Category Archives: Technology

The Problem with Trade Documents in Global Trade

In today’s digital age, it may be surprising that the document trail for international trade is still very much physical.

Due to the complex nature of cross-border trade transactions, there are often many different parties involved across multiple geographies involved, most of whom use fragmented systems that do not harmonize with each other.  The continuance of paper-based processes persists because currently there is no easy way to verify the authenticity of these trade documents.

Time and money spent on paperwork continues to be a significant cost of conducting cross-border trade – Research done by IBM and Maersk has shown that the costs associated with trade documents processing can cost up to one-fifth of the actual physical transportation costs. Today, exporters need to dispatch the physical documents to consignee in their destination markets, despite having already sent the documents on other digital channels like emails and messaging applications. Thus, it is not uncommon that the goods can be shipped faster than the documents are processed.

The usage of physical trade documents inherently poses a high level of risk, mainly from falsified documentation. According to CNBC article, there has been a rise in falsified trade documents in the last five to ten years. High-tech photocopiers can duplicate trade documents like the bill of lading, in the original ink colours, and add fake information.

Due to the difficulty of distinguishing the real documents from forged ones, fake documents can be used to obtain loans from the banks and increases the risks for all involved parties including legitimate buyers and financial institutions providing trade financing services. The 2020 high-profile case of trade finance fraud by Hin Leong Trading, a Singaporean oil trading company that allegedly forged an email and documents, is proof that reliance on physical documents is a huge vulnerability.  The adeptness of forgers are forcing banks like OCBC to look into going digital and using blockchain for the US$9 trillion global trade finance industry.

What is TradeTrust?

Together with the International Chamber of Commerce (ICC), the Singapore government launched TradeTrust, a set of globally-accepted standards and frameworks that is connected to a public blockchain supporting the exchange of electronic trade documents between governments and businesses.

TradeTrust aims to digitalize global trade and eliminate the inefficiencies caused by manual trade documents and verification processes. TradeTrust works to ensure there is legal harmonisation across multiple countries and jurisdiction for legal validity of digital trade documents, and promote internationally accepted standards that facilitates interoperability of digital documents exchanged across platforms.

Most recently, the Australian Border Force (ABF) started a blockchain trial with Singapore Customs and Singapore Infocomm media Development Authority (IMDA) to digitally verify electronic Certificates of Origin (COO).

How DiMuto uses TradeTrust

The Tradetrust verification is integrated onto the DiMuto Platform. Trade documents that are uploaded onto the DiMuto Platform are automatically pushed onto TradeTrust, allowing users and relevant parties to verify the authenticity of their documents.

When a trade document is uploaded on the DiMuto platform, it is identified uniquely by a Document Hash and saved as a signed TradeTrust JSON file – this JSON file serves as a unique fingerprint that is then recorded on the public Ethereum blockchain.

 

DiMuto’s Trade Contract Timeline captures the documents uploaded and our platform automatically creates a TradeTrust identifier that can be easily verified

This record will be visible on the DiMuto platform to users and relevant trade parties, who can then drag and drop this JSON file onto tradetrust.io and verify the file.

Users will be able to see that a DiMuto certificate of authenticity that verifies the document has been uploaded on the blockchain

Due to the usage of the public blockchain, this allows any relevant parties that have this JSON.file to verify the validity of the trade document on TradeTrust, creating greater level of trust in digital trade documents. By integrating TradeTrust onto our system, DiMuto helps to create trust between trade partners and strengthens the validity of the digital trade documents.

This can help government agencies and authorities that issue certificates and want to verify the validity of these certificates.  For instance, agricultural ministries that issue Certificate of Origins, and global certification bodies like the Global G.A.P that is recognized in over 100 countries, can simply utilize TradeTrust verification tool to verify certificates that have been uploaded on the DiMuto platform. Due to the unique identifying quality of the TradeTrust file, as well as the immutability from using the public blockchain, this can significantly reduce the room for fraudulent certification and speed up the time it takes to verify certificates, reducing the friction brought about by physical documents for global trade.

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If you are interested to learn more about our solutions, please contact sales@dimuto.io.

This article is a part of the series “The Digital Supply Chain”. This series explores what is digitalization, reasons for digitalization and best methods for digitalization of agri-food supply chains.

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An Urgent Need for Digitalization of Food Supply Chains

The digital food supply chain has been in the spotlight for a while now, and we’ve previously talked about the need to digitalize the food supply chain being made even more obvious during the ongoing pandemic, as well as benefits of digitalization (think better cash flow management and better food safety controls). A digital food supply chain would be more resilient to potential disruptions and allow players in the food system to navigate any uncertainties with data-backed decisions.

Full Supply Chain Visibility is Inevitable

McKinsey predicts a future where “digital platforms enable full transparency and traceability across the food value chain—creating an environment in which actors in the value chain can more easily buy and sell to each other, compare prices, and review and rate suppliers.”

