An open-source electronic bill of lading software solution can provide tamper-proof records, eliminate the risk of document duplication, and enable real-time verification of document ownership.
By Vanessa Mbanefo
In global trade, the authenticity and integrity of documents are paramount. Traditional paper-based bills of lading have long been the backbone of global commerce, but they come with inherent risks, particularly concerning fraud. According to this McKinsey report, the digitization of bills of lading is an overdue multi-billion-dollar value creating opportunity, given the establishment and growing adoption of industry and data standards.
Research by the DSCI demonstrates how open-source standards for electronic bills of lading (eBLs) offer a digital solution that fundamentally changes how we handle shipping documentation. By embracing open source eBLs, businesses can significantly reduce the risk of fraud, enhancing trust and efficiency in trade transactions.
One of the fundamental advantages of eBLs is their elimination of physical paper documents, which serves as a significant deterrent to fraudsters. Traditional bills of lading are vulnerable to duplication for illicit purposes. In contrast, eBLs use a digital format where each document is uniquely encrypted and tied to its rightful owner. This protection makes it difficult for counterfeit documents to infiltrate the supply chain, bolstering security and trust among trading partners.
The Open eBL initiative seeks to bring a new level of security and transparency to document management through distributed ledger technology and enterprise level security.
Central to this initiative is software being developed by Open eBL co-founding member BlueX Trade. Upon initial validation, this software will be contributed to the Open eBL initiative, co-founded by the non-profit Digital Supply Chain Institute (DSCI). Additional development of the software solution will be advanced through collaboration among designated Open eBL member organizations, governed by the leadership and technology councils of the Open eBL initiative.
The software code for the Open eBL solution will become available for public use under an open-source licensing agreement.
The planned Open eBL architecture is designed to function as an operating system for trading document exchange, akin to how a smart phone operating system manages software and hardware resources. The architecture intends to serve as the backbone of digital trade, facilitating seamless and secure interactions between trading partners. Users can be subjected to KYB/KYC (Know Your Business/Know Your Customer) processes to prevent potential fraud and security issues. The eBL solution seeks to securely record and modify transactions, ensuring the authenticity and provenance of each document.
This verification process ensures that only legitimate and trusted parties can participate in the eBL network, effectively thwarting attempts at fraudulent alterations and providing stakeholders with peace of mind.
The eBL platform seeks to provide a decentralized network backbone that ensures reliable global message delivery. Accessible only to certified members, this network would promote security, decentralization, and secure message delivery across the entire network.
To enhance security and streamline trade processes, the eBL solution employs advanced encryption techniques. Messages are encrypted with the recipient’s public key and signed with the sender’s private key, ensuring that only intended recipients can decrypt a message and verify the sender’s identity. This method forms a chain of messages, allowing recipients to verify the consistency of each message with the previous one, thereby reducing administrative burdens and improving overall efficiency. The eBL solution only permits messages to reach their intended recipients, curtailing document fraud by facilitating real-time verification of document ownership and title transfer, thus mitigating the risk of fraudulent title claims or double spending.
While the widespread adoption of eBLs is still in its infancy, the potential to significantly reduce fraud in trade transactions is undeniable. By embracing the Open eBL initiative, businesses can usher in a new era of trust, transparency, and interoperability in global trade driven by the open-source standards.
Vanessa Mbanefo is the Managing Director of the DSCI Open eBL initiative.
Initially focused on establishing open-source standards for the electronic bill of lading (eBL), Open eBL aims to develop open-source supply chain solutions by working with a community of large supply chain players and stakeholders.
By Sean O’Malley
Projects like Open eBL allow companies to focus on competitive differentiation by building complementary, value-added services that leverage an open-source bill of lading standard.
The advantages of digitizing supply chains are undeniable: improved visibility, enhanced efficiency, reduced costs, and better decision-making. Despite these benefits, the adoption of digital solutions has been slower than anticipated. The root of this issue lies in the immense complexity and proprietary nature of these global networks. However, open-source software that is modular offers a promising solution by empowering companies to build upon a shared digital foundation.
