How Blockchain + Salesforce can Transform Supply Chain Logistics
In today’s digital economy, there is an increasing demand for speed, efficiency, and most importantly trust. Establishing trust has traditionally not only required significant intermediaries that drive up the price of goods for consumers, but has also come at the cost of other objectives such as transparency, quicker transaction processing, and faster issue resolution. In the world of supply chain specifically, the challenges of trust, speed, and accuracy increase exponentially as more products, stages, geographies, and entities get added to the process.
As we move closer to globalization, the focus of getting products from manufacturers to consumers can be derailed in a number of ways from damaged products as they travel across continents and unethical practices to inefficient vendors and delays in customs clearance. The biggest roadblock to solving broken complex supply chains comes down to finding a way to consolidate data and processes across all the entities on the supply chain that traditionally work in silos.
Why Blockchain?
Let us visualize a simple supply chain of exclusive cheese as an example. The milk for the cheese is produced by a local dairy farmer and is first shipped to an intermediary such as a milk supplier center, which then delivers milk to the cheese plants. The cheese is then produced, shipped to an intermediate distribution center before it is shipped out to retail stores.
Throughout this supply chain, there are critical factors that can affect the product such as:
- Temperature of the milk being transported (needs to remain below ~10 degrees Celsius)
- Humidity levels
- Temperature of the shipping containers transporting the cheese
- Tracking local laws, and regulations of shipping dairy across state lines and country borders
A gap in any of these processes or not having an accurate paper trail of the required data points can cause a lot of product wastage along with monetary loss.
Blockchain technology provides a feasible solution to some of these problems by providing a framework that primarily creates a network of trust.
The easiest way to visualize how Blockchain technology works is by recognizing that Blockchain can essentially represent a physical asset as a digital asset on the network. By doing so, it can track any changes to the specific properties of the asset such as the transfer of titles of goods, maintain a record of permissions, and activity log related to the item as well as real-time data updates using internet-enabled devices (IoT); thereby, eliminating the need to reconcile and minimizing errors across complex value chains.
In our exclusive cheese example, a digital token can be attached to each container of milk and cheese as it is transported from the milk producers all the way to the retail stores. IoT devices attached to the transportation trucks can transmit specific data attributes such as location and temperature of the milk or cheese. This data can be stored on the Blockchain where the data is immutable and a historical ledger is maintained. When the milk arrives at the cheese plant, not only does the cheese manufacturer have a guarantee that the milk was transported at the right temperature maintaining its quality, but smart contracts built into the Blockchain can enable automatic payment to the dairy farmer based on the containers of milk received. Similarly, the quality of cheese can be ascertained to retail manufacturers, ensuring that damaged products are not placed on the shelf for our consumption.
Taking this even one step further, a bar code on the product can link to the data on the Blockchain, so consumers can see detailed information of where their exclusive cheese came from and make an informed choice. The process eliminates intermediaries such as insurers and the costs associated with them while encouraging transparency and visibility into shared data. Blockchain technology redistributes power across the value chain, and eventually back to us, cheese lovers.
How does Salesforce fit in?
While the Blockchain provides solutions to the inherent challenges of trust and efficiency in our digital economy, Salesforce has been steadily mobilizing industries with more than just CRM by transforming the way businesses operate through seamless solutions for information management, powerful analytics, task automation, and enhanced communication. Like Blockchain, Salesforce puts power back into the hands of the buyer by empowering not just sales and service reps to provide a better quality of service, but also by increasing transparency to buyers through solutions such as Partner Communities. When it comes to supply chain, Salesforce CPQ provides the tool-set to transform a bulky sales and order process into a lean one. Salesforce CPQ stands for Salesforce Configure, Price, Quote and provides a consistent process for quotes and also can be used to track orders and renewals in relation to the quotes. In addition, by leveraging CPQ for Partner Communities, buyers can directly see the status of their orders and renewals which increases transparency and trust.
