IBM Canada and DMG Blockchain (DMGI.V) have begun collaborating on the design of a blockchain-based, supply-chain solution which combines the former’s manpower and technology with the latter’s blockchain expertise.
The global supply chain market was valued at USD$12.96 billion in 2017 and is expected to grow at a 12.3 percent CAGR between 2018 to 2026, according to a report by Credence Research.
Blockchain solutions of the kind proposed by IBM Canada and DMG Blockchain enable “complete provenance, regulatory compliance, inventory management and on-time payment of products along the entire supply chain.”
Provenance is a product’s authenticity and its place of origin. Besides verifying a product is genuine, this solution will ensure a company’s regulatory compliance alongside monitoring quality control for sensitive goods such as pharmaceuticals which, if mishandled or illegitimately sourced, could have severe detriment to the health of users.
In 2017, the Harvard Business Review published an article illustrating how DMG Blockchain’s solution might have saved one of the most popular restaurant chains in the US a 42 percent drop in share price.
E.coli outbreaks at numerous Chipotle Mexican Grill (CMG.Z) restaurants in 2015 destroyed the company’s reputation, highlighting a serious problem that faces companies with many sensitive and moving parts: how to keep track of it all.
“At the heart of the Denver-based company’s crisis was the ever-present problem faced by companies that depend on multiple suppliers to deliver parts and ingredients: a lack of transparency and accountability across complex supply chains. Unable to monitor its suppliers in real time, Chipotle could neither prevent the contamination nor contain it in a targeted way after it was discovered.”
-Michael J. Casey and Pindar Wong, H.B.R.
Essentially, these new blockchain-based solutions provide a single database stored on the blockchain which will track everything from a product’s place of origin, to when it was delivered and even who signed for it at the supply depot. Most of all, the information is tamper-proof which guarantees its validity.
In its collaboration with IBM Canada, DMG Blockchain will shoulder the financial costs of the project. The company expects to spend roughly CAD$3,000,000 in the first year to develop the global supply chain platform and up to $10,000,000 over a three year span.
The project is headed by Danny Yang, DMG Blockchain’s CTO, backed by IBM Services and assisted by advisors such as the creator of Litecoin, Charlie Lee.
The solution will be stored on the IBM cloud alongside “interfaces between the blockchain technology and legacy enterprise systems, ERP systems, and integration with manufacturers, distributors, retailers, shippers, as well as reporting and auditing systems.”
“Blockchain is ideally suited to address supply chain challenges because it establishes a trusted environment for all transactions. We are pleased to work with DMG on this important initiative. DMG’s selection of IBM services and blockchain technology on the IBM cloud will help create robust blockchain solutions so all participants in the pharmaceutical or agriculture supply chain can gain permissioned access to known and trusted information regarding the origin and state of their transactions.”
-Peter Finn, IBM Canada’s CTO
Dan Reitzik, CEO of DMG Blockchain said that his company’s first step is to “develop this platform with IBM and then to monetize it.”
How this collaboration will deliver revenue is still unclear as the project is still in its infancy. Equity Guru will continue to provide updates on this front as development continues and as new information emerges.
FULL DISCLOSURE: DMG Blockchain is an Equity Guru marketing client.