February 2018  |  TAGS: , , , , ,
How IBM Is Using Blockchain to Change the World

How IBM Is Using Blockchain to Change the World

The general manager of IBM Blockchain explains the gist of the new technology — and why it’s such a big deal.

One in 10 people worldwide will contract a foodborne illness this year. It’s a fact that doesn’t sit well with the U.S. Centers for Disease Control and Prevention (CDC) and its counterparts in other countries — or with Marie Wieck and her team at IBM. Wieck oversees the global strategy for much of IBM’s work around the emerging technology that she describes, in its simplest form, as a shared database. Among the uses for this database: food provenance (aka traceability and origin) to ensure the safest possible food supply.

“This is going to have the same kind transformative effect on business processes and transactions that the internet had on communication.”

Marie Wieck, General Manager, IBM Blockchain

Working with suppliers and retailers, IBM has developed a blockchain platform that has the potential to hold information from every party involved in getting a food item to consumers — from the farmer to the packaging plant, distributor and store. “When you have an issue with contaminated items and you’re trying to protect people’s health, blockchain helps you find and eliminate those items quickly,” Wieck says. The technology has already been put to the test tracing shipments of organic mangoes from Mexico for a large U.S. retail chain — and it’s reduced the average time needed to trace food to its exact origin from just over six days to mere seconds.

Blockchain is the latest big breakthrough for the 107-year-old company that made a name for itself in calculators, mainframe computers, printers and PCs before debuting IBM Watson, a computer system that uses machine learning to answer questions, in 2011. “Any technology company that is going to survive for 100 years, given the rate and pace of technological evolution, pretty much has to reinvent itself continually,” Wieck says.

That’s what led to IBM’s exploration of blockchain as part of a longstanding exercise at the company that looks at emerging technologies 5–10 years out. “We saw it as a really great way of sharing information across enterprises and to build a level of transparency and trust that you can’t get from normal mechanisms today,” Wieck says.

Not Your Average Database

Several factors differentiate blockchain from other databases. One is that the exact same version of the database — right down to every data point — is shared across the entire network of involved parties. That means there’s no single source of failure for the data that could potentially be vulnerable to a cyberattack or another kind of system breakdown, Wieck says. (To address privacy and security concerns, blockchain data is encrypted.) Perhaps the key difference, however, is that a blockchain is “immutable.” That means that unlike most databases, which are updated to create the latest version, blockchain keeps a record of all updates. “One of my colleagues likes to talk about it as if you’re writing the crossword puzzle in pen,” Wieck says. “If you write ‘MOON’ and then realize it should be ‘STAR’ instead, you would see that you crossed out ‘MOON’ and wrote ‘STAR’ — you wouldn’t just replace it.” That attribute — the complete history of the data — ensures accuracy. And in the case of mangoes from Mexico, it quickly connects the dots for everyone involved in the process.

“Considering 90 percent of physical goods we consume worldwide spent some time on an ocean in the course of their life, this can actually have a material impact even on GDP.”

Marie Wieck, General Manager, IBM Blockchain

While blockchain is being put to use for functions across dozens of industries — think drug trials, financial transactions, educational records — research by global research firm Gartner shows that manufacturing and supply-chain-related industries represent the biggest opportunity for the technology. That explains IBM’s work to create blockchain solutions for Danish shipper Maersk, the largest ocean container shipper in the world. Upwards of 200 communications — from the producer to the shipper to the port authorities, most on paper — are associated with each container, IBM learned. Digitizing those communications on blockchain will streamline the process, provide real-time transparency for location and other conditions, and, ultimately, reduce the cost of shipping a container. “Considering 90 percent of physical goods we consume worldwide spent some time on an ocean in the course of their life, this can actually have a material impact even on GDP,” Wieck says.