Obstacles to Digitization: The Complexity Factor
Transforming complex supply chains is challenging due to several obstacles:
- Legacy Systems: Many existing supply chains rely on outdated, fragmented systems that do not easily integrate with modern solutions.
- Lack of Global Standards: The absence of universally accepted data standards creates communication difficulties between different systems.
- Cost and Expertise: Implementing and managing comprehensive digital supply chain solutions requires significant investment and technical expertise.
- Trust and Collaboration: Building trust between supply chain partners is often crucial for data sharing and successful collaboration, yet it can be a slow process.
The Way Forward: Open-Source Modularity
Open-source modularity provides a powerful framework for addressing these challenges:
- Building Blocks, Not Monoliths: Instead of imposing “one-size-fits-all” solutions, open-source software allows companies to select and combine modular components that address specific needs (e.g., eBLs, tracking, inventory management, customs).
- Shared Foundation: Open standards and protocols promoted by open-source projects create a common language, enabling seamless integration and data exchange between different solutions.
- Collective Innovation: A large community of developers contributes to open-source projects, driving innovation, security improvements, and rapid problem-solving.
- Lowering Barriers: Open-source reduces the cost of entry, especially for smaller businesses, who can leverage pre-built components instead of starting from scratch.
- Focus on Differentiation: Build proprietary solutions atop open-source modules.
The beauty of open source is that it encourages businesses to focus on competitive differentiation. By utilizing proven open-source modules, companies can:
- Develop Unique Solutions: Innovate by building proprietary software that tackles their specific supply chain challenges, adding value to their core offerings.
- Accelerate Time-to-Market: Focus development efforts on unique features instead of reinventing basic infrastructure.
- Create a Thriving Ecosystem: A diverse ecosystem of proprietary solutions around a common core benefits all stakeholders.
The Bill of Lading: A Prime Starting Point
The electronic bill of lading (eBL) is a perfect illustration of this model. Projects like Open eBL are establishing the fundamental framework for creating and managing eBLs. This open-source foundation paves the way for a wide range of companies to build complementary, value-added services that leverage the bill of lading (e.g., customs, financing, payments), accelerating the shift away from paper-based processes. The following image demonstrates the power of Open eBL’s solution across every part of the supply chain.
Open eBL’s Modular Architecture Allows Proprietary Solutions atop Open Source
As Open eBL is a data storage and transmission protocol it leaves the business logic around specific applications to the application layer. In short, companies (like trade finance, banks) using Open eBL will continue to be able to leverage their same tools (i.e., Bolero) with the benefit of a common data storage and data transmission system across platforms.
As the network of Open eBL expands, there is the added benefit of a marketplace of standard Apps and integrations that can allow all stakeholders to further benefit from the growing ecosystem. The systemic expansion of the Open eBL network and community will create the opportunity for participants to collaboratively explore and experiment with solutions to wider digital trade document concerns including solving for other related trade documents critical to trade.
Open-source modularity will play a critical role in accelerating supply chain digitalization. It embodies a philosophy of collaboration, flexibility, and focused innovation. By embracing this approach, businesses of all sizes can unlock the full potential of digital transformation, creating more resilient, efficient, and sustainable supply chains while also developing their own differentiating solutions. For the companies that embrace this trend, they will likely leap ahead of the competition.
Shawn O’Malley is co-founder of BlueX Trade, a founding member of Open eBL. This blog originally appeared on his LinkedIn page.
By Sean O’Malley
Open-source software can deliver substantial economic value in supply chains
For years, the global supply chain stakeholders have been talking about a digital transformation. However, the progress in this revolution has been hindered by various factors, one of the most significant being proprietary software platforms. To propel the industry forward, a new approach is necessary. Open-source, standards-based models hold enormous promise in resolving the issues exacerbated by proprietary platforms.
