We live in a time where transactions accounting in the billions go through servers across the world every day and thus, a semblance of digital security is something that concerns every party involved. It is here that blockchain has found its success in, with it capable of revolutionizing business transactions by bringing in a ledger that can provide a secure and verified route for transactions and value storage.
Samsung SDS’s Blockchain platform, Nexledger, was designed to take full advantage of these proven benefits of blockchain and to allow full-scale blockchain implementations into existing enterprise business processes. “Nexledger provides the infrastructure and services required to implement blockchain technology, for all industries, including logistics, financial services, electronics, and manufacturing,” says Seungkee Baek, principal consultant at Logistics Business Unit, Samsung SDS.
“The Nexledger is an agile system that can rapidly launch a variety of blockchain based services including payment transactions, authentication security, authentication verification, cross-institutional transactions, IoT solutions. Security and stability of the system are guaranteed with blockchain based information processing. The foundations for growth is provided with the expansion friendly platform system that is not limited to any specific industry, channel or location.”
Samsung SDS, undertook a 7-month pilot of Nexledger with South Korea’s shipping logistics companies, government shipping arms like the Oceans, Fisheries, and the Customs, alongside major ocean liners - becoming the foundation of what is being called the “Ocean Shipping Logistics Blockchain Consortium” now.
The idea was to create a blockchain framework that could be the lynchpin of all shipping related logistics processes at the Korean ports. “We developed several functions for logistics processes such as purchase order, booking request, bill of lading, and freight tracking. As financial processes, we included freight insurance and settlement using open account transaction,” adds Baek. “Our proof of concept (PoC) can be classified into two - one focusing on logistics process, and the other covering end-to-end ocean shipping logistics process including financial process.”
At the time of initiation, there were fifteen members in the consortium which has inflated to include 38 members now, including insurance companies, and bank and port terminal operators.
One of the challenges faced by Samsung SDS while working on the pilot was converting paper-based documents into its electronic equivalent. “The first stage of PoC is to analyze the current ocean shipping logistics process, where we found that nearly 99% of the documents have already been generated by electronic data interchange (EDI) technology,” notes Baek.
“Since blockchain stresses ‘sharing’ of data and not ‘exchange’ as EDI does, we had to define a common format of documents at each process. This can be easily resolved because we simplified the document format, by extracting common data from various document formats. This did work. Simplified data format composed of common data requirements eliminated any potential obstacle that members may have.”
Baek firmly believes that blockchain will become a major player in distributing electronic bill of lading (e-BoL). Although several platforms such as Bolero exist in the market, blockchain based BoL will make an effective threat to existing e-BoL technologies because blockchain can be offered at competitive prices. “The hidden secret of the superior competitiveness of blockchain comes from smart contracts which allow autonomous data sharing and processing,” says Baek.
With the success of the pilot run, Samsung SDS is keen on developing its logistics blockchain technology and its affiliated platform. A blockchain platform would guarantee trust amongst global trade parties, and Baek insists that this could lead to additional service offering like a blockchain based data analytics application (dApp).
“We are interested in applying the blockchain platform to cross-border trade. The technology can be a good candidate for removing dispute of authenticity of trade documents, which would continue to boost up the speed of global trade,” explains Baek.
Samsung SDS is also examining the feasibility of blockchain to create an innovative financial service ecosystem based on the supply chain network of manufacturers (Digital Supply Chain Finance).
At present, most of the suppliers for major manufacturers receive promissory notes or bills for providing products, and use these notes to obtain short-term loans for stable cash-flows. By implementing blockchain to this network of participants, Samsung SDS believes the verification process would become transparent and create trust between all parties. This could categorically reduce risk for financial institutions, allowing them to provide lower interest rates on their loan to the suppliers, who can now charge the manufacturers less - thereby allowing the manufacturer to play at a more competitive pricing.
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