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Blockchain and its Impact on Business Operations

blockchain

Blockchain and its Impact on Business Operations

When one thinks of blockchain, one thinks of cryptocurrency, but even though much of this article is dedicated to the use of cryptocurrency, the truth is that more can be done with blockchain technology. This is because blockchain technology allows people from all over the world to create a transaction on a computer system. This transaction is secure (cannot be tampered with), it is dated, and it can be signed in many secure ways.

In short, if you wished, you could conduct a large digital Mexican wave around the world, and not only would the entire process be secure and efficient, it would also be traceable and wouldn’t rely on a central authority or third party to action.

The Omise Story

Omise is a company the operates a payment gateway for Thailand, Japan and Singapore. Rather than moving money from one country to another, convert it and so forth, they created their own coin OMISEGO, which they can quickly transfer anywhere. It can be deposited with an Omise office in another country. To help keep the price of their coin from fluctuating too much, they only conduct inter-office transfers as a way of getting money from one country to another. This is far faster and cheaper than using an Automated Clearing House, and far cheaper than using wire transfers.

But, what about the problem that each transaction creates a little more OMISGO coin? The answer for them was simple. They released the coin onto the general market, which gave it a market price, which therefore solved the “bit-extra” problem and introduced the problem that transactions now had to happen quickly for fear of sharp rises and falls in the coin’s price, which pushed up the potential transaction fee. However, the increase was marginal, and it was still cheaper than wire transfer and is still almost as fast.

Can the Omise Story Transfer Over?

Well, it certainly transfers to other payment gateways, and even modern US banks have stated their intentions to create their own cryptocurrency so they may move money within their own branches more easily. They would maintain full control of the currency, including its mining, which means that theft is more difficult and price fluctuations are not a problem.

Still, if it is to be applied to business operations, it needs to somehow improve efficiency, otherwise it is just another path to the same objective. If your business has an international element, then there is a chance that blockchain technology, specifically cryptocurrency, will help you. Otherwise, cryptocurrency needs to evolve and be retooled before it can do things like pay separate departments on demand more efficiently than the methods you are using right now.

What About Automated Clearing Houses?

ACH is hardly in its death throes since despite online transfers being as common as salt in the ocean, companies are still wrapping themselves in the warm blanket that is ACH, so what are their arguments against blockchain?

Argument – Costs pretty-much the same for each transaction.

Counter – Yes, on a per-transaction basis, but you receive your money up to 24 hours quicker with cryptocurrency.

Argument – We conduct thousands of transactions per day that only a clearing house could handle.

Counter – Dealing with fiat money yes, but transacting thousands of blockchain transactions per day can be done in house with almost no security risks.

The truth is that there are many ways that blockchain technology can replace Automated Clearing Houses, especially in terms of speed, security and traceability. But, ACH is trusted, tried and proven, whereas blockchain is still too new for most companies to trust.

The Demand for More Transparency

Let’s say there is a new law where every company had to track every supplier from its source. Every screw and every wire from every phone ever made, and so forth. A similar thing already happens with products labeled “Organic” in stores. Such a law would cost most primary and secondary industries a fortune, but the costs could be reduced in such an event with blockchain.

They could use blockchain to track transactions from start to finish. That way, every product being sold could have its own history that is stored in digital form. If required, an authority figure could back track every single element within a product, from where the coffee beans were bought to where the glue was manufactured for the label. Plus, the system could be set up so that each supplier need not consult a central authority to execute transactions, and each transaction would be protected with encrypted data. It would be difficult for a single entity to disrupt the history of transactions, which on its own will make the transactions a lot more secure.

Supply Chain Tracking

Using the same method as above, a company could track its supply chain, which is more important in the food industry than anywhere else. Walmart is unable to trust the record-keeping of companies in China, so it is using blockchain to track the supply of pork. Record-keeping transactions are marked at intervals so that Wal-Mart can see if a piece of pork sat in a warehouse for six months before being processed. The record-keeping process happens with regards to where the meat comes from, is slaughtered, processed, and stored, and this information is then used by the company in the US to create its sell-by-date.

