Commodity firms and other businesses in the supply chain space (shipping, logistics) have a long history of trying to build platforms to simplify global trade. While a great goal, over and over again these initiatives have failed because of immense inertia in the industries and because of the fact that every single counter-party involved in a transaction must be on the platform for it to work.
For a merchant to use Shopify, connected to Stripe, connected to Visa, working with me, it’s relatively “easy”. Not many people involved in the process and some of them (me) don’t have any power to control how the flow works.
When Cargill ships a 100,000 MT parcel of grain to be processed, there are SO many people and organisations that touch the commodity in some form. From inspection companies like SGS, to rail lines, to customs authorities, to port representatives, to ocean transportation, to banks....the list goes on. And historically the vision has been an “all or nothing” style of platform.
One day we will figure out the solution to this problem, but not anytime soon and probably not with Splinter. Four of the world’s five largest grain companies, three of the world’s five largest iron ore companies, and many more use the product that I work on (www.SEDNA.com) to manage their global supply chains, and their workflows remain to be very email-based and driven by traditional ERPs.
You see this in action with businesses like Flexport who started with a very formidable vision to build a platform for third-party logistics, and ultimately had to pivot to become a very digital freight forwarder after being trapped by the traditions and slow-moving nature of the industry.
In these organisations there is incredible buzz and thought around digital transformation, but many of these companies are also only recently beginning to trust cloud software. So although there is a big desire to innovate and operate on the cutting edge, so many primitives and so much of the day-to-day process keeps them lagging behind.
Truck driver. I just picked up a trailer of toilet paper in Portland, bound for Ontario CA.
The guard handling the paperwork asked me "Are you able to sign online?"
I desperately tried to come up with a snappy "yep," it sounded like such a good idea. But I finally had to say "I'm not sure what you mean."
He handled it, gave me my bill of lading, and away I went with toilet paper in tow and paperwork in hand. Because it's still not finished until the paperwork is done.
I’m curious about this intersection of truck driver and HN: not the typical demographics. What got you into either trucking or tech (not sure which was first)?
I used to be in software, which is how I found HN. Then I rage-quit my last in-career job.
I was a B-player, and past my fresh date. I stumbled around a bit, and wound up here.
I like it. I haven't been in a meeting in three years, and my commute is three feet. Right now I'm in California on I-5, looking at Mt Shasta floating above the clouds.
There are a lot of people who left white-collar jobs for trucking; engineers especially. Something about wanting to be more or less your own boss, control your own schedule, and not be in an office is appealing.
So your stereotype for "trucker" has to be resilient to the occasional former nuclear physicist or mathematician showing up.
One innovation that really got adopted throughout the supply chain is the container.
Agreed that it's only part of the supply chain compared to what you describe, but it was a major change that affected a very large amount of processes and businesses.
The scale of things such as worldwide supply chains makes you wonder whether competition is really the right catalyst for efficiency. Cooperation and the setting of standards seems to be a better answer, but of course this leads to a whole lot of different issues.
It really took off during/after the Vietnam War as the Pentagon saw its benefits in efficiency and not having to use Old School longshoreman and switching to cranes.
Absolutely - standardisation is the path to ubiquity. From the screw thread to the accidental standard (ISA) of the IBM PC.
It removes many of the barriers to competition and reduces the risk of large players creating monopolies.
I think it’s fair to say that much of what we see in tech is deliberately engineered to avoid standardisation in order to protect competitive advantage.
Wired did an interesting article on standardisation years ago.
Think about railroads and even early highways. It’s hard to standardize before you have a problem.
Containers have big downsides too... but technology allowed costs to be vaporized with containers.
The other big thing is that containers appeared in the US as the railroads entered their death spirals. You can build a dock anywhere and have trucks show up from 100 companies quickly compared to the negotiation required to live railroads. Think about how quickly the NYC maritime business died and moved to New Jersey... that’s a market that represented ~10-15% of the US population at that time.
The container was adopted very fast and very thoroughly throughout worldwide supply chains because it was many, many orders of magnitude better - and allowed a massive reduction in staff.
