Sid Siefken: 0:03

If I know that I'm supposed to get 33 bags of seed from the manufacturer and I count them when I got them on the farm, I as producer feel good. And I've reported that back everybody's happy. Check smart contract requirements 43 You know, check, it's covered. Everybody in supply chain sees that

Tom Raftery: 0:28

Good morning, good afternoon or good evening wherever you are in the world. This is the digital supply chain podcast, the number one podcast focusing on the digitalization of supply chain. And I'm your host, global vice president of SAP. Tom Raftery. Hi, everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today I have my special guests, Sid, Sid, Would you like to introduce yourself?

Sid Siefken: 0:53

Yeah, Tom. Thank you. Sid Siefken, I work for a company called Block apps. And we are specifically working on enterprise level blockchain solutions. When I work in this role, my focus is in the agricultural marketplace. So the applications of blockchain technology for ag enterprises,

Tom Raftery: 1:14

superb, and what kind of problems are you solving for people in the agricultural industry using your blockchain applications,

Sid Siefken: 1:24

we've got some very unique use cases that it really identified themselves. And mainly, if you think about the broad category of blockchain, it's around traceability, and traceability allows for, in this instance, the opportunity to see, you know, what seed genetics are planted, what geographical location are planted in, and ultimately, how those removed post harvest into grain terminals or processing as really the very beginning parts of the supply chain.

Tom Raftery: 1:59

Okay. blockchain has been in the news for a number of years now. And as a consequence of, you know, cryptocurrencies and Bitcoin in particular, it's gotten quite a bad name in terms of it being an energy hog, and in terms of it causing massive carbon emissions. So, I know, correct me if I'm wrong, but I'm guessing you're on a private enterprise blockchain, which consequently has a low carbon impact.

Sid Siefken: 2:32

Yeah, I'm Tom, thanks for that opportunity to clarify that. One of the things that is really unique about blockchain is that we've taken really what we consider the best of the Ethereum platform as the core source of blockchain, utilizing solidity for smart contracts, for example, but we've moved that into a private and permissioned network environment, it does a couple things for us. And especially from an enterprise perspective, we have no exposure to cryptocurrency or cryptocurrency risks. And we're not operating this on the wider massive public blockchain. So that we work with we consider point to point data movement, although we go multiple parties through a distribution of, of nodes that participate and combined to make up our network, you can almost think of it as your own private mini network of blockchain communication protocols that are only using whatever computing power that you need to conduct those transactions. And normally speaking, those are much lower than we think of when we look at the large public blockchains that are doing multiple multiple transactions continuously, for different purposes completely. So yes, private permissioned, lower energy consumption, typically working on really good cloud environments from Microsoft Azure, for example, or AWS, or Google Cloud platform where, you know, they're working very diligently to manage their footprint of energy resource consumption, while supporting a blockchain network like block apps.

Tom Raftery: 4:11

Okay, great. And who are typical customers for your apps? And what particular problems are you solving for them?

Sid Siefken: 4:19

Sure. One of the clients that we've done some really good work with some really good innovation work is bare crop science. And it's probably typical for us to work with some of the leading companies in an industry that understand they're making incremental improvements to an already robust supply chain. When we started with this project, they had very specific needs with unique products that they were selling into the marketplace. So if you think about it in categories, let's say we have a generic seed product, right? In other words, It may be technology that's been around for multiple years, right? It's still pretty good at what it does. It's generic, we sell it through normal distribution, it has a price point that meets a certain need, and people consume grow that and we're off to the races. When we start to develop the next level of genetics, specifically for purpose from either a million or a processing perspective, there needs to be a little higher level of visibility on that. And of course regulation to know where that seed and genetic is moving from, and we're going to, so again, think, okay, egg, a lot of commodity great, we understand that a weight of an hour stepping into high value unique products it may have and an enzyme may have a starch content slightly different, but is built for purpose of processing. So in that instance, they want to know, did this particular genetics make it through distribution from retail out to a grower, and can we confirm that grower has in fact received that specific genetics, most of this is already underpinned with a contract, where the grower is contracting, let's say 100 acres to grow of this product. And the blockchain allows for the verification the movement of data across multiple parties. So that let's say we're getting pre spring, we're in February, the growers receive the seed genetics, he interacts with the blockchain to say, Aha inventories. Here, I've got the units required. The bear up team is happy, we know what made it through the channel, we know what sitting at one location. So those are the more finer things that they're tracking, but really around specialty products that are that are more regulated that have a little bit more of a fit for purpose in their genetic sign.