According to PwC, food supply chain visibility is also an “increasingly standard expectation” from consumers.

A study published by LogisticsIQ states that the digital supply chain market is expected to reach $75-plus billion by 2030, with major drivers of growth entail Big Data, demand for greater visibility and transparency and the adoption of artificial intelligence (AI) and blockchain technologies.

Thus, it seems like a digital food supply chain with full supply chain visibility is no longer a matter of if, but a matter of when.

So what does a digital food supply chain mean? What would it look like for the different players in the food system, and more importantly, how can companies prepare for digitalization so that they won’t be left behind?

The Implications of Digitalization

Supply chain transparency would likely reduce inefficiencies when it comes to the buying and selling of agrifood products, allowing all relevant information to be shared in a timely, verified manner between stakeholders.

For instance, DiMuto’s 4T Suite Solution allows procurement teams, purchasing managers and retailers to physically “see” the quality of every single carton of food products at the point of the packing house before the products are sent further downstream. Not only so, all trade documents are also tagged to each order, so both physical product information and documentation information can be shared between trade partners easily on our platform. Find out how we digitalize each product here and watch our explainer video here.

DiMuto 4T Suite

Supply chain visibility also creates trust between buyers and sellers and helps to facilitate open agrifood online marketplaces. Sooner than later, buyers would expect full traceability down to the individual product level and this would likely become the market expectation, fuelled by expectations of end consumers. DiMuto’s Global Trade Network helps to connect buyers looking for traceable produce to DiMuto-verified produce growers & exporters.

At the same time, transparency could also mean lower returns for traditional intermediaries such as distributors and traders that have traditionally thrived due to market conditions of information asymmetry and lack of trust. Acoording to McKinsey, trading margins of agriculture commodities have been shrinking, dropping from 15 percent in 1998 to just 9 percent in 2018. In lieu of lower margins, it is now more important than ever for agrifood intermediaries to be cost-competitive and reduce unnecessary losses. This can be achieved by adopting digitalization technologies like DiMuto’s 4T Suite Solution that can help reduce food wastage from trade disputes over quality.

Learn more about how DiMuto has helped a produce buyer to simplify the trade dispute resolution process here.

Thus, with the advent of digitalization, it is important for agrifood companies to adopt holistic trade technologies that will prepare them to navigate and overcome future disruptions.

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In light of the current coronavirus crisis, we remain committed to helping agrifood players trade better and build a more transparent food supply chain. If you are interested to find out how DiMuto can help your business, please reach us here or drop us an email at sales@dimuto.io.

One of the key benefits of digitalizing agrifood supply chains is being able to trace and track food products more easily, thus having more visibility of food supply chains. In lieu of food safety scares, food fraud and food sustainability, food traceability has become a prominent area of focus for many food industry players, food and health authorities, as well as solutions providers.

Consumers Want Greater Levels of Traceability

There has been a burgeoning focus on food journeys and origins as consumers now want to know more about the origins of foods they’re purchasing and consuming. A survey done by the International Food Information Council (IFIC) Foundation found that over half of US consumers surveyed indicated that recognizing the ingredients and understanding where food is from as key factors that affect purchasing decisions. In the UK, 8 in 10 consumers check the origin of their food when purchasing them – ensuring that their food originates from where it is advertised as coming from is important to them.

And the need for traceability and focus on food origins is likely to continue growing. The Center for Food Integrity predicts the number of consumers concerned about the origin of their food will hit nearly 50 million by 2021, with a significant number of them from the younger generation, who are typically more concerned with ethical food choices.

Information about origins and methods of production, with its storytelling ability, comes with huge marketing opportunities to shape the narrative of our foods. Research conducted by the University of Copenhagen’s Future Consumer Lab found that consumers tend to think food tastes better when they know where it came from and how it was made.

Thus, there is a real need for players in the food ecosystem such as food manufacturers, produce growers and suppliers, retailers to meet the demand for such information about their products.

Food Safety Concerns Continue in Asia

According to the FAO, food safety continues to be a concern in Asia. The infant milk powder fraud in China back in 2008, otherwise known as the melamine milk crisis, resulted in the death of at least six babies and a swift response to improve food safety regulations and practices throughout Asia. During the world’s first Food Safety Day in 2019, FAO said that the Asia-Pacific region has a poor track record when it comes to preventing foodborne illnesses, resulting in the deaths of 225,000 people each year, and affecting over 275 million people annually. This shows that there is much to be done still when it comes to food safety.

In Singapore, food safety is also top of mind. The government set out a 30 by 30 mandate in 2019, aiming 30% of Singapore’s food supply has to be homegrown to bolster its food security by 2030. A new statutory board, Singapore Food Agency, has also been created to focus on food safety and food security.