No proposal for better IT integration in freight comes even close to that level of saving, mostly because the existing chaos is "good enough" and the executives are very, very old and very conservative compared to "digital natives".
It took collaboration to integrate the containers but not necessarily to create it. Creating requires risking resources which is incentivized by the potential monetary gain. Without that potential, it's hard to imagine competitors risking their resources. Another point about collaboration in this case is that it only happened because all parties benefited more. If you don't adopt new things that optimize operations then you'll be left behind by your competitors who are operating more efficiently and have wider support for the customers everyone is competing for.
A closer innovation for supply chain might be the concept of an ASN (although anyone who works in logistics knows how disparate different supplier portals can be...)
> their workflows remain to be very email-based and driven by traditional ERPs
This really is the crux of the issue. It comes down to “your ERP has some information I want in my ERP” - followed by twenty emails, redirects to find the person who actually understands the schema of the ERP on each end, mapping the fields, and finally sending the info.
What’s missing is not some omniscient decentralized master system, but a standard framework to rapidly conduct data negotiations between private parties and systems. Each party needs a public-facing searchable data catalog of some kind so requests can be made precisely the first time, and so each party understands what they’re agreeing to.
> What’s missing is not some omniscient decentralized master system, but a standard framework to rapidly conduct data negotiations between private parties and systems.
What is the difference? You seem to be recommending a protocol (maybe with some level of human involvement) between two centralized systems. OK now that sounds more like federation than decentralization, but still, there's not much of a distinction.
This happens in the cannabis game. There are 120+ software vendors, so to make it easy humans email each other links, those links also have pointers to the data (JSON), so that the receving end can just paste it into their end.
But, wow! Is it hard to get your competitors to adopt an open protocol. Whole bunch of NIH syndrome. And each player can sit on the sidelines, or invent their own "protocol" and not adopt another (que that XKCD about 14+ standards).
Converstaions:
A: our clients want to work together, so our softwares should work together.
B: Yea, well, how many clients do you have?
A: Well how many do you have?
B: Use my protocol, we'll build a spec.
A: here's our protocol with public spec & moderate adoption.
B: Well, we didn't get to have input so we don't like it, you're clearly not a team player.
A: It's on Github! I'm literally inviting you to participate right now!?
B: ...
It's very hard to build open, distributed, federated systems when all the other parties in the game are more interested in building up their own walled garden.
I think some of these things also start to address internal controls issues.
The Cargill branch in my area lost at least $3M to embezzlement by an accountant who just paid phony or stretched invoices for years, which gives you an idea of the risks associated with paper and excel processes combined with lean staffing and lack of controls.
Yeah, but this person will probably get prosecuted and fired; corporate attorneys are probably already on hand and expected to fight these sorts of cases. It’s unlikely that this is too common of a situation.
Compare that to fully digitizing. Will cost many more millions in procurement and training.
There are advantages to digitizing. But until they’re really transformative, conservative industries won’t budge. And they won’t budge until the benefits of going fully digital become so large that a competitor/startup comes along and realizes these benefits and kicks their asses at which point they too need to transform or die.
> there are SO many people and organisations that touch the commodity in some form
and 99.9% of those people are a joke and don’t even realize it. commodities traders are the most gullible lot I’ve ever encountered, chasing a pot of gold at the end of a rainbow. they’re so dumb as they cannot tell reality from fiction.
> they’re so dumb as they cannot tell reality from fiction
Ya know, here in the US we just found out that nearly have of our population and our last president have this problem. Maybe they should move into trading commodities?
the answer is yes its the same current of people and it is global
Think of it like real estate agents, but without even the bare minimum of the license. You have people with no marketable skills, no formal education, no success at anything else all chasing commissions. Its going to be a circus.
I think it's hilarious that "blockchain-like" is how people are climbing off the hype train. I'm glad they're trying to find an exit, though, and I hope that lets software be blockchain-unlike enough that these systems aren't too weighed down with unnecessary constraints and costs.
The hard part is not technology. It's getting a zillion players to agree on how to use a technology together. To the extend that "blockchain [jazz hands]" ever mattered here, it was only the chance that the tidal wave of hype might sweep everybody in the same direction.