Conclusion – A Tool is Only as Good as Its Use

A paintbrush in the hands of a novice is no more useful than a shotgun in the hands of a kangaroo. The intrinsic benefit of blockchain, as described in the introduction, is very powerful, but businesses are having a hard time integrating it into their companies. There are plenty who claim they have tried, such as Tyson, Nestle, Unilever and Dole, but they are more like nervous children dipping their toes in the shallow end of the pool.

Blockchain will benefit those who wish to transact payments domestically and overseas, and those who wish to track a process, a supply chain, and/or who just wish to be more transparent about their business operations. However, it is only the really competitive industries like the financial and food industries that are worth the added benefits of blockchain for the slight edge that blockchain technology gives them over their competitors.

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Ava Williams is a Resumeble editor and a career expert from Vancouver. She finds her inspiration in blogging and career courses. Meet her on Twitter and LinkedIn

KC SmartPort

KC SmartPort Shares Leading Differentiators for its Ecommerce Surge

Known as the “hub for food logistics” in the Midwest, the Kansas City region boasts a unique approach to economic development. KC SmartPort – a nonprofit economic development organization – focuses on attracting freight-based businesses to the region through its streamlined efforts in workforce development, real estate opportunities, and thriving logistics-focused operations. The Kansas City region recently reported substantial growth in ecommerce and distribution companies establishing operations in the area with these companies planning to invest $1.3 billion and aiming for the creation of seven thousand jobs. KC SmartPort president Chris Gutierrez and his team attended the Dallas RILA/LINK 2020 conference as exhibitors and shared the latest and greatest developments emerging in the Kansas City region.

“With online sales increasing every year, companies have really been focusing on their omnichannel strategy. The Kansas City region is centrally located and offers a robust transportation infrastructure from road, air, rail and water, ultimately supporting the ability for businesses to reach 88-90 percent of the population in about two days. This really lends itself as a successful strategy around ecommerce,” said Chris Gutierrez, president of KC SmartPort.

“Since 2012, we’ve had over 40 million square feet of industrial buildings built primarily on spec because the ecommerce companies will go through a peak season and if they hit their numbers, they need to be in the next building within a certain time frame to hit next year’s peak. If they don’t have a building to move into, then the opportunity is lost. That’s something our region has been very successful in supporting,” he added.

Among big-name ecommerce and distribution companies that made the move to the Kansas City region in 2019 include Wal-Mart, Hostess, Amazon, CVS Pharmacy, Overstock.com, Tool Source Warehouse, and more. Part of this surge in ecommerce, automotive, and retailers is dually supported by the region’s balancing of business and workforce development efforts.

“What we are doing locally is a three-step process. First, we create an awareness buzz at the elementary and high schools and community colleges around supply chain jobs that serve as career opportunities with great benefits and growth options rather than just filling a position. The second part of local efforts involves public transportation, rideshare, and other mobility solutions to support getting the employee to the job site.”

“The third leg of this approach is encouraging employers to critically think about workplace culture. We take it a step further and educate employers of the importance of the first week during onboarding, eliminating the desire to go to the next company offering a quarter more in pay but offering a potentially more satisfying culture. If the company offers a healthy culture, it makes a huge difference, specifically with non-tangible things that add value to the employee experience.”

These multi-layered efforts not only support the existing workforce and growth in economic development but serve as proactive solutions for future workforce generations in Kansas City. More than 2.3 million people in the region rely on the unique economic development team covering both Kansas and Missouri. The Kansas City Area Transportation Authority (KCATA) serves as a bi-state authority covering a broader regional area while addressing large-scale concerns. This partnership serves as a major differentiator in the region for businesses seeking a myriad of options in amenities, incentives, and transportation.