Tom Raftery: 6:51

So, again, this is coming from naivety on my part, why are bear concerned that these particular seeds make it to the field or not is? Is there an issue with that? Do they go missing? Or what what's the problem,

Sid Siefken: 7:11

uh, two levels all addressed one at the high end, some of these products that they are marketing assertively are available and approved regulatory wise, in a particular geographic region. Okay, okay. Sit for North America not fit for export. But if they're utilizing a particular hybrid for ethanol production, white corn production, in tortilla chips, for example, that's going to be grown, consumed and processed in United States. And so they want to make sure they maintain control over that product from that area. The second point I'll answer is very much a practical distribution question. Now, you would think, with as good as we are, that we would not misplace inventory. But remember, we have a manufacturer that has a warehouse that we ship to a distribution that ships to a retailer that is then delivered to a farm, right, lots of opportunities for one or two units, perhaps to get shuffled to the wrong pallet. To fall off, it just there's just these moral complexities that happen when you have multiple parties in a supply chain touching the project product, especially physical product that we need to deliver. So we all sleep better at night to say, Okay, if I know that I'm supposed to get 33 bags of seed from the manufacturer, and I count them when I got them on farm, I as producer feel good, and have reported that back, everybody's happy check smart contract requirements 43. You know, check, it's covered. Everybody in supply chain sees that. What that allows for, Tom is that when we've worked these smart contracts, we can then identify and proactively flag any of these issues that may came up. So if I'm a grower, and I said, Oh, wait a minute, I was supposed to receive 33 units. I've actually did physical inventory count of 30. Now I can send exceptions like, right? And at that moment, when I interact with the blockchain, all the parties with visibility to that data, all of a sudden go, Oh, crap, we're going to move to right. And now we know we have an issue to resolve. And so we're resolving it almost real time because we're doing these checks along the way. And generically, that's just simply referred to as desktop audits that the process is moving correctly. When they look at the block apps application and all bars are green, everything's fine. We don't worry about that. Oh, wait a minute. Here's an exception area we better go dive into. So we're applying resources to those areas that need the attention first.

Tom Raftery: 9:47

Okay, and what advantage does blockchain give this system that a regular database wouldn't convey?

Sid Siefken: 9:56

Well, traditionally, the regular databases would be in place Again, for those commodity products that we've talked about, oftentimes, the communication between these multiple entities is largely handled around a traditional EDI solution, where a retailer may be saying I want to submit a purchase order to a seed manufacturer for X number of units, they would confirm receipt of order, be able to then create a bill of lading and an invoice. That's kind of the b2b business transactions that are typically taking place in these environments. What happens in and what the result was that we're trying to figure out is, once it gets from the warehouse to distribution to a retail point, the opportunity to lose visibility goes really high. And the ability for the manufacturer see to see what the actual delivery at the retailers two steps down is almost zero. Aha, enter the blockchain. When I've committed to inform the blockchain, I received inventory, that it's bi directional communication, and the seed manufacturer knows. And so it's in a way, it's creating an underlying tool that really aids in multiple party data sharing both directions around a particular product or an inventory product. And the blockchain can do that if you had to go and EDI from the manufacturer out to a retailer and for heaven's sakes, how are we going to get it at the farm? You know, they've got even QuickBooks running, for example, you just know no way to do that efficiently. But the blockchain with I've entered Yes, I've confirmed receipt of inventory check, right? Everybody knows exactly where we're at. And the blockchain can tie that multiple parts of data all the way through those participants on that supply chain. Okay,

Tom Raftery: 11:49

interesting. And you have more than one app, you have three if memory isn't failing me.