Couldn't blockchains offer some new tools to tackle the problem? Imagine for instance wanting to create some incentives by distributing the value of correctly tracking an item to the actors of the supply chain, with some rule like "once the item is sold, part of the revenue gets distributed to all the actors that contributed to the tracking". Wouldn't smart contracts render this simpler to implement, since code is visible by all actors and guaranteed to be executed?
I got my start trading for one of the big commodity shops. The problem isn’t incentive. Markets create natural incentives. The problem is authority. Who decides what’s right? Who decides what constitutes “solved”?
Blockchain or smart contracts have no way to solve this without abandoning the decentralized and permissionless aspects, at which point you’re giving up loads of efficiency for none of the benefits.
This is the problem that every large non speculation based blockchain problem has encountered: any system will be reduced to its weakest link. Any problem that requires crossing off chain into the real world will necessarily lose many of any benefits blockchain can provide.
Blockchain really only solves a few specific problems in a few specific domains. There’s a reason that a decade on, all we’ve managed to build are massive casinos that can’t be shut down by authorities
I doubt it. The only place where I see blockchains in significant practical use is in very low-trust cases. But supply-chain relationships already involve a fair bit of trust. Cryptocurrencies are also attempts to solve problems of financial interaction, but these people already have financial relationships.
Moreover, I think one of the big problems with "blockchain [jazz hands]" is what you're doing here: a solution looking for a problem. The right way to build something is to start with actual problems actual people have and then find the most economically efficient technology that best fits the solution. When approached from that perspective, I still haven't heard of a case where a blockchain turned out to be the right answer.
William, while I agree the problem at hand is mainly an organizational one, you ignore that even with a trusted environment you still need safeguards for internal fraud. A distributed ledger can ensure that protection and easily verifiable audits. The distributed ledger solves this real problem, but with the caveat that as you noted that is a fairly small part of the overall picture.
I agree that a distributed ledger could under very specific circumstances protect against some very specific types of internal fraud. But again, that's the wrong way to look at it. The way to do it is to look at actual fraud problems that businesses are actually having and then see what measures, technological and otherwise, best mitigate the problem.
Even if the fraud in question was of the very specific type where somebody fiddles records after the initial write (as opposed to fiddling them before, or on output, or making offsetting transactions, or any of the many other ways to hide internal fraud) I still wouldn't try to set up some sort of multi-organizational distributed blockchain ledger. I'd just write a regular ledger to some immutable medium. E.g., AWS's WORM solution. [1] That would not only be simpler, clearer, cheaper, and more thoroughly vetted, it would also be very easy to prove compliance with the sorts of standards used to prevent fraud.
The issue isn't one of trust in the general sense. Blockchain would "solve" the issue of transparency about when and who signed for what shipment where and when. The problem that can't be solved is that you have to completely trust that the blockchain reflects actually physical reality. A blockchain signature doesn't mean it is actually where it says it is. Even if you have some digital "fob" device, how do you know that it is on the right pallet of good. A digital signature can't prove anything in the real world. Blockchain is only useful in the pyramid scheme world of coins.
Is that a goal that anyone involved actually wants to implement? Does the code being visible really add any value? The problem isn’t in executing the contract among people who agreed to it.
I think the smart contract part of blockchain doesn't offer much value.
But I think the core value proposition of blockchain to supply-chain like situations is to solve the problem of "who's version of the database do we trust", without needing to resort to escrow or other 3rd parties. It won't completely solve the problems of parties being in disagreement - lawyers will still be needed, but it might address a subset of problems.
"Whose records do we trust" is a problem that's thousands of years old. [1] In practice, the answer is "we both keep records and compare when there's a problem". It's not clear to me that having a single shared database solves more problems than it creates.
Not at all. A blockchain requires a shared model. Everybody has to agree on what's stored. But the way it normally works is that each entity gets to do its own thing. E.g., if company A sends a package received by company B via shipper C, each one is going to keep their own records of what's going on. They don't have to agree at all on what gets kept when. There are specific, limited points of interaction. It's only if some problem occurs that everybody compares their individual records and reconciles them.