The Problem – Proprietary Software That Controls Customer Data
Current electronic document solutions are closed and proprietary solutions that silo customers’ data under a for-profit commercial entity. This approach has several drawbacks. Firstly, it makes it difficult for businesses to share data with each other, as all parties need to be on the same platform, leading to inefficiencies and errors. Secondly, proprietary networks being profit-oriented, can be costly, straining budgets. Thirdly, closed networks aim to lock customers in and are subject to the whims of the commercial operator which can alter terms of service or even cease operations abruptly.
Despite the drawbacks of closed network solutions, they dominate supply chains (TMS solutions are a perfect example). However, recent attempts at closed platforms have been rejected by stakeholders where data privacy and data sharing are significant concerns. One notable example is TradeLens, a blockchain-based electronic document solution developed by IBM and Maersk. Launched in 2018 with much fanfare, TradeLens has since closed due to lack of traction with its closed nature being a major reason. Businesses were reluctant to share their data with a for-profit entity, and concerns regarding high costs and ‘lock-in’ stymied adoption.
The Solution – Open Source, Standards-based Software that Gives Control of Customer Data to the Customer
To overcome the limitations of proprietary closed networks, an open-source, standards-based electronic document solution is needed. Such a solution should be available to all, respecting their privacy and security concerns. Adopting a standards-based approach would facilitate consistent platform utilization across businesses and would gain the support of business leaders, engineers, and developers by simplifying data sharing and collaboration, enabling greater interoperability and efficiency. Ultimately, establishing the open-source solution organized under a non-profit aimed at advancing global business interests should further foster industry trust.
The Benefits of an Open-Source Software Platform
Cost-effectiveness: Open-source software is typically free to download, use, and distribute. This can significantly reduce the total cost of ownership, particularly for startups and businesses seeking to minimize software expenses.
Flexibility and Customization: Open source offers the flexibility to modify and customize the software according to specific needs, enabling users to add features, fix bugs, or tailor the software to suit their requirements, often impossible with proprietary software.
Transparency: The availability of source code allows users to review it, identify security flaws, understand how the software works, and contribute to improvements.
Community Support: Active communities of developers and users often contribute to the open-source code, documentation, and support, offering valuable resources for solving problems and learning best practices.
Security: The “many eyes” theory suggests that open source can be more secure than proprietary software as the availability of source code for public review enables faster identification and resolution of vulnerabilities.
Interoperability and Standards Compliance: Open-source projects typically adhere to open standards, making it easier to integrate with other systems and migrate between different technologies without vendor lock-in.
Innovation and Speed of Development: Open-source projects benefit from contributions from a global community of developers, accelerating innovation and the introduction of new features.
Open eBL: An Industry Blueprint for Open Source-Source Software Models
Open eBL, a non-profit under the Center for Global Enterprise (CGE) and the Digital Supply Chain Institute (DSCI) focuses on open-sourcing the electronic bill of lading (eBL) within supply chains. The entity recently launched the Open eBL initiative to establish an open-source industry solution planned for trial within its member community consisting of large supply chain players and stakeholders. This group is composed of supply chain veterans and developers intent on helping the industry deliver on the promise of digitalization. It’s an ambitious project that has the potential to be a game-changer in one of the most impactful areas – Bills of Lading.
Conclusion
Open-source solutions will play a crucial role in future supply chain digitization. Open-source solutions are more efficient, effective, and affordable compared to closed networks. They are also more secure and less susceptible to fraud. As businesses increasingly adopt open-source electronic document solutions, the global supply chain will become more efficient, agile, and resilient.
Shawn O’Malley is co-founder of BlueX Trade, a founding member of Open eBL. This blog originally appeared on his LinkedIn page.