Sid Siefken: 11:56

So yes, initially, as we went to market, really December last year with a application called the trace harvest network, the trace harvest network is really the supply chain traceability functionality that allows for that multiple party distribution of both inventory as well as information surrounding that. So the trace harvest network is really the opportunity for block apps to show a very defined user interface that Mandel manages to track and trace and transparency very well. And so we've had the opportunity to then take that and apply it into some additional use cases that are very interesting as well. And so, so think of, you know, trace harvest as kind of the entry level user application fit for purpose. We then had the opportunity to expand into not let's say, the seed and crops area, but in the animal production. And that product that we've created with a with a partner is Genesis block chain for beef. And so the underpinnings of both the trace harvest network and Genesis block chain for beef remain consistent and constant through the block app strat or network. But the user interface, and the things that we are tracking are different. And so you need different methodologies, you have different assets, for example that we're tracking, in Genesis blockchain for beef, we happen to be starting at a newborn calf, when it is identified at birth.

Tom Raftery: 13:40

And what are you doing with this newborn calf?

Sid Siefken: 13:44

The first and probably most important thing that that happens when that when that calf is born, is they are an essay the rancher is is attaching an identifier tag to it. And we know in North America, those programs are voluntary. But if you and I are in the business of raising the best Angus beef in Nebraska, for example, we know about the genetic profile that we put together. And now we are seeing the results of that calf on on the ground. When we identify that there are very good technologies today that are enabling technologies. These smart tags have RFID capabilities and there's multiple companies that that offer those you know, data Mars is a worldwide company all Flex is a company of up and coming challengers like Ford supply, all doing radio identifiable tags in that tag. There is E ID information, as well as V ID. The E ID is electronic identifiable data, and the visual of course is exactly what it sees. I can look at the the calf I can see a number on that tag. What's important is when we've identified that calf, we Now understand information about it. We know the dam, we know the date of birth, we know the weight, we know a little bit about it from a phenotype perspective. And then we enter that into Genesis. So if I'm a cow calf rancher, I've got 100 cows, I'm going to have 100 Cows born. Actually, at the end of the day, we may have some some lesser number, you may have 97, live at weaning that we're taking to sell into that open market. And so when we take that, we now are saying to the next potential buyer, we have information of exactly what you're buying, you're not just buying a lot of 50, head of black calves, right? You're buying my genetic profile on oh, by the way, here's how I can prove it. Here's my data set. A Wait a minute, how do I know that that data set is that cast? Okay, we're going to go back and use our electronic wand, scan the animal, match the ID tag with the information on on the production, animal husbandry that went around that. And then we'd get super excited Tom, so you stop stopping when you need to but but that moves from the cow calf to the background or to the feed yards to the processors. And then ultimately, right when you and I go make a purchasing decision at retail on what type of products we're going to buy, we now have the ability to take information again, all the way back to that beginning animal at birth.

Tom Raftery: 16:19

Okay, so this is I'm guessing from what you're saying this is relatively new app. So it hasn't gotten that far yet. Because you've calves have only just been entered into the system in the last 612 months. They're not ready, they're nowhere near ready for slaughter yet, but three, four years time when they are full beef animals for slaughter than people in the shops will be able to whip out an app, scan some kind of maybe a QR code on the packaging, and see all the data back to the birth of that animal.

Sid Siefken: 16:51

Yeah, absolutely. That the exact concept underway here. One of the things that we know, especially in the blockchain world, right, not just block apps, not just you and I here today, you have to start, right. Like with any project, there has to be that beginning point. And what we know is that the more quality we can bring to that animal, the more opportunity there is for me to make more margin. Right. But we've talked to companies really big national companies that say I like the idea that you just said, Tom, but we don't know how to do it. Yep. And I say I understand, then the reason you don't know how to do it, is because you are a single participant in that value chain. Yep. And you can't do it on your own. Now you can want to write but you got to get these players to go through the the worthy challenge that's in front of us today is Genesis blockchain for beef, first set of cows moving it through that production cycle. And you're right, you're not going to be able to see a full view of data until we get that calf ready for slaughter. Right. And that, again, as you mentioned, could be 1618 months, maybe 24 months, depending upon the breed and the feeding conditions. Whereas consumer products, right, much different, right? Hey, wait, we're gonna turn these every 30 days through a typical distribution channel, right? That value is more condensed, and more real readily available to get some kind of that user feedback on a really quickly. But when we're dealing with the animals, it's a more complex environment. But the again, the basic underpinning a blockchain allows these multiple parties to participate, to add information about the care and handling of that animal all the way through the supply chain. The other thing, Tom, that you'll know is big industries that have been traditionally set up for extremely high efficiencies, right, I've got a plant that's going to operate 24/7, we're going to have a continuous flow, right? We're optimized down to the pennies on our production cost, right? Those are going to be some of the challenges to be addressed. Now, where we're seeing traction from a blockchain perspective, isn't the bit the largest of the companies, but it is some of these smaller companies, where you might even see the ownership of this packing plant is distributed to multiple ranch participants. Now, what are we doing, we're not going to be that bought commodity product, but we're going to brand our beef and move that into the marketplace and be able to do that. Likewise, you might be able to then create that export market based upon branding as opposed to just a simple USDA grade. So I'll pause there a little bit but we get excited about both trace harvest network Genesis blockchain for beef along the way.