That looks like waste to the "blockchain [jazz hands]" crowd. But it prevents other wastes. Like trying to get a whole industry to come to consensus on ontology and process. Or trying to comply with systems build around that fantasy process when local needs differ from the standards.
Any single centralised database performs that function though, since supply chains are emphatically not trustless and there's no more guarantee updates to a blockchain corresponds to actual changes to the physical goods. "What if the party that manages the database reverts data entered?" is really quite low on the list of risks involved in transferring goods of value between multiple independent parties, ensuring all contractual and legal requirements have been met and paying separately, and anyone given read access to a centralised database can identify edits anyway.
While it is true that blockchains themselves cannot guarantee that they're synchronized with the physical world, they provide an irrevocable digital trail that can be used to punish bad actors, one that is relatively immune to tampering. A lot of the world operates this way—simply signing something under penalty of perjury does not guarantee that it is true, but it can be taken to court if it is later found that you're lying.
A blockchain (not proof-of-work, but permissioned/BFT-based) is pretty clearly the optimal way to have an irrevocable digital trail.
Sure, I'm not disputing that they can fulfil a role, I'm noting that [i] they're not remotely close to being a solution to the sort of problems parties use escrow for (except where the goods are digital to the extent fulfilment can be encoded into some sort of smart contract) and [ii] a distributed ledger only has value over and above a non-distributed one if other parties worry about the centralised database manager tampering with records [without leaving obvious evidence behind], which has got to be so far down the list of potential issues with most supply chains (even with respect to record keeping) it's barely a consideration. Another vendor's good old fashioned cloud datastore might be equally suitable as far as parties not being able to update records without leaving an audit trail goes, and quite possibly with a shinier front end and easier to use API.
> they're not remotely close to being a solution to the sort of problems parties use escrow for
But you can encode fulfilment into a smart contract for physical goods, assuming that those physical goods have some digital representation on-chain. Discrepancies between the chain and the real world continue to be resolved through the court systems in various jurisdictions, but on-chain activity is just strong evidence that any court can rely on.
> a distributed ledger only has value over and above a non-distributed one if other parties worry about the centralised database manager tampering with records
An alternative viewpoint is that a centralized database manager can be seen as a potential risk. One of the general ways we progress in society is when we reduce sources of risk, and a permissioned blockchain where you need 2/3rds of a cabal to collude is a pretty clear reduction of risk compared to a centralized DB. (I mean, how would you keep track of whether a central DB has been tampered with? You'd probably maintain your own copy, reconcile the two periodically, and flag discrepancies if and when they happen. That's exactly what a blockchain is.)
To be clear, I'm pretty skeptical about blockchains in general, but this seems like a very compelling use case.
> But you can encode fulfilment into a smart contract for physical goods, assuming that those physical goods have some digital representation on-chain.
But why would I want to? Unlike a smart contract for some verifiable code-based outcome it doesn't offer any guarantees I get paid, which I still rely on the courts for, it just adds complexity and unfamiliar risk.
> An alternative viewpoint is that a centralized database manager can be seen as a potential risk
Sure, in theory it can be. But relative to all the other potential supply chain risks, the ERP cloud vendor colluding with a part of the supply chain to remove records from or silently update a datastore is pretty near the bottom of the list in terms of likelihood, expected cost and chances of it not being glaringly obvious to other parties and used as evidence of bad faith on their part in court.
To be clear, I'm not saying blockchain can't be used as a datastore, I'm saying that overall its about as useful for mitigating supply chain risk as insurance against your spouse committing identity fraud is for mitigating potential problems with marriage.
Well, the assumption is that unfamiliarity risk goes down as people get more familiar with the technology. There's certainly some added complexity but a blockchain is not that complex, it's just a git repo with some added functionality to repel hostile actors.
Doesn't a permissioned blockchain require a trusted central authority to manage the permissions? How is it better than having that central authority manage the database?
You have, say, 50 entities that are part of the cabal, not all of whose interests are aligned (this is the important bit, you want a diversity of interests), and you need a 2/3 vote to add a new one.
Could you give some examples of current commercial relationships that let, say, 50 entities have a binding majority vote? I agree it's in theory possible, but I've never heard of such a thing.
