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Blockchain could make a big leap into the global supply chain of large oil companies.
VAKT, a London-based blockchain company that tracks physically traded commodities, is attempting to make such a move by collecting primetime partners in the oil industry. Royal Dutch Shell (RDS.A) (RDS.B), Equinor (EQNR) and BP plc (BP) are already trying to strengthen their supply chains with technology.
"The launch in our first market with such high caliber users is a transformational moment for us and for industry," said VAKT CEO John Jimenez. "But it's only the beginning: the success of a blockchain solution depends on widespread adoption and we are not looking forward to seeing the ecosystem grow".
ICYMI. #BP, among other world leaders #power producers and banks have joined forces for the launch @VaktGlobal #blockchain platform https://t.co/Hp13Jx0Y9k pic.twitter.com/CgxAd1lYZp
– BP India (@BP_India) 3 December 2018
The technology will track contracts and allow each of the consortium companies to follow the same register.
"Digitization is changing the way the energy value chain works, it's an exciting time," said Andrew Smith, EVP Trading & Supply, Shell International Trading and Shipping Company Limited. "Collaboration with our colleagues and some of the industry's key players is the best way to combine market expertise and reach the scale needed to launch a digital transaction platform that could transform the way we all do business. the goal is to improve speed and safety, which benefits everyone along the supply chain from market operators to customers. "
In fact, the adoption of the blockchain has helped other industries to control supply chain management, particularly Walmart (WMT), which has used blockchain for its green monitoring. The need for a company like Walmart to employ blockchain throughout its company could provide a model for the oil industry.
"Every time there is a collection of actors who need to work together but do not trust each other, this creates a confidence gap, everyone wants to keep control of the data", Kevin Werbach, professor of business ethics and law firms at the Wharton School of Business of the University of Pennsylvania Real money. "This leads to all kinds of errors and inefficiencies".
He said that in the case of Walmart, which is perhaps the largest test case available in the United States, it has shown that blockchain registries have drastically reduced the tracking of raw materials.
"Let's say that someone gets sick, as we had with Romaine lettuce, how long does it take to get back?" Werbach asked, noting that Walmart found it to take six and a half days. "They put him on a blockchain … they got the six days in less than two and a half seconds."
Naturally, the logic of this supply chain can be easily applied to oil in significantly reducing inefficiencies in the distribution chain and at the same time decreasing any improper gambling in an industry that often falls victim to the graft.
For companies looking to use this new accounting technology, cost savings could be huge, both in terms of fraud reduction and Amazon's supply chain optimization (AMZN).
To be sure, this is still a nascent segment of the industry and will take time to develop.
"This is a great transformation in the fundamental platforms of Wall Street and many other businesses," said Werbach. "We were really seeing the start now."
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