Blockchain business: Global firms already deep in Web3
AstraZeneca and Anglo American are utilising blockchain for massive supply chain visibility, revitalising production and saving time and money.
Web3 is a new field in IT, set to grow explosively in the coming years. The phrase covers a range of technologies that will form the backbone of the worldwide web in coming years: things like decentralisation, metaverse and virtual reality.
Blockchain is part of the decentralisation piece of the pie, and it's been around for a while: most existing cryptocurrencies have some relation to the tech. But that's not all it can do - in fact, recording virtual currency transactions is the least of blockchain's power.
AstraZeneca, which shot to worldwide fame in 2020 thanks to its part in manufacturing one of the first Covid-19 vaccines, realised this early on. Biopharmaceuticals rely on a web of complex supply chains delivering everything from the active ingredients to foil wrap for tablets: a web that requires meticulous planning and re-planning to understand how demand is changing in real time.
It was an area ripe for blockchain to prove its worth.
Steve Woodward, who led platform transformation at AstraZeneca until earlier this year, describes the situation:
"There are hundreds of people doing this planning. At the time, they were using spreadsheets to do all of this, to pass the data back and forth, and we were like, 'Surely there must be a better way to do this? One that's completely transparent and we can get more than just one step down the downstream supply chain?' We really wanted to understand step two and have a bigger viewpoint on that."
It just solved this whole problem of transparency and visibility
To address the complexity, AstraZeneca implemented a blockchain-based system with two suppliers, who shared all their real time stock live. The pharmaceutical giant could then replan based upon what it needed, and instantly send updated lists of supplies. "We'd be able to see what they had in stock so we could understand if that was going to be instant or whether they would need to do any manufacturing their side," says Woodward.
"It just solved this whole problem of transparency and visibility of supply chain, it was a fantastic opportunity and value add, as well."
Rather than just one step up or down, blockchain will enable AstraZeneca to see the status of the entire supply chain. The system is tentatively known as Sense & Respond, based on sensing what happens using a number of mechanisms and responding semi-automatically.
"So if we know there's going to be a shortage of, say, bottles, rather than us plan to have an extra run going on where we're going to need all of our bottles, we can now respond by saying 'We'll delay that by a week, we'll put on another run...of tablets that don't need vials or bottles', so that we can suddenly automate and swap them out in a semi-real time based upon somebody else's stock, not just our own."
More than one type of mining
Blockchain underpins most cryptocurrencies, which are 'mined' by high-powered computers. But mining was a thing long before Bitcoin, Ether and Ripple came along.
Anglo American is a multinational firm that produces most of the world's new platinum, as well as other materials like copper, nickel and diamonds. It's also investing heavily in blockchain to track those goods throughout their lifecycle - a potential game-changer when it comes to the growing demand for ethical metals and stones from both business and consumer perspectives.
Woodward recently left AstraZeneca to join Anglo American as the company's first ever Head of Blockchain. The two companies have a radically different approach to the technology.
"AstraZeneca...is not really forward-looking [in the supply chain]... But when I started looking at [blockchain] from a mining perspective, you realise there's a lot of forward steps in that kind of process as well; so as much as you're looking backwards, you're also looking forwards in the supply chain, and that's where it becomes really interesting."
A company normally loses visibility of a physical product once it's sold; it might know who it sold the product to, and where, and when, but it has no idea what happens after the product leaves the store. Blockchain can change that.
Woodward sees a future where Anglo American can use its data from higher in the supply chain - "It was ethically mined, it was using zero water, it was carbon neutral, or carbon offset up to the point of sale" - to attract new buyers.
For example: Shell might find it helpful to know the ESG provenance of the copper it buys when building a wind farm; energy suppliers buying power, and consumers looking for truly green energy, would also be able to use that information. The data has value from the top of the supply chain to the bottom.
Blockchain is a kind of huge, exciting prospect
Precious metals and stones are another area ripe for just this sort of provenance tracking - not only because jewellery buyers are increasingly looking for green materials, but because it could enable whole new business models.
"You might say, 'I know now that [our platinum] is being used by BMW or Mercedes or Land Rover, or whoever it might be, for catalytic converters. But what if - now that I know I've sold it to them and it's traceable on the blockchain, and they're sharing that data about where it's been used and in how many cars - that rather than me dig up another 100+ tonnes [of earth] just to get seven grams [of platinum], I can work out a financial plan, almost like leasing, which means that at the end of the lifecycle of a car...they have to return that platinum to us! Because that's a hell of a lot cheaper for us to recycle catalytic converters back into a product than it is to dig up hundreds and hundreds of tonnes of land...
"Blockchain enabling that kind of business model is a kind of huge, exciting prospect."
While the figures above are just examples, it is true that mining, especially for materials like platinum, is incredibly inefficient and environmentally damaging. Cutting the amount we do could be a great thing for the planet, even if it will take years to come to fruition.
Bureaucracy, Brexit and blockchain
Speaking of things that take years, it's time to talk about bureaucracy. Cutting it is blockchain's other prime use in business, specifically in the form of smart trading. This could slash the time spent filling out forms, checking compliance and gaining approvals - which, in the post-Brexit era, is critical for any firm working across borders.
"To facilitate sales across borders there's an awful lot of paperwork that has to be signed. Can blockchain be used to validate that, to prove that it's been signed in the correct order so that everybody is happy with it, to enable more seamless transactions to take place?"
This aspect of blockchain is less about the physical data like signatures and more about document metadata. Potentially, companies could accept blockchain confirmation that a collection of documents was validated as proof, rather than viewing every single document in the pile.
Smart trading has huge potential, but is still very much in the proof-of-concept stage - but even if that's all it ever reaches, the underlying blockchain technology has plenty to offer.
We are right at the start of the Web3 era, and just as Web 2.0 empowered marketing departments and turned Social Media Manager into a valid career, Web3 is likely to revitalise discussions around data and change how IT teams work. To realise the full benefits, it's important to get an early understanding of the technology and how your business can apply it; this is the perfect time to be thinking about recruiting your own Head of Blockchain.
Learn more about blockchain at day one of the IT Leaders Festival on 4th October with Nick Hodder, Associate Director of Transformations at the Imperial War Museum. Register now.