Tom Raftery: 19:50

And is there a reason you chose beef as opposed to for example, lamb or pork given that I mean the Lammers slaughtered several months of age. So is pork, whereas beef is that one and a half to three years?

Sid Siefken: 20:07

Probably a couple of reasons that we'd start there on the beef side. Number one, the need has been identified and kind of accepted industry wide. Right? Everybody you talk to will shake your head, yes, this is something that we'd like to do, right? Why is that? It's because the fact we're going to slaughter an animal that's worth 1000 $1,200 dollars at a time of processing, right? Pork is going to be a little less, right? You go all the way back and you look at chickens, for example. Okay, the cost of the technology is not as easily dispersed over the actual amount of value that resides in the animal. So again, in some ways, it's not strategic, it's market poll market poll says we're going to invest money in this animal, and what the heck is four bucks on this animal that I'm going to get 1200 bucks at the end? Uh, wait a minute, if I do a few things, right, I might get 1300 bucks. And I put that 100 bucks in my pocket. Right? The other thing that I would say is, and I'll go to the extremes on that time, the poultry industry is extremely vertically integrated today. Okay. So if I'm a large processor, I probably have already contracted with growers, before the birds to deliver, they raise them, we process them, we package them, we ship them, we bring it out to retail. Right? And because that is so tightly controlled, right there, traditional databases are doing a pretty good job. And if we're vertically integrated, I trust them because I control them.

Tom Raftery: 21:43

Make sense? Yeah. And far this beef product, the Genesis beef product? Is it you know, the likes of the Cargills, etc? Who are the target customers?

Sid Siefken: 21:56

Our initial customers are the independent cow calf ranchers in the West. That's the initial target client. Okay, we know that we need critical mass of animals on a blockchain to be attractive to a Cargill, or National Beef, or JBS for example. Right? And again, they're going to ask the same question you did? Okay, all of these cattle that I'm processing every year, what percentage of them we're going to have this data associated with them? And the and the initial answer is a very small percentage, they're going to have some really good questions. Why would I participate? And the answer may be you were not ready yet. Right. But there's this other term in in this production, that rainbow, which is called program cattle, and program cattle are just kind of a term, that means we're going to treat animals completely different. And we're going to have segregation of these animals through their life cycle of growing, and we're going to produce, we're going to produce those animals to be processed, perhaps in a satellite facility, that set up to handle this more specific type of animal and be able to bring that to the consumer. Okay, so you're still going to have commodity products moving through there, because we got big world of feed. We may have this subsidiary or a satellite processing facility handling these program cattle. And right now there is documentation for program cattle, right? blockchain can just increase the efficiencies that would set data flows, and create that immutable record on which they have more confidence in those animals. When you have that, then we can scale up, right? Because what you want to be able to do is prove it out. Okay, for the 2022 calving season, you know, we're gonna put X number of cattle on the blockchain and away we go. Okay, now, that's going to be attractive to buyers, cool. 10 years from now, it could be like Europe, where every animal is identified. And they have not only a database, but it's shared, you know, amongst the processors as well. So in some ways North America is catching up to Europe. We think blockchain has a way in which we can reduce friction in that and scale it more quickly than left to their own device.

Tom Raftery: 24:17

Fair enough. And you have a third app as well, a carbon app.