The Open eBL initiative embraces lessons learned from TradeLens to overcome industry challenges
“The aim of the new company will be to offer a jointly developed global trade digitization platform built on open standards and designed for use by the entire global shipping ecosystem.” — PR Newswire announcing Maersk and IBM to Form Joint Venture Applying Blockchain to Improve Global Trade and Digitize Supply Chains, 2018
“Digitalizing the bill of lading—which accounts for 10 to 30 percent of trade documentation costs—could unlock more than $15.5 billion in direct benefit to the shipping ecosystem and up to $40 billion in increased trade.” — McKinsey & Company, 2020
“The platform called TradeLens will be phased out by the end of March next year, Maersk said. ‘While we successfully developed a viable platform, the need for full global industry collaboration has not been achieved, the company said in a statement.’” — Reuters, 2022
“Success, however, may come with smaller projects: ones involving fewer participants, with clear returns on investment and that don’t try to transform an entire sector all at once, experts say.” — The Wall Street Journal, 2022, on the demise of TradeLens
The global trade ecosystem, despite its vital role in fueling the world economy, remains stuck in a paper jam, plagued by antiquated and cumbersome paper-based processes and a lack of transparency. This inefficiency translates to billions of dollars wasted and countless hours lost, hindering international commerce and frustrating stakeholders across the supply chain. But there is hope that global trade can progress beyond physical documents with an initiative launched by The Center for Global Enterprise’s Digital Supply Chain Institute (DSCI) and leading members of the shipping and logistics community.
Open eBL is designed to overcome the obstacles that befell other digital efforts by introducing standards-based, open-source electronic bill of lading (eBL) solutions. Unlike its predecessor, TradeLens, a joint venture formed by Maersk and IBM, Open eBL embraces open-source standards and a non-profit structure, effectively addressing concerns about vendor lock-in and data privacy that stymied earlier efforts. This commitment to transparency fosters trust and collaboration, paving the way for a truly inclusive platform benefiting the entire supply chain community.
The advantages of electronic bills of lading (eBLs) are undeniably significant. They expedite processing, slashing customs clearance times and enhancing cargo visibility. Additionally, eBLs eliminate the risks associated with physical documents, minimizing the chances of loss, damage, and fraudulent activity. The environmental benefits are equally compelling, as the shift away from paper reduces resource consumption and carbon footprint, aligning trade practices with global sustainability goals. McKinsey & Company estimates that eliminating paper processes can bring a 90% reduction in document processing costs.
Open eBL’s true strength lies in its open-source philosophy. This approach fosters innovation and agility, allowing the platform to adapt to ever-evolving business needs and industry trends. Organizations gain greater flexibility to customize workflows and optimize processes, unshackled from the limitations of proprietary solutions. Open-source development also promotes cost-effectiveness, lowering the total cost of ownership and democratizing access to advanced trade solutions.
The lessons learned from past endeavors guide Open eBL’s strategic approach. Its collaborative spirit ensures that the platform serves the needs of the entire community, not just select players. By focusing on demonstrably valuable use cases, Open eBL aims to create compelling value propositions that resonate with supply chain operators, driving organic adoption and user buy-in.
Open eBL understands the challenges of transitioning from paper-based systems. Flexible tiered subscription plans or usage-based pricing and user-friendly interfaces will ease the adoption process, while partnerships with technology providers will ensure robust integration with existing infrastructure.
Building a strong ecosystem around the platform is another key strategy. Attracting early adopters and influencers, encouraging third-party development, and fostering collaboration create a powerful network effect, propelling Open eBL forward.
Open eBL’s success hinges on its ability to adapt and evolve. By remaining agile and responsive to market dynamics and user feedback, the platform can continuously improve and maintain its relevance. Embracing data insights and user feedback ensures that Open eBL remains at the forefront of trade innovation, driving efficiency, transparency, and sustainability across the global trade landscape.
The time has come to unjam the paper jam and usher in a new era of open, collaborative, and streamlined global trade.
