EdeXa: Supply Chain on the Blockchain

This week we are welcoming Tim Stockschläger, former Corporate Relationship Manager at Deutsche Bank and since October 2018, the CMO of EdeXa. Tim gives us a great insight by comparing an old supply chain process with a new one enabled by blockchain technology in conjunction with IoT sensors.

Enjoy the Interview.

What problem is edeXa trying to solve?

By now many companies realized the potential of the blockchain technology. We see this in the increasing demand for Blockchain experts for example. But, they just don’t know how to use it properly.

The business model of edeXa revolves around this matter. The startup wants to make it easy for companies to use the blockchain technology. Therefore edeXa has created an environment in which it is for companies to make future processes tamper-proof and more transparent by using the blockchain. In the edeXa Blockchain, data entries will be stored encrypted on the servers of many trustworthy large companies who run the nodes for the Blockchain.

In order to manipulate data, a hacker would have to hack not only into one but into the system of several highly secure companies. Or the companies would have to act in bad faith, which is highly unlikely given the reputation of these companies who are granted to run the node.

In order to guarantee that only trustworthy companies are located in the business network, edeXa has developed an intelligent trust process that uses a machine learning algorithm and the assessment of each existing network participant. The resulting network is a so-called consortium blockchain. Besides offering the network, we support companies in developing their own applications based on the blockchain. Companies can then use their own application or use one of our ready-made DApps.

What is a consortium blockchain?

The consortium Blockchain is a permissioned Blockchain. Instead of either allowing anyone with an Internet connection to participate in the network or giving full control to a single company, trusted nodes are selected. The consortium blockchain thus offers the same advantages as a private blockchain — efficiency and a high privacy of transactions. At the same time, it is not one company that receives the entire decision-making power, but a selected mass of participating companies.

The form of the blockchain is highly suitable for cooperation between organizations. In fact, it is currently the only viable approach for companies. A “tradition” public blockchain has far too many downsides, one of them being the lack of control and the inefficiency. Consortium Blockchain does not mean that only a few companies can be part of the blockchain. In fact, a consortium may well comprise several hundred or thousands of companies. Access restriction and control via the Proof of Stake guarantees significantly higher efficiency and is optimally tailored to the needs of the companies. Our 20 years of experience in the business of digitizing business processes (with the parent company io-market AG) have shown our track record.

How does the supply chain management profit from blockchain technology?

We like to illustrate the functionality of blockchain technology and the advantages for supply chain management with an example from the food industry. If a fish is caught, the data can be stored directly in the blockchain. Until now, there are of course existing digital solutions for some steps along the Supply Chain, but there is no solution to integrate all steps along the product journey.

If a wholesaler buys the fish, a Smart Contract could immediately take care of reserving the pending payment. In addition, an order is immediately sent to a logistician. During transport, the temperature curve and the duration can be tracked using an IoT-sensor. Customs clearance and final payment are also simplified and even automized by Smart Contracts and the information is stored in the blockchain. On top of this, the end consumer gets all the (trustworthy) information about the fish on his phone, he can easily access it from the blockchain by scanning a barcode.

By using the Blockchain technology many communication steps can be simplified, streamlined or eliminated. The probably biggest advantage for the end consumer is the added transparency he gets about the products he is eating. For the supplier along the supply chain, they will profit from much higher efficiency, less to no paperwork (thus reduce costs) and better quality (control).

Where can we take advantage of the Blockchain technology?

In addition to supply chain management, there are numerous other areas in which blockchain technology can be used in a profitable manner.

In healthcare, for example, Blockchain technology enables the targeted and secure exchange of health data between physicians. It is conceivable that patients can keep their own medical records and only share them on request. When supplying medicines, there is no risk of counterfeiting, as the blockchain makes it possible to store all ingredients as well as transport routes and conditions transparently and make them visible to everyone.

For governments, there are many possibilities to increase transparency for the citizen. For example, elections can be conducted with blockchain technology in a tamper-proof and publicly visible manner. In addition, many identification processes can be simplified by introducing an electronic ID. Governments can also note property and assets in the blockchain.

Blockchain technology is also used in the areas of carsharing, trustworthy art trade, contract management and the issuing of diplomas and certificates. And the best of it: With our edeXa network, we can bring all of the different fields together in one blockchain connecting everyone seamlessly.

Can you give us an example of an old supply chain process and a new one?

An extremely large increase in efficiency can be achieved with blockchain technology in conjunction with IoT sensors for machine maintenance. In our example, a weaving machine manufactured in Europe is operated in Asia.

This example illustrates how error-prone and slow manual labor can be reduced with an innovative process. The following steps take place in the traditional product process:

1. The machine reports the defect of a component and stops working.
2. The operator of the machine orders a spare part from the manufacturer of the machine.
3. The order is often done and confirmed on paper, decreasing efficiency and is error-prone.
4. The manufacturer manufactures the spare part or takes it out of stock.
5. The companies must agree on payment terms — easer prepayment or after the work is done. Or, if they don’t trust each other, they need to involve banks (trade finance) and pay a hefty fee to the banks/insurance.
6. The spare part is then sent and has to be transported in plane or ship over a long distance. This takes at least many hours, but often several days or even weeks.
7. The machine operator receives the part, installs it and can then continue working. Sometimes even an expert from the company has to come onsite and install the part.

With Blockchain technology in conjunction with IoT, the process can look like this:

1. A sensor reports that a component is very likely to break soon.
2. This information is sent to the machine manufacturer.
3. The manufacturer releases automatically the CNC data for a corresponding number of components.
4. The payment will be deducted automatically through a smart contract.
5. Upon receiving the payment, the CNC information is securely forwarded to a CNC supplier at the machine location without any time delay.
6. The corresponding spare parts will automatically be queued and 3D-printed for the customer in the immediate vicinity of the company. The registration of the CNC license in the blockchain prevents the CNC supplier from re-producing more parts than allowed by the original manufacturer.
7. The part is transported (short route, since almost 3D-printed on site) and installed onsite..

We’re moving from an almost completely manual process to an almost completely digital and automated process.

How is edexa financed?

In order to strengthen the confidence of investors and business partners in our business model, we decided against an ICO and opted for an innovative security token based on real shares. In our opinion, this is a modern, innovative and secure form of corporate financing for our investors.

Because we believe that our investors should receive a return on their investment, we plan to pay regular dividends and create the environment for liquid trading. In just a few weeks, we already raised one Million Euros. The price for a token is at the moment 0.36 euros. The goal is to have received 5 million Euro investments in the next few months.

What are upcoming challenges in the area of the EDE Security Token?

If you decide to carry out an STO instead of an ICO, you are dealing with more regulations. In order to make trading the EDE Security Token as easy as possible, we strive to make our token tradable on an exchange. Due to legal requirements, there is currently no such provider. But we’re in talks with a few, who are confident to open their services later this summer. We are also observing closely efforts on the part of the Liechtenstein government to publish regulations for such trading venues in the near future. We’re happy to have been in Liechtenstein with our parent company io-market for 20 years now and edeXa can utilize the extremely technology friendly laws of the country. This is just another component for the success of edeXa, together with the proven track record in the past 20 years and the many experts we have in our company. edeXa is therefore truely ready for the road ahead.

Thank you for the Interview!

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