The integration solution between Salesforce and Blockchain enables order information from Salesforce to reside on the Blockchain establishing security, visibility, immutability, and most importantly assuring that all the entities involved are operating on the same shared data even across different Salesforce orgs. All the current supply chain actors such as producers, manufacturers, registrars, standards organizations, certifiers, auditors, and buyers can have an accessible profile on their respective Salesforce orgs and access available data about a product such as its valid certifications or quality related data.
How does the integration work?
Salesforce has joined forces with Dapps.ai to create a product suite that is available on the AppExchange as a managed package and can enable the distributed app (Dapp) suite on the Salesforce instance. The package provides the Blockchain Engine, the Ethereum Application Manager, and the Hyperledger Application Manager (i.e. the application layer on Salesforce, the integration engine, and the development platform). The app installs a listener on the Blockchain and Salesforce, such that any data that is added in Salesforce (e.g. orders) is added as a transaction on the Blockchain, and data from the Blockchain or IoT cloud is sent back to Salesforce.
The Dapp is built on the Ethereum platform and leverages the Hyperledger framework. The Ethereum platform enables the client for Ethereum on the Salesforce instance which can allow a business to develop and run their own smart contracts. Hyperledger framework offers a modular architecture which is token agnostic, extensible, flexible and supports interoperability between different Blockchain instances. Hyperledger is built on underlying components such as a consensus layer, smart contract layer, and oracles which are agents that have the ability to gather real-world data to be utilized by smart contracts within the blockchain.
In the context of the exclusive cheese supply chain, the consensus layer houses the mechanism which generates an agreement on the who produced the cheese, the price of cheese, and validates the accuracy of each payment for cheese. The smart contract layer houses the business logic that can associate certain costs, discounts or quality level to the cheese based on the data on the Blockchain. The oracles create the API layer which connects with the IoT cloud to gather and store telemetric data on Blockchain such as the temperature of cheese, milk, or the location of the transport truck.
Let’s go back to our exclusive cheese example to see how the integration might work. With the managed packaged installed in Salesforce, a sales rep for Cabot creates a new quote for Whole Foods from an existing opportunity and generates a proposal leveraging Salesforce CPQ. Once the Whole Foods opportunity is won, the rep would then create an order with a list of cheeses to be supplied by Cabot. The Dapp Suite can be set up such that the data is sent to the Blockchain once the order is has a specific status, for example, “Packaging Complete at Cabot”. As data about the order such as location, temperature, humidity or customs inspections is added to the Blockchain, it will be sent back to Salesforce and the historical details about the cheese from packaging to delivery can be viewed on the Salesforce instance.
The integration from the Blockchain back into Salesforce allows the Cabot sales rep to easily validate where an order is on the supply chain while the Whole Foods store manager can also see this information via Salesforce CPQ Partner Communities. This helps the store managers to know exactly how much cheese may be damaged and can help them to plan for shelving or replacement in advance.
The overall integration also enables powerful reports and analytics that can be created on shared Blockchain data by the cheese transportation companies such as DHL, exponentially improving their supplier/buyer logistics and along with smart contracts can generate new revenue models.
Considerations
One of the most critical aspects to consider when dealing with multiple systems is data standardization, data volume, and the cost it can have on efficiency of the integration. The IoT cloud generates data in the range of zettabytes (or 1 trillion gigabytes), which means that a major consideration while setting up this solution for Salesforce CPQ and connecting to the Blockchain network is the agreement of all parties on what relevant data needs to be stored in Salesforce versus on the Blockchain, and based on the anticipated volume of data, what type of consensus mechanism should be utilized (e.g. Byzantine Fault Tolerance on Hyperledger instead of computation intensive Proof of Stake or Proof of Work). Moreover, it may also be prudent to consider additional integrations with cloud service platforms such as AWS Quick Sight or Microsoft Azure Monitor to mine useful data from the zettabytes of IoT device data available.
There are several other open challenges primarily around development and governance including agreeing and conducting protocol updates, standards and agreements for interoperability across supply chains, and the integration of current legal regulations and commercial codes into smart contracts.
Despite these challenges, the promise of dynamic demand chains replacing rigid supply chains is realistic and is the way forward.
Salesforce and Blockchain cannot only transform supply chain, but can work together across industries from insurance to healthcare to pave a path for the future.