Reading the article, it’s clear there is nothing resembling actual blockchain/cryptocurrency technology involved. The engineers have built something with the features Cargill thinks their supply chain needs, and the marketers (or the savvy product managers) are just using “blockchain-like” as a descriptor and other crypto-adjacent buzzwords to generate interest and attention. It’s probably the inevitable endpoint of all the years of blockchain hype from people who didn’t understand the system to begin with—-keep using and evolving the buzzwords and apply them to entirely different, old-fashioned, boring tech that actually addresses business needs.
Something that really blew my hair back is hREA (formerly Holo-REA) - which is a combination of the Resources Events Agents (REA) accounting method, together with the distributed application framework holochain. It can help us move from corporate Enterprise Resource Planning software to follow (material) resources, to Network Resource Planning software, where all resources are stewarded in the commons based on open access and mutually consenting agreements/protocols. And holochain makes it all easily evolvable and unenclosable. It's one of the most exciting projects I've come across.
hREA is aimed at creating a radically inclusive supply chain system. It is fully open source and being developed here: https://github.com/holo-rea/holo-rea
What I would like to know is how did this come to exist in the first place? I realized Cargill is HUGE, but an open source system that supports private sub-networks?!?!?
If I were a betting person, I'd guess that somebody with social connections to Cargill (e.g., an ambitious executive) took advantage of the blockchain hype cycle to sell a pilot project to credulous executives. The copyright says "2018-2020", which fits well with the cycle: https://trends.google.com/trends/explore?date=all&geo=US&q=b...
I presume it's getting open-sourced now because they've given up on the idea of closed-source domination of the industry, and this is the hail mary attempt on the part of the technologists to save the project, or at least to have something good on their resumes by the time the project funding runs out.
Your tone seems contradictory, but I don't think that actually disproves my point. I can believe that some developers always wanted to open-source it. But that doesn't mean it would have been allowed if the business plan had actually worked.
respect on the cynicism (for real) but i think you can prob drill down on it. was airflow a failed business plan at airbnb? react a hail mary for fb?
principles/values based innovation anchored on open tech / open standards / open governance being a better path for these types of solutions. because the alternative is what? entire industries locked into commercial solutions til death do us part? sounds bad.
Of course one would hope this platform single handedly leads to major advancements on industrialisation, permanently eradicating child labour and slavery in all industries. One would also hope that simply not buying chocolate sourced from farms that employ child labourers that should be in school (as opposed to older children that don’t need to be at school, which according to the data I can find actually represents the vast majority of child labourers in the cocoa industry) would also solve the issue. My fear is however that it’s not that simple, and we could even make things worse. For example, child labour numbers have increased in recent years, haven’t been able to find percentages over time so cannot comment on that. One could hardly say that “ethical sourcing” and marketing has proven that it’s reduced child labour given this increase.
For a merchant to use Shopify, connected to Stripe, connected to Visa, working with me, it’s relatively “easy”. Not many people involved in the process and some of them (me) don’t have any power to control how the flow works.
When Cargill ships a 100,000 MT parcel of grain to be processed, there are SO many people and organisations that touch the commodity in some form. From inspection companies like SGS, to rail lines, to customs authorities, to port representatives, to ocean transportation, to banks....the list goes on. And historically the vision has been an “all or nothing” style of platform.
One day we will figure out the solution to this problem, but not anytime soon and probably not with Splinter. Four of the world’s five largest grain companies, three of the world’s five largest iron ore companies, and many more use the product that I work on (www.SEDNA.com) to manage their global supply chains, and their workflows remain to be very email-based and driven by traditional ERPs.
You see this in action with businesses like Flexport who started with a very formidable vision to build a platform for third-party logistics, and ultimately had to pivot to become a very digital freight forwarder after being trapped by the traditions and slow-moving nature of the industry.
In these organisations there is incredible buzz and thought around digital transformation, but many of these companies are also only recently beginning to trust cloud software. So although there is a big desire to innovate and operate on the cutting edge, so many primitives and so much of the day-to-day process keeps them lagging behind.