Connected ecosystems leverage blockchain
Podcast episode 62
COVID-19 revealed the weak links in our global supply chains. With predictions for more pandemics in the future, how do we prevent the breakdown we’ve experienced over the last two years? For Marlin SCX Founding CEO Wouter van Neerbos, the solution is an Industry 4.0 connected ecosystem powered by 5G, IoT, and the transparency that brings.
Below is a transcript of this podcast. Some parts have been edited for clarity
Michael Hainsworth: We’re experiencing a convergence of technologies in the logistics industry. It’s one of the keystones of the Fourth Industrial Revolution: using 5G, IoT sensors, machine learning and more to create a more transparent supply chain system. Wouter van Neerbos knows all about it. As the Founding CEO of Marlin SCX, he’s spent his career connecting ecosystems up and down the supply chain. He believes that while small companies will benefit from this evolution, it’s the large organizations that will lead this revolution: bringing the SME’s along with them. Marlin’s specialty is the maritime shipping industry. So I began our conversation by discussing how COVID-19 has revealed the weak links in the chain of ports around the world.
Wouter van Neerbos: COVID caused significant challenges to the supply chain globally, and probably you have read that in the newspapers. So multiple lockdowns actually, they slowed down or even temporarily stopped the flow of raw materials and finished goods, disrupting manufacturing as a result. And this disrupted again the supply chain demand and supply, causing a shortage of products, price increases, and creating lots of uncertainty. And on top of that, maybe you know, but the Evergreen ship actually blocked the Suez Canal, leading to a perfect storm almost. So, the pandemic has actually accelerated and magnified problems that already existed in the supply chain.
MH: So how would connected ecosystems have done a better job?
WVN: Yeah, so today, supply chains are often fragile, lacking end-to-end collaboration, and therefore they’re a black box to many people involved. So connected ecosystems will help to increase visibility, transparency, and enable networking with customers, suppliers, and all stakeholders involved. So, this transparency and collaboration will allow parties involved to become more proactive compared to the reactive world we live in today. So, the more connected we are as a supply chain, the better we are able to absorb shocks like COVID.
MH: It's been said that data is the new oil, but you say it's not the new oil, it's the new enabler. How do you convince multiple independent stakeholders to share this new enabler?
WVN: It's indeed the enabler of ecosystems, and that starts with data and visibility. Ecosystems are not a mean in itself, it's about collaboration about business ecosystems, and that starts with trust and security and data ownership. And about 10 years ago, I was a board member of a data exchange company that created data exchange through a data lake, where all parties actually shared data in a big file or a big database. And that was not optimal because there was a lack of trust, because of security issues. All data was dumped into this big database and there was no sovereignty of data. So, the data ecosystems can help, because they can guarantee security and data sovereignty and ownership, which I think will help there.
MH: Now I understand you've got a relationship with one of the top energy companies in the world to demonstrate the business case for connected ecosystems. How does a large organization create a data-driven ecosystem in the first place?
WVN: Yeah, so that starts again with a business ecosystem and starts with actually building a business case around the value of actually driving data and sharing data and therefore actually having a better understanding along with the supply chain. Large corporations like multinationals, they're often the spider in the web of supply chains or big value chains, and they have therefore the resources and the power in particular to build ecosystems. But that doesn't grow overnight actually, it grows step by step, often you have to actually start with a small system and then you grow organically.
MH: So, you're starting with a small system, but you're actually working with a massive company, not a small organization. What's the difference between starting this kind of work in a large organization versus small? Are the small organizations even going to be the players that make the ecosystem a reality?
WVN: At the end of the day, they will, and they will benefit maybe the most out of it, but it starts with larger organizations, as I said, because they have the power and the resources to start this, as they are the owner of the business ecosystems, but often large businesses, they depend on smaller businesses around it supporting these larger companies. And therefore, they can benefit of being part of such an ecosystem. And as I said, so the smaller companies, they lack that power to start an ecosystem, so they have to join the bigger ones.
MH: So, this ecosystem, and we certainly don't want to go down the rabbit hole about Bitcoin, but the ecosystems that you create are built out of the private blockchain?
WVN: I'm not a blockchain expert to be fair, and I'm not a Bitcoin expert, even. However, what I can say is that cryptocurrencies and private blockchains, they're not the same thing. So, at Marlin, we consciously have chosen to not monetize data for instance, but we believe that the blockchain solution of Nokia is a very important one, because it actually enables us to securely exchange data. With smart contracts between all parties involved. So, they will get time stamps, actually people will get the assurance and the visibility that everything is executed in the way it's supposed to be.
MH: How do we quantify the efficiencies, the increased transparency, the faster turnaround thanks to a connected system?
WVN: Yeah, that's pretty difficult to quantify because at the end of the day, it's an end-to-end improvement of all parties involved. And it's difficult to assess what's the contribution of each and every party. But I do know that we're always looking for win-win opportunities and these win-win opportunities between different parties involved needs to become visible. So, for example, in my previous role, with Shell I was responsible for global distribution activities, across many locations worldwide, evolving for instance, the Marine supply chain with tens of different parties. And generally, each party tends to build in a slack in the supply chain of about 10 to 20 percent into their individual piece of the value chain. So, if you build that up and accumulate all of these inefficiencies, then you can imagine that there is a huge inefficiency in the end-to-end supply chain. So, if you are going to optimize that, that will be a huge benefit for all people involved.
