The OEL Foundation is a Hong Kong-based non-profit organization that aims to remove the dependency on paper records in the supply chain by using the blockchain in its open source enterprise architecture.
The organization will utilize the properties of the blockchain to help make disputes a thing of the past by confirming records on the blockchain the moment it is verified e.g after a satisfied business receiving their goods on time.
The OEL Foundation’s solutions are also designed in a such a way that benefits the transport industry as a whole instead of only benefiting one or two major companies.
To achieve its vision, the company will work on three core goals:
- Build the OEL Enterprise Architecture
- Launch the OPN token
- Host the OEL Foundation Alliance
These goals will form an ecosystem supporting decentralized applications (dApps) that allows companies to drastically improve their supply chain with the aid of accurate and indisputable shipment data hence cutting down on costs and inefficiencies.
We recently sat down with OEL Foundation board member Max Ward to have a chat with him about the project as well as learning more about his thoughts and insights.
Hello, Max! Thanks for joining us today. Can you tell us more about the OEL Foundation?
Simply put, the OEL Foundation is a way for the logistics community to make the promise of blockchain real for our industry, and start exploring applications. It acts as a platform to consolidate the resources required to develop a true open source enterprise architecture and make it available to the community of Alliance members.
Tell us about how you came up with the idea of The OEL Foundation.
Did you personally face a problem within the industry or do you think there is a gap in the market for The OEL Foundation to fill?
OpenPort – of which I am CEO – began developing blockchain logistics solutions last year on Ethereum, and we were able to successfully roll-out our blockchain-enabled Proof of Delivery product to existing clients earlier this year. Those early pilots have been very successful and there is a lot of enthusiasm among our clients for these products, but the unit economics don’t work out at scale. The Ethereum network is simply too costly, and the transaction speeds too slow, to operate the specific types of applications that the supply chain industry requires.
So we had a working proof of concept and a proven commercial application, but we needed a blockchain architecture specifically adapted for our industry. We knew we weren’t the only ones facing this issue, and that developing an open-source platform that could be become a global standard, rather than a siloed project, would be much more powerful. So the OEL Foundation was born, and already has several members from the supply chain community that share the vision.
What do you think is the biggest problem the OEL Foundation will solve and why is it important to solve?
The supply chain is very fragmented. A single source of trusted data – a decentralized ledger – will be huge for the industry. There are so many benefits, from efficiency gains, lower costs, and faster payments, that can be created if there is a shared, trusted data source.
Let’s talk about the potential of the blockchain in the logistics and supply chain industry. What makes the blockchain better than any other technologies out there in terms of overcoming the problems in these industries?
Are the properties of the blockchain really that efficient in combating these inefficiencies in comparison to other technologies?
It’d be great if you could also expand on some of the weaknesses of the blockchain in this industry as well as the steps taken by the organization to overcome these weaknesses.
I think it’s less about better and worse, and more to do with suitability for the task at hand. Supply chains are about the secure transfer of goods and payments, and blockchain is about the secure transfer of data or digital assets. They are deeply complementary.
Blockchain alone is not enough to revolutionize the whole industry as much as many would like to believe. However, mated to other technologies (IoT, Cloud, SaaS), it has the ability to fully revamp the verification processes that have been, to put it bluntly, quite inefficient for many years now. It provides an automated solution to many problems that have been plaguing the industry. If all participants in the supply chain can agree, in real-time, on an irrefutable truth such as “this shipment was delivered by X person, at this time and place, and in this condition”, that has massive implications for the flow of capital through the supply chain because verification is now instant and undeniable.
You can replicate the speed with other technologies, but not the irrefutability, and that drives cash flow.
The whitepaper mentions that overcoming the paper-based system in use today is the main goal of the OEL Foundation. How confident are you in this and how long do you expect to achieve your targets for the OEL Foundation?
Are there concerns about adoption considering the fact that most businesses are used to the paper-based model and the blockchain is still foreign to many people?
We’ve seen from our work at OpenPort that there is plenty of appetite in the industry to embrace digital solutions. The issue is that current digital solutions cannot entirely replace the paper trail due to the need to be compliant with different data standards and regulations, where paper records remain the only common standard.
Those paper records exist to do one thing: to verify that a transaction happened. Now, for the first time, we have the ability to verify transactions in a paperless and irrefutable way. Once a scalable and robust system is in place, I think adoption will happen on an accelerated curve. Certainly, that will take a few years, however.
The idea of rewarding OPN tokens to participants who share their data is an interesting one. What is the reasoning behind incentivizing data sharing in the OEL Foundation?
What will the data be used for in the ecosystem and how does it benefit the participants of the ecosystem?
Blockchain protocols and applications are useless without reliable source data being fed directly from the supply chain by the actors within. Truck drivers, for instance, are not typically incentivized to share their GPS data, or to proactively record an issue with their shipment.
Micro-incentives are feasible with a token, and can be used to encourage the sharing of the necessary data, and also to reward participants who might be considered to be ‘bottom of the chain’ for the valuable data they provide. Truck drivers, warehouse operators and many more individuals in the supply chain are essential resources of critical data, and now they can share that with us via their smartphones, and be rewarded for it.
The cost to the shipper is a small fraction of the goods value, but it is used to create security and trust.
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