There’s no question the impact of the technology is far-reaching. “This is going to have the same kind of transformative effect on business processes and transactions that the internet had on communication,” Wieck says. And IBM is keen on making blockchain technology accessible to all, including programmers and developers. “We even have a free academic initiative to provide access to over 1,000 universities for our blockchain platform so they can teach the skills needed for these new types of networks and new types of solutions,” Wieck says.

Ultimately, most people will never need to know they’re using a blockchain, she says. “They’re just going to know that they can look up on their cell phone whether this mango was organic or not. We want it to be that easy.”


Blockchain and FedEx: The Next Generation of Shipping Transparency

Woman in lab coat analyzing a test tubeBlockchain’s shared network, or database (or chain of events, aka blocks — hence the name), can track almost any kind of business activity, from financial transactions to medical records and patents. One of the most tangible examples is shipping goods, where blockchain is poised to reduce risks and create cost and time efficiencies. “At FedEx, we’ve long positioned ourselves as a trusted ally in the custodial control of goods that move through our networks,” says Robert Carter, executive vice president, FedEx Information Services, and chief information officer. “Blockchain is ideally suited to events that occur when you’re moving something of value, whether it’s pharma or designer goods from Louis Vuitton, where there’s a high need for a trusted custodial chain.”

That’s particularly true in shipments moving across borders. “When it comes to customs, I believe there will be a future where all clearance entries are represented on a blockchain — and that becomes the best way to represent the provenance of something,” Carter says.

As a charter member of the Blockchain in Transport Alliance and Blockchain Research Institute, FedEx recognizes the need for the entire industry to adopt blockchain technologies. “Many things moving through supply chains get touched by more than one carrier,” Carter says. “So the idea that you can create a blockchain for goods moving within the context of transportation is really powerful.”

TELL US YOUR OPINION

  • How do you see blockchain helping your business?

COMMENTS

  1. Sandy - February 16, 2018

    Very glad to see FedEx is a charter member of the Blockchain in Transport Alliance and Blockchain Research Institute. Look forward to FedEx being the first carrier to implement blockchain for transmitting to CBP and clearance purposes.

    Reply »
    • Karen - February 23, 2018

      Bravo! More transparency throughout the clearance process will enhance our ability to provide exceptional service to our international customers.

      Reply »
  2. Waseem - February 17, 2018

    Rob has mentioned an outstanding transformational opportunity for Customs Authorities and the Brokerage business around the world. The use of Blockchain technology to move Customs data and process it efficiently could reduce significant costs, facilitate better service, streamline regulatory procedures and minimize the need for data archives.

    Reply »
  3. Jacques - February 17, 2018

    Very interesting. I think we should launch a program with local (in addition to central)block chain advisors/experts (much like we do with DQM) to support and drive innovation for the business.Why not start with a POC either in the US or Europe and see hox it goes ?
    Krgds,
    Jacques

    Reply »
  4. john - February 18, 2018

    Enjoyed this article. Helps with understanding what Block Chain is and how FedEx is using this to reshape logistics

    Reply »
  5. Alan - February 18, 2018

    Seems to me that Blockchain’s weak link is the incentive mechanism for miners. Energy costs could go anywhere and financial stake is no guarantee of disinterest in the long term. I see incorruptibility everywhere except there. Is there a way of using absolutely random methods of verification?

    Reply »
    • John - February 22, 2018

      I'm not sure I'm very knowledgeable in block-chain technology, but I think the point you are trying to make focuses almost entirely on Cryptocurrencies and the practice of mining built on top of block-chain technology. The Proof-of-work verification used by crypto's expends lots of energy to verify "honesty" based on unknowns and a multitude of unverified users. I would think this wouldn't be an issue in this case, and no need to incentivize "honesty" because these chains are built for extremely specific industry usage – not directly for financial gain. Therefore, the verification and chain building process could be less random, strict, and would have known user submissions. I may be completely off the mark with this one, though. Regardless, energy costs involved with maintaining the block-chains could be mounting. I'd think that in some cases, such as with package tracking, the chain could expire after a set amount of inactivity; which would reduce the load.