MH: And I can imagine too, you know companies typically build in a 10 to 20 percent slack into their business planning, and I suppose what you're suggesting is these efficiencies mean we can eliminate that additional 10 to 20 percent?
WVN: And on top of that actually, there are also additional improvement opportunities, because if you're going to share data, then apparently what people see at the end of the day, that there are process improvements possible for instance, that you built on new technologies and other ways of working that we're not possible at the first part.
MH: So where does 5G fit into the Industry 4.0 maritime port model?
WVN: (chuckle) Good question. I'm not an expert in 5G. But what I do know is that 5G actually enables a low latency, a high bandwidth that makes instant data available everywhere. And that actually gives access to many more applications in the data exchange. So together with data, with our data marketplace and advanced IOT as sensor technology, you can assure that instant information is available and that will enable lots of opportunities and further optimization in supply chains like we investigate today.
MH: And I can imagine an increased transparency reduces inefficiency as well.
WVN: Definitely, yeah that’s needless to say. Therefore, I believe that 5G and all the new technologies that are actually around the corner will help us to optimize the supply chains and let’s start with proper data exchange, which is reliable, which is secure and trustworthy to all parties involved.
MH: So if the adoption of advanced IOT sensor technology is the first step in creating a connected ecosystem, what's the next step?
WVN: The next steps will probably be the analytics of data thereafter. So actually, doing better analysis and making better business decisions, followed probably by I think artificial intelligence and continuous improvement, and learning faster based on the data available.
MH: What are some of the lessons that any organization will have to learn when it comes to applying artificial intelligence to a connected ecosystem?
WVN: I'm not an expert again in artificial intelligence, but I think that it's at the end of the day, artificial intelligence will help to make better business decisions. But at the end of the day, it will always be human interactions that are important to actually optimize your businesses.
MH: So, the idea being that you leverage the technology, you're not dependent on the technology.
WVN: Exactly. And some parts of the organization actually might be automated, where computers can actually calculate and do better analysis than humans can do. But at the end of the day, people have to interpret it and actually execute it, because the businesses we work with are still executed by humans. And that won’t stop for the coming period, I think.
MH: You know, we spoke at the beginning about how data is the new oil or is a new enabler and that you have to convince multiple independent stakeholders to share their data for a connected ecosystem to work. What though of more data between stakeholders, within an organization? It sounds like there is a cultural change that needs to take place, as well.
WVN: Yes, definitely. It starts I think with trust because people experience data as power. And in particular, if you don't share data and if you're not willing to share data, then you can't benefit from both sides. So, I think that all these parameters like security, selectivity of data exchange, being able to demonstrate that the data is there for a certain period of time between the parties that agreed to actually share the data is very important to build that trust within an organization and to actually create also the trust outside of organization. So that's the cultural part of it, if you ask me.
MH: Now you're a data connector. You're not actually using the data between organizations when you build this connected ecosystem. Tell me though about the state of connecting data. There was a time when it was very difficult to be able to connect two disparate systems, but since then we've developed application programming interfaces, SDKs, how are we connecting these very disconnected systems today.
WVN: Yes, so with the Nokia blockchain solution and the Marlin solutions on top of that, actually we’re able to access data in a very federated way. So, there's just one entrance to the data post office. Like we are the data exchange and then you can exchange among all the people that are connected to our post office. And that makes it very easy. It's a kind of plug and play solution where you just have to have one interface with the post office and then you can access the rest of the world if and when they are connected to our data exchange. So, that simplifies the way we are connected in the future. And actually, we also reduce costs substantially because APIs, as you mentioned, are often on a mutual basis, or a bilateral basis, rather than on a one-to-many basis.
MH: So now that we've connected these different systems, you're using it to help the maritime shipping industry become more sustainable. How so?
WVN: First of all, of course, because we are going to optimize the supply chain organizations and the maritime businesses. So, they will shorten their supply chains, and that will help actually to reduce mileage, to reduce fuels and fuel consumption and therefore CO2 emissions. And that will eventually also add to sustainability and the environment. And, but also good to mention, that there are some customers of ours that are also actually monitoring actively their CO2 emissions with sensors actually directly, providing the data of their CO2 emissions, so that they also can actually demonstrate and monitor what their emissions are. And, similarly, there are some other customers of ours that are actually willing to share their biofuel production and consumption on the global scale, so that they can demonstrate that they have used green fuel, rather than fossil fuel, and contributing to their environmental footprint.
MH: So greater efficiencies mean greater sustainability. You're shortening the chains, you're improving the track and trace of everything you do, every time you make a footprint using your carbon.
WVN: Yes, definitely.
MH: Do you see a time when supply chains are sufficiently connected to avoid a collapse like we saw with COVID-19?
WVN: Yes. I think that with the secure data exchange of Marlin and Nokia, the connectivity solutions we provide will actually end up in full connectivity of all parties involved together with 5G and internet of things. And, and that definitely will improve the supply change, and people are much more able to be proactive and anticipate any change in disruptions that we have visit in the future. So, this federated and compliant, secure and selective way of exchanging data will be a benefit for future supply chains, and I think there will be a very efficient and optimized way of working and without major disruptions like we face today.