe
CAT. Recently, Vinturas announced its partnership with Santander Consumer Finance, the
consumer finance arm of Santander Group. “With Santander Consumer Finance joining, Vinturas
will explore new business models in the finance and insurance business.”[18]
[18]
“Santander Consumer Finance Joins Vinturas,” Vinturasx, www.vinturas.com/news/santander-consumer-
finance-joins-vinturas, (February 20, 2020)

23
Vinturas is an industry collaboration network that aims to be the digital backbone for the FVL
industry of the future. It provides:
• Real-time supply chain tracking from the OEM (factory) to the final customer (dealer),
• Access to real-time data on all digital transactions in the FVL supply chain.
For start, they aim to handle at least 12 million vehicles on a yearly basis.
4.1. Solution canvas
Joining Vinturas will allow Mostva to share and exchange data in a fully encrypted way
between stakeholders. Vinturas is a network of “nodes” that contain data which platform
members agreed to share between each other. The platform enables cross-member collaboration,
value creation and development of new business models (see figure 10).
To join Vinturas and start securely collaborating, a stakeholder must set up a node that will
be connected to the network. The nodes can be hosted by trusted parties such as IBM, Amazon
(AWS) or Microsoft or in the participant’s own environment. In the case of this test-pilot, Mostva
will host their node in the OEM’s environment connected to the Vinturas network where the data
and data exchange is protected. Our business parties (such as subcontractors, dealers, claims
handlers or tax offices) will be able to log on to the blockchain through an API. At the moment,
there’s no initial investment required to join the platform, unless we would like to become
a shareholder. There are plans to introduce membership fees in Q1 2020 based on the services the
platform will provide (such as the e-CMRs). However, we’ve been told that we could test-pilot
the platform for some time without any investment. Such an approach seems to be enough to put
together a theoretical MVP-case study presented in this thesis.
The ability to swiftly and securely collaborate between multiple business parties in the FVL
industry is one of the biggest benefits of this platform (Figure 10). All key stakeholders, including
parties such as claims handlers, insurance companies or regulators can verify and exchange the
data over the network.
Mostva will be able to conditionally share its data in a safe environment with all stakeholders.
For example, OEMs can collect this data in a secure way and have access to real-time information
on all logistics processes in their supply chain. This allows them to replace costly multiple EDI
connections with one multi-functional data-exchange infrastructure. Mostva’s participation on the
network as an LSP provider can also contribute to a more efficient and transparent import and
duty clearance processes. Since the car configuration (“the precise factory configuration with all
optional extras, the exact mileage, the service history, records of any accidents, ownership, and

24
more.”[19]
) can be permanently linked to each VIN and uploaded onto a blockchain network, the
entire vehicle’s provenance can be immutably stored and verified by all stakeholders.
Figure 10. Collaboration scheme on the Vinturas platform. Source: www.vinturas.com
Mostva operating on the Vinturas blockchain can bring many benefits to its key
stakeholders (Figure 11 & 12). One of Mostva’s core clients are OEMs, such as Toyota. Here are
some of the competitive advantages Mostva would be able to offer:
• Toyota can track (real-time) all Mostva’s operations in Europe,
• Toyota dealers can track (real-time) the locations of vehicles and ETA and keep their
customers with up-to-date information,
• Provide Toyota dealers with the possibility to advance or delay deliveries and optimise
their business processes,
• Provide real-time ETA including those of subcontractors,
• Provide all Mostva’s stakeholders with real-time information on CMR and detailed
damage data of every delivered vehicle. Toyota can quickly analyse and take corrective
actions to prevent damage.
[19]
"Koopman. Enabling transparent, efficient and trustworthy logistics for new and used cars with
blockchain," https://www.ibm.com/case-studies/koopman-blockchain-logistics, (February 20, 2020)

25
Figure 11. Mostva. Pre-blockchain vs as a member of Vinturas
Figure 12. Mostva on the Vinturas blockchain - Benefits for key stakeholders

26
4.2. Test-pilot Simulation
Mostva receives access to the Vinturas platform where OEM has registered vehicles for
delivery to the dealer in Poland (Figure 13).
Figure 13. Vinturas dashboard. Source: Vinturas demo December 2019

27
The dashboard provides information about the compound, vehicle details and status. (Figure
14). The Mostva forwarding team can update the status of each car they handle (such as the
remaining stock, delays, in transits, damage and ETA information).
Figure 14. Outbound vehicles. Source: Vinturas demo December 2019
The dealer has access to the logistics flow of each requested vehicle (Figure 15). They can
request changes in the delivery process (such as change the address of delivery or its priority).
Figure 15. Incoming Deliveries. Source: Vinturas demo December 2019

28
An LSP provider, such as Mostva, updates all logistics events for each VIN. For example,
drivers can also upload damage documentation accessible to all stakeholders (Figure 16).
Figure 16. Track, trace and upload documentation. Source: Vinturas demo platform

29
5. Final conclusions and summary
Blockchain technology has been one of the most disruptive technologies in recent years. If
applied correctly, it can significantly improve transparency, efficiency, and simplify cross-border
supply-chain operations. Despite the fact that there are still many challenges to overcome,
blockchain is showing promise across many industries. Life sciences and healthcare, retail, citizen
services, automotive, energy and logistics are just a few examples. It also offers a promise for
a more secure, transparent and reliable global supply chain. Scaling blockchain globally requires
careful design and planning. It's not a solution to all pain-points and must be evaluated carefully
before implementing.
Mostva and its key stakeholders’ FVL operations can greatly benefit from implementing
blockchain into their infrastructure. In my opinion, the results of the theoretical case study
presented in chapter 4 support this conclusion. The next step would be to do a practical demo and
compare the findings. We could assess the annual benefit-cost ratio and decide whether Mostva
should a) implement Vinturas b) join another 3rd party for Track&Trace (such as Project44) and
consider a different blockchain-based platform or c) independently create from scratch and run
its own customised platform that would include Track&Trace and blockchain-powered features.
An OEM partnered with Vinturas has recently completed their first trial of functionality (track
and trace) for cars moving from the factory to dealers in Europe. The trial showed that having full
transparency in the supply chain (including shipping data) allowed to:
• better plan for ships (ability to have advance notice of the available capacity),
• expedite “direct delivery to the port” for sold units.
The OEM company estimates that such a mechanism can generate savings of around €5-10
per unit. Mostva transports around 300 000 cars annually. If Mostva could save even €2.5 per unit
with Vinturas or a similar solution, it would bring an additional €750 000 to the annual budget.
Those extra funds could be invested in areas such as extended staff training programs, research
and development and environmental sustainability.

Blockchain technology and its impact on the supply chain

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Ähnlich wie Blockchain technology and its impact on the supply chain

Ähnlich wie Blockchain technology and its impact on the supply chain (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Blockchain technology and its impact on the supply chain