DREP Research Institute | How does DREP help to remodel the global supply chain system

Recently, blockchain has become the hot issue on building the supply chain model. The world’s largest food company Dole and IBM have reached an agreement on modifying the food source tracing system. Wal-Mart is cooperating with many pharmaceutical companies to track the production line. What can blockchain technology offer on building the supply chain? This article will start with a real case and illustrate DREP’s work in this field.

For example, tuna is a kind of popular food material worldwide, and the top-notch “bluefin tuna” has been a regular on the menu of gluttons. Have we paid attention to where they come from? In fact, you may have heard that the fishing grounds in the Pacific have been suffering from poaching for a long time. Many marine organisms, especially whales, have become endangered animals and even become extinct. Even the “ordinary” species like tuna have begun to decline significantly.

Annual statistics of bluefin tuna Cr: International Seafood Market Sustainability Foundation

An appropriate time schedule of fishing is needed to sustain the seafood supply chain. Otherwise, the untimely overfishing will be easy to cause irreversible damage. Since tuna is quite popular around the world, its supply changes will cause instant reactions in the market price, and even trigger a chain reaction in the entire food market. As in agriculture, fallow is necessary for lands to restore the fertility.

Then how could blockchain deter illegal fish-poaching?

Scan the QR code Cr:WWF

There have been applications on Alipay and WeChat which allow customers to scan the QR code on the packaging of food to see the source of supply. But these two are centralized platforms belonging to private enterprises, the ledger mechanism is not transparent, and there is still risk from the third party. Therefore, the security level is not as high as that of blockchain technology.

Actually, adopting blockchain industry in food industry isn’t a distant future. WWF and Consensys (Ethereum blockchain application company, CEO of which is Joseph Lubin, Ethereum co-founder) have already reached a cooperation. WWF also organized the Pacific Fishery giant Sea Quest Fiji. The picture above shows the result of the trial operation of this project.

We see the impact of COVID19 on various fields in which supply chain bears the brunt. Can blockchain technology be the “vaccine” of this epidemic? In addition to QR codes, DREP also has a feasible, mature, and easy-to-land solution.

According to the data from Postal Savings Bank of China, the epidemic has caused severe losses for domestic small and micro enterprises. The small and micro index in early 2020 was 31.9, a month-to-month decrease of 14.2 points, and a year-on-year decrease of 14.3 points, reaching the minimum value of all time.

A few days ago, various economic stimulus plans were rolled out by some countries, including the direct subsidy of $1,200 per person. However, not all the funds that financial institutes got from the government can be distributed to the small enterprises in trouble. The problem lie in the supply chain model.

Actually, all the supply chains resemble.

The ways of making accounts and tax inspection vary among different industries and even respective firms. The coordination and management between banks and enterprises are difficult. Even with software like Tianyancha, the comprehensive situation of the enterprises still remains to be revealed.

However, the blockchain is expected to turn over the situation. As shown in the above figure, when it is widely used, all the related documents will be electronic and uploaded in real time. As a result, the bank can make sure that all the information is authentic.

Based on the difficulty of corporate financing, DREP designed and developed the alliance chain + private chain solution that serves the financial system of supply chain.

We provide an account receivable financing platform to give full play to the distributed accounting functions of blockchain technology applied to warehousing, logistics, trade, and financial credit, as well as the functions of digital divide, transferability, and automated execution. As shown below:

DREP helps to build a credit system inside the enterprises with help of bond and credit, which are the proofs of electronic/digital debts generated in business.

DREP supply chain alliance chain solves the problem of excessive number of enterprises and the high cost of maintaining the account receivable data of individual enterprises.

Every financing application of a loan company needs to be backed by genuine trade background, and information about every single transaction record, the fund provider and the loan enterprises should be restored on the chain which cannot be tampered with or deleted. DREP will digitally sign and save the documents such as trade contracts.

Originally, only big firms could pass the bank review and get the financial assistance, because the banks are afraid of the bad debt rate increase. Now that they have understood the real situation, banks will choose to allocate more money to SMEs for emergency. This is contrary to what people assume: a transparent market can actually encourage competition, not monopoly. Customers are now enjoying fresh seafood from various sources with QR code to ensure its safety.

Bitcoin achieved the decentralization of personal assets, but more practical and down-to-earth applications are needed for better future of blockchain technology. confirmation is needed for supply source in every industry, and there have been tracks in the industry of food and finance. DREP will dig deep into the supply chain and serve as a bridge connecting traditional industry and digital currency, which is also the original vision in the DREP white paper.