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Chris Gutierrez is the President of KC SmartPort, Inc., a KCADC affiliate organization focused on attracting freight based economic development to the greater Kansas City region and providing thought leadership to the supply chain industry in Kansas City. Chris has been active in economic development and logistics for over 30 years. He joined KC SmartPort in 2003.

pencils

Pencils: Still Teaching Us Lessons About Trade

Pining for Simpler Times

Pencils remind us of simpler times, when writing was an adventure and erasing life’s mistakes was easy.

In the classic 1958 essay I, Pencil, Leonard Read opened a window for readers into the surprisingly complex global supply chain of something everyone holds in their hand, the pencil. Read helps us realize that countless individuals are involved in logging, mining, processing, transporting, and manufacturing the California cedar, Sri Lankan graphite, Mississippi clay, and foreign and domestic copper, zinc, wax, and coatings combined to produce an elegantly simple pencil.

To Read, a pencil is a miracle. No single individual could make one and no “master mind” directs its production. Pencils are made nonetheless because of the “invisible hand” of free markets. In the decades since Read’s essay, commentators have observed that pencil making is not entirely the result of free-market activity. Governments, too, support pencil production by managing forests, educating workers, and building ports and roads.

The question of where and how pencils are made has resurfaced in the current debate over American trade policy. In a recent campaign video by Senator Elizabeth Warren, she criticizes “giant ‘American’ companies” and their U.S. and foreign shareholders for “hollowing out” American communities. Warren offers as a proof point that “the maker of the famous no. 2 pencil” now largely imports pencils made in China and Mexico.

With pencils in the spotlight, we revisit what can they teach us about the complexity and nuances of modern American trade.

Is Trade Erasing U.S. Manufacturing?

American pencil production has plummeted over the last 25 years. According to the U.S. International Trade Commission (USITC), the number of U.S. pencil manufacturers fell from 11 in 1993 to four in 2016.

Dixon Ticonderoga — maker of the iconic green-banded yellow pencil — shuttered plants in Ohio and Missouri in the early 2000s, shedding hundreds of jobs. With the end of production by Sanford L.P. in 2014, U.S. production and capacity plunged further — by more than half. During this period, the domestic share of America’s $557 million pencil market declined markedly, while imports from China, Brazil, Mexico, and elsewhere more than quadrupled, growing from 6.7 million gross in 1993 to 28.8 million gross in 2016. (A gross is 144 pencils.)

Trade Vistas- Number of US pencil manufacturers

What’s at the Core?

There has been a significant “hollowing out” of American pencil manufacturing. But is the pencil industry representative of U.S. manufacturing and trade generally? The data suggest it’s not.

America has lost five million manufacturing jobs since the mid-1980s. During this period, however, U.S. manufacturing output has doubled. America is making more stuff with fewer workers largely because U.S. factories are more efficient. Studies show that the loss of American manufacturing jobs is due primarily to improved technology, not trade. Economists at Ball State estimate that, overall, 87 percent of U.S. manufacturing job losses between 2000 and 2010 were due to automation, while 13 percent resulted from trade. (Automation was by far the predominant cause of job loss for 15 of the 18 manufacturing sectors studied.)

There are, however, certain largely lower-tech U.S. manufacturing sectors where trade has had a much greater impact. Foremost among these are furniture and apparel (Senator Warren’s video also highlights foreign production of Levi’s jeans) where economists estimate that trade accounted for some 40 percent of job losses. Pencil manufacturing is an example of a “mature” industry where there’s little room for manufacturing innovation but space for makers of high quality products for niche markets. Indeed, for American specialty manufacturers like New Jersey-based General Pencil, the process and equipment used to make pencils has hardly changed from over a century ago.

Can Protection Sharpen U.S. Production?

Policymakers often try to revive trade-impacted low-tech sectors through trade protection. The pencil industry’s experience highlights the difficulties of this approach.

In 1994, the United States imposed antidumping duties on pencils from China, after finding that sales of Chinese imports at “less than fair value” were injuring U.S. manufacturers. Imports of pencils from China fell sharply in 1995. By 1998, however, the volume of “subject imports” from China (six million gross) actually exceeded the volume during the original investigation.