Food safety scares also carries heavy burdens on companies –  Food recalls cost companies an average of $10 million in direct costs alone and reputational damages. Consumers are wary to purchase products that were previously recalled or deemed unsafe for consumption –  A Harris Interactive survey shows that 16% of consumers would never buy a recalled food product again, and 17% of people impacted by a recall would not buy any product from the same manufacturer.

Challenges of Food Traceability Due to Globalized Supply Chains

Between 2000 and 2016, world agricultural trade increased more than threefold in value, rising to USD 1.6 trillion in 2016. While this burgeoning trade provides more food options on our plates, it also creates new risks. With longer and more complex supply chains giving rise to the “Messy Middle”, tracking from farm to fork requires increased scrutiny and accountability throughout the process.

The difficulty here is that each stage of the supply chain depends on one another for full visibility. One weak link could break the whole flow of information, which traceability heavily relies on. It is more difficult to ensure that ingredients and finished products are safe to eat when the responsibility for food safety is spread over many different business partners, as most do not know each other and information is all over the place, yet they all have to work as one to ensure food remains free from contamination at every stage of the supply chain.

Traceability Technologies

With the challenges of food traceability, several traceability technologies have popped up to tackle the problem. There are four aspects to traceability:

1. What is The Data Being Captured 

Details about the product information such as origins, company involved, product health certificates and certificates of origins should be captured.

At the same time, product information is closely related to trade information – i.e. purchase orders, sales orders, invoices all should be captured alongside the product information such that we can easily track and trace the movement of the product as it exchanges hands.

2. How is the Data Being Captured

It would be infinitely complex to try and capture all this information at every single stage of the supply chain. A clever way to capture essential information would be to capture the data at a point of aggregation in the supply chain. For instance, DiMuto helps packing houses to digitalize their fresh and frozen produce, and capture relevant product and trade information for each product and it has worked because packing houses would have the relevant farm information from the farms they purchase from.

DiMuto technology used at the largest Thai Durian exporter’s packing house

Then the question of how to efficiently digitalize each product and associate to the data that we are capturing arises. The operational aspect of tagging and tracking each physical item also comes into question as every company has different operations across the various markets.

Firstly, easy-to-scan produce codes have to be implemented to allow easy, digital identification of products. Universal standards have to be created and adhered to so that the identification code can easily be used and read by all partners in the supply chain, including consumers. For instance, GS1, the most widely-used supply chain standards system in the world, has introduced a GS1 QR Code standards that DiMuto has adopted.

Then, using our propriety DACky machines, DiMuto is able to assign a digital identity to every single physical produce, and are able to capture a photo of each carton and product before each carton is sealed, upload this photo and associate it to the specific sales order it was packed for. Thus linking the physical product to the relevant digital data for traceability of both product and trade.

3. Where is the Data Stored

Supply chain players have turned to blockchain technology as a new, effective way to build trust due to its ability to validate, record, as well as distribute transactions in immutable, encrypted ledgers.

DiMuto uses blockchain, AI and IoT in our Track & Trace platform to provide supply chain partners full visibility. It is important to note that blockchain does not prevent errors, but instead places responsibility on the supply chain players with regards to what they declare. What anyone declares, whether it is right or wrong, voluntarily or not, will be analyzed and processed thanks to the immutability of the source of each data. Thus, we are able to show who made the error, and what was the error, if any, in each trade.

4. How Can We Communicate the Data Effectively? 

At the same time, besides solving traceability amongst B2B supply chain partners, traceability solutions have to link back to the end consumers who are ultimately the ones demanding for higher transparency. This is where the easy-to-scan codes come in, as the DiMuto QR labels are easily scanned by consumers to access the relevant information about the product.

We also provide a consumer marketing solution that can help companies to brand their products.

DiMuto Consumer Marketing Solution

A Need for Applicable, Interoperable & Customer-Centric Solutions

At the same time, we cannot ignore the fact that many companies will choose to adopt in-house solutions for traceability. However, given the interconnectedness of our agrifood supply chain, solutions that will work in a scalable manner will have to be interoperable and be able to speak to different systems while still maintaining the truth. That is why DiMuto solutions are interoperable, and we work with IBM Food Trust such that our customers can easily provide important information mandated by major retailers like Walmart and Carrefour while using the DiMuto system.

The application of traceability technology has to be well thought out. Data being captured, shared and verified with the blockchain, can now be used for a multitude of purpose – trade financing, data analytics, QR marketing, trading with new trusted partners and more. That is why DiMuto offers a 360 trade solutions so that we can help our customers better their trade from all aspects.

Food Traceability is a promising and exciting space. Allied Market Research has predicted that the global food traceability market will reach some US$22.3bn in 2025, growing 9.3% from US$11mm in 2017. Thus, it is likely we will see new developments in Food Traceability in the next few years.

If you are interested to learn more about how DiMuto helps create traceability for fresh produce, please reach us here or drop us an email at sales@dimuto.io.