ChainYard and IBM reduce new vendor risk & drastically cut onboarding from 60 to 3 days with Hyperledger Fabric

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Post points out that colleges solved a similar problem almost 50 years ago.

In the old days, students had to fill in a separate application for every college they were considering. Today they can use the online service Common Application to apply to their choice of 800+ colleges and universities with a single form.

That saves a lot of time, and makes a lot of sense. Today B2B procurement seems stuck where colleges were back in 1975.

Storr and Post and a few colleagues from IBM and Chainyard―a development partner in Research Triangle, NC―started talking about how to bring this corporate function into the 21st century. Everyone agreed it was high time for an update.

“There’s a clearly defined need: Every organization large and small deals with other organizations,” says Post, “and there’s a need for trust between buyers and sellers.”

Since blockchain is explicitly designed to generate trust, this seemed like a natural use case.

Why can’t a seller create one verified company ID stored on a secure blockchain where any buyer can look up all the information they need? That would save both buyers and sellers days of effort and weeks of delays.

“And that would be much more efficient and more conducive to doing business,” says Post.

The Trust Your Supplier Network

Getting buy-in from a champion

To get a reality check, the group proposed the concept to IBM Chief Procurement Officer Bob Murphy. He oversees a vast operation that includes 18,500+ direct suppliers to IBM plus a BPO procurement network for many outside clients.

All told, his operation handles hundreds of billions of dollars in annual spending.

Although IBM is more nimble than many enterprises, it still takes 30 days to onboard a new supplier. The proposed blockchain system could reduce that to 3 or 4 days.

“Bob was excited to hear the concept, because he experiences all those pain points every day,” says Gary Storr, a VP with Chainyard at the time. “But he wanted a proof of concept to see how it might work.”

So at the start of 2018, five developers worked part-time to create a PoC. There was no debate about which framework to choose, since Chainyard and IBM are both deeply familiar with Hyperledger Fabric. In fact, Chainyard created some of the code that IBM donated to the Linux Foundation to seed Hyperledger.

Murphy liked what he saw in the PoC and gave the system his blessing. He was an effective champion, highly placed within IBM and in touch with the entire procurement space. And he was all-in on the new network.

“Trust Your Supplier is a cross-industry blockchain platform that is compellingly different from any other platform in existence today,” he says. “This platform will make life simpler for both suppliers and buyers, and create massive savings for chief procurement officers.”

Building a nimble new business

Despite the exciting potential of the new concept, IBM had its hands full running several other blockchain networks such as Food Trust, TradeLens, and World Wire. In the short term, the company couldn’t start another.

So the team brainstormed a different approach.

What if they combined the best of an agile startup with the track record of an established enterprise? What if they blended Chainyard’s expertise in blockchain development with IBM’s global reach and client list?

A small team from each company joined forces to start a new business with a big To Do list. That list included building an application, creating a network, pulling together a consortium of major enterprises, and finding the talent to administer, support, and grow the network.

And they had to do it all quickly at minimal cost.

The new business was christened Trust Your Supplier, with Chainyard’s Storr and IBM’s Post to oversee it.

One challenging part of the system was designing the elements of the corporate digital identity. There is no existing industry standard the team could simply adopt.

“That’s the secret sauce!” says Storr. “There’s nothing else like this in the marketplace. No one captures supplier firmographic information like we do. We don’t do any web-scraping to aggregate data, we get that from the suppliers directly, so they own their own profile.”

And all this is built on the blockchain, which provides immutable and highly secure records.

“We’ve only been working on this for about 18 months, and we’ve made more progress in that time than any other network I can think of,” says Post. “That’s because we’ve paired the benefits of a small startup with the advantages of a big brand. The winning model for a blockchain network is small and nimble paired with large and trusted.”

Assembling a far-reaching consortium

The network needed to attract a good number of big companies with many thousands of suppliers each. So Storr and Post began to approach major enterprises with a global footprint.

Everyone acknowledged the problem. No one said it was a crazy idea. And slowly a consortium took shape, with the most interested companies joining the founding board of governors.

“We’re up to around 25 corporate members, all of them multi-billion dollar, top of the foodchain enterprises,” says Post. “If you look at the blockchain network space, Trust Your Supplier is one of the biggest—if not the biggest—in terms of logos attached to the network.”

Among these well-known members are Anheuser-Busch InBev, Cisco, GSK, JetBlue, Lenovo, Nokia, UPS, and Vodafone. These members cover many major industries including aerospace, consumer packaged goods, electronics, logistics, pharma, tech, and telecom.

All told, the members’ suppliers number in the hundreds of thousands. And they’re all committed to modernizing their procurement with the new system.

Trust Your Supplier creates a unique “digital passport” for each supplier’s identity on the Hyperledger Fabric blockchain. This ID can be shared with any permissioned buyer on the network to save time validating and onboarding a new supplier.

Several third-party verifiers are on the network, including Dun & Bradstreet for business data, EcoVadis for sustainability, and RapidRatings for financial risk. These third parties can provide further audit or verification services to create an even more comprehensive picture of any vendor.

Trust Your Supplier proposes a compelling value proposition: Buyers and sellers can save time and money and keep their supply chains humming by accessing a single repository with verified accurate data.

Rolling out the system with an eye to the future

Since Trust Your Supplier is for company identities, the system design is unique.

Each supplier record includes non-personally identifiable information (PII) about the company’s management, finances, and contacts, all encrypted with the keys stored off-chain. A unique decentralized identifier (DID) is assigned to each supplier. Verifiable credentials are stored on the chain, with pointers to actual records.

Of course, any PII is stored off-chain.

The system uses three channels from Hyperledger Fabric: one for supplier data, one for DID documents and verifiable credentials, and the third for an audit trail of interactions with external partners.

Built with Hyperledger Fabric v1.1, this design makes the system easier to use and simpler to maintain, while providing strong data security and privacy.

Standard blockchain metrics like transactions per second are not relevant.

“Speed’s not a key performance indicator for us,” says Storr. “This is not a transactional system where people are doing work on it all day long.”

A more meaningful metric is the total number of buyers and sellers on the blockchain. So far, many thousands of suppliers from IBM and other founding members have been invited to the network.

With testing complete and the system in full production with 10 nodes, the team expects to be busy from now on generating and loading IDs. But modernizing such a mission-critical function for so many members will take time and attention.

“This is not something you download from the app store and put on your phone,” Storr chuckles. “Large enterprises need integration. And we give them the white-glove treatment.”

For example, his team looks for any requirements beyond what the core application offers today and creates updates or notes on the system roadmap.

How big could the network get?

“We think every organization that buys services, and every organization that sells goods or services can use this tool,” says Storr. “We’re industry-agnostic. This is for big organizations, small organizations, any business anywhere in the world. We don’t have a lot of constraints on where this could play.”