The antidumping duty order was continued in 2000, 2005, 2011, and 2016 after the USITC found that revoking the order would cause further injury to U.S. pencil makers. However, despite duties as high as 114.90 percent imposed on “unfair” imports, subject imports continued to grow to 9.2 million gross in 2004 and 10.5 million gross in 2009, and were 8.5 million gross in 2016.

The pencil industry isn’t the only manufacturing sector where efforts at protection have seemingly failed. Over 97 percent of clothing and footwear sold in America is made overseas, despite the fact that America has, for decades, imposed tariffs on these imports that often exceed 30 percent.

Back to School – With Trade, the Consumer Wins

Is “Big Pencil” to blame for the loss in U.S. manufacturing jobs? Or, are big retailers who seek lower-cost pencils from overseas? While Dixon Ticonderoga isn’t a large company, it’s now owned by a larger Italian firm and imports most of its pencils. And, according to the USITC, there has been increasing consolidation among U.S. wholesale purchasers of pencils. Office Depot and Office Max have merged and big box stores like Target and Walmart are buying larger volumes and seeking low prices.

These retailers are responding to demand for lower-cost imported pencils — in no small part from America’s parents.

Although there has been a resurgence in demand for high-quality, specialty pencils like the Palomino Blackwing and coloring pencils for stressed-out Boomers, most “commodity” pencils are sold during the “back to school” season. In recent years, schools are increasingly requiring parents to buy student supplies like pencils.

School Supplies Costs to US Parents

In 2018, American parents paid an estimated $941 for school supplies and fees for each middle school child. These costs can be a significant burden, especially for low-income parents. Imported pencils — and binders and backpacks — can help moderate these costs. Studies show that middle-income, and especially lower-income Americans, gain significant buying power, stretching their dollars further, from imports.

Pop Quiz

The pencil has a storied history. According to pencils.com, Ancient Roman scribes introduced the use of thin metal rods as a stylus. In the 1800s, the best graphite was sourced from China. Although the first mass-produced pencils were unpainted to show off high-quality wood casings, pencil makers later painted them yellow, a regal color in China, to demonstrate the quality of the graphite within.

The simple pencil continues to both transcribe and itself illustrate complex stories, including the growth and effects of global trade. It can also evoke fond memories like the time mine saved me on a pop history quiz in the 5th grade:

Question 3: Name three Colonial forts.

My answer: Fort Pitt, Fort William Henry, and . . . uh . . .oh yeah! Fort (Dixon) Ticonderoga!

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Ed Gerwin

Ed Gerwin is a lawyer, trade consultant, and President of Trade Guru LLC.

This article originally appeared on TradeVistas.org. Republished with permission.

Walmart Supply Chain Reveals E-Commerce Provider of the Year

Pilot Freight Services was officially announced as Walmart Supply Chain’s selection for “E-Commerce Provider of the Year,” taking the spot for one of the six annual award categories for transportation providers.

 “2018 was a year of unprecedented change in the transportation industry. As our supply chain network has evolved with greater efficiency and new ways of working, so have many of our carrier partners’,” said Ken Braunbach, vice president of Inbound Transportation for Walmart. “The companies recognized have provided Walmart with innovative and improved service offerings that ultimately help us lower our cost to our customers and stay in stock, both on the shelf in our stores or online.”

The global transportation and logistics services provider achieved this status as a result of the company’s operational excellence across its extended network which includes Walmart e-commerce deliveries for all stations. Additionally, the company provided services that ultimately supported Walmart Supply Chain’s customer-focused service requirements.

“It is an honor to be recognized by Walmart as a provider that innovates, improves services and lowers costs to customers,” said Gordon Branov, chief executive officer of Pilot Freight Services. “Our dedicated employees continue to go above and beyond for our clients to create customized solutions and provide an outstanding customer experience while impacting the bottom line. That is exactly what Pilot strives for every day.”