      Reply »
      • Bob - February 26, 2018

        John you are correct. There is a big difference between PUBLIC blockchains (such as used by crypto-currencies) and PRIVATE blockchain (used to record transactions between companies). Public blockchains need a mining process to ensure that a random person is selected to verify the transaction. This is energy intensive as everyone competes to be chosen to be that random person (and gain a reward). In private blockchains the participants are (more) trusted and selected trusted participants can be nominated as the verifiers. This not only reduces the energy used but also increases the volume of transactions that can be recorded.

        Reply »
  6. dan - February 23, 2018

    Hopefully FedEx will look at using Blockchain to enable constant movement of goods and real-time data interchange instead of the current EDI type environment.

    For example, Customer produces a label and FedEx knows that the shipment is ready. FedEx can pickup that one package (Ideally with any carrier FXG/FXE/FXF/FXO, etc.) and the chain will know the shipment is on its way. FedEx can sort the package at any time and start moving it to the destination (instead of holding the shipment until a sort time).

    Later if the shipper needs to update the address, the blockchain can be updated and the shipment automatically rerouted and invoiced correctly (and potentially in real time). Customer can "see" in the chain that the shipment was updated (and can only be updated by them).

    Seems like the possibilities are endless for data sharing etc.

    Reply »
  7. Sergio - February 23, 2018

    I think FedEx's decision to join the Blockchain Research Institute was a key move that communicates the company is serious about being on front lines of blockchain innovation. I think another key area that FedEx should focus on is increasing its representation at industry conferences and university events involving blockchain. The company needs to communicate to these students that we will be at the front lines of adopting blockchain and they need to work for us if they want to get in on it. If blockchain is in fact the future of the logistics industry, we need to invest in recruiting the best talent now.

    Reply »
  8. Nannette - February 23, 2018

    Makes we want to take the CBU class with IBM Watson today !

    Reply »
  9. Johan - February 26, 2018

    These days, there are still too much misunderstanding by common people about what blockchain is and how it works and can help business. Still some are associating blockchain with crypto-currencies while in fact it's crypto-currencies which are associated to blockchain by using it.
    Simply said, blockchain is the capability to guaranty data accuracy in a decentralized way by getting them validated by a community instead of small groups often working in silos.
    It will definitely be the future of information sharing where a validated trust-chain is required and therefore, FedEx focus is a tremendous step to future.
    I do fully agree with some above posts stating that focus groups should already be created in each region in order to start learning, experiencing and practicing. And this not only at "central" level.
    I do believe that being part of BITA is great but not in a position of "follower" watching others evolving (IBM/Maersk).
    As innovator, exactly like we use to do for Quality Driven efforts, we will need in a near future (tomorrow) a group of knowledgeable people getting strong hands-on.
    Looking forward for the first Purple-Chain-Of-Trust.

    Reply »
  10. jeff - February 27, 2018

    given the advancements in the blockchain technology, which blockchain company has Fedex chosen to partner with…. Steller? Iota?

    Reply »
  11. Bob - March 8, 2018

    Two observations:
    As Johan observed above, "It will definitely be the future of information sharing where a validated trust-chain is required" and that is where real news collides with cryptocurrencies. Groups are looking to deliver quality local news using blockchain, with groups (publisher) or individual journalists (freelances) being paid in crypto. Interesting to me as a retired journalist wondering how to filter fake news and also get people to pay for news delivered digitally.
    Second, and I may be off the mark here, but I live in a community with five similar street names, which means it's sometimes anyone's guess where my online purchase will be delivered. In one case, something that started with Fedex got handed off to USPS and delivered to the wrong destination by the postal supervisor. Hoping blockchain will give me the ability to verify delivery at end when I get a "your package has been delivered" text. Sometimes it hasn't and it's hard to tell which delivery outfit — FedEx, USPS– had it at the end.

    Reply »
  12. Elena - March 24, 2018

LEAVE A COMMENT

Your email address will not be published. Required fields are marked *