Sid Siefken: 24:54

We do. We've been interested to really look at the whole topic of carbon carbon emissions, greenhouse gases. And again, I'll take you right back to where we started. Because we're focused on enterprise solutions on a private and permission network. We said okay, what is the next big topic that we can take a look at? One of the things that are even seen in beef production is the creation of greenhouse gases, for example. You know, and again, in ag, I can get about five minutes into an egg conversation. We're already talking about carbon and greenhouse emissions, right. They're very closely tied. I've got a counterpart in Houston, John Chappell, and he, he's working with the energy companies. And if you think about what they do, they again have multiple parties that participate in that supply chain. And they all have some type of an effect on on that carbon. They're either doing carbon remediation, or their carbon, you know, to the point where they're expending some carbon to get that part of the process done. So we've we've taken the trace carbon idea and say, Okay, we need to create a ledger that ties together the impact of emissions across multiple parties in our production supply chain. And when we have talked to some of the energy companies, one of the things that they've stated is, they have lots of divisions with lots of spreadsheets, that are capturing the work they're doing with the process that they control. So let's say I'm an extraction part of the organization. And I'm, I'm, I'm out to drill, I'm out to do the extraction piece. I've got pretty good database records over here. Excellent. Wait a minute, we're now off to a midstream carrier, right. We've got a pipeline involved, we're trying to get it from, in this case, Colorado down to Oklahoma for processing, for example, refinery, right, you have a midstream person there, well, let's say their missions are really low, right, and they've got a whole documented set of spreadsheets to it. Well, you go through that. So you might have some pluses, you might have some minuses, you got to refine where you go from refinery to distribution, distribution to retail. What happens in these large organizations is somebody says, We need to reduce our emissions work. And I find that data, and everybody kind of raises their hand, I got a piece, I got a piece, I got a little bit and they go, oh my goodness, how we're gonna make heads or tails of this? And it's, it's a fair question. The very nature of blockchain being a ledger, at its core, allows for us to create hooks or participants on the blockchain to say, okay, extraction, we're going to take some of your information here, this is the carbon impact, we want midstream processors, distribution, retail, and then tie that reporting together so that we get a scorecard at the end. And we got to measure it. And you got to have some mechanism by which to do so. So in some ways, think of every one of these participants having their own database with the information, but no real way to bring that all together for a sum total of you know, this barrel of oil, for example. And that's really the things that these industries are trying to address. And we're trying to help them out and say, with our trace carbon network, we have the underpinnings of a blockchain that can help you with this reporting overall, so that you can trust your number. Most of the time, if it goes up to a CFO level, for example, within an organization, you know, they're looking at reporting that says, I gotta sign my name to this report, it says we've reduced emissions by pick a number, right? How do I know it's real? Yeah. And so in some instances, Tom, they just take that number, and they cut it in half, they reduce it, right, just because they don't have the highest confidence in it. So again, likewise, in the trace carbon industry, if you can record it, and we're no, we're capturing the right things dropping into the immutable ledger, putting together a report at the end of the day that we have more confidence in well actually, I believe, have a more positive impact throughout all of the energy sectors to make sure that guess what we know what we're doing, there are going to be some instances where we're not going to have positive impact on emissions, right? And in other parts of our operations, we can and we know that right? But how do you come up to a sum total at the end of the product, those are things that the industry is going to be challenged with, from here into 2030 and beyond. And we know blockchain has a play, you know, it isn't the answer to solve the readmission emissions reduction. But it is the methodology by which we can track it and bring confidence the entirety of the supply chain.

Tom Raftery: 29:41

It is that old thing, isn't it that if you don't measure it, you can't manage it. And

Sid Siefken: 29:45

I think that's what some of the challenges are, right. We're good at managing what's in front of us my particular enterprise, my my piece of this business, but what I get done with it, and I sell it to you, Tom, it's years from now. Oh, you want some information from me? Okay, let me what email that to you.

Tom Raftery: 30:04

I have it on a clipboard. fax it across?

Sid Siefken: 30:10

And in some cases, right, you know, we can kind of joke but in some cases, there are very practical applications where that's their initial set of data capture. Yeah,

Tom Raftery: 30:21

yeah. Sid we're coming towards the end of the podcast. Now. Is there any question I have not asked that you wish I did or any aspect of this that we've not covered off that you think it's important for people to be aware of?

Sid Siefken: 30:34

Well, you know, I think maybe maybe the one thing that I would like people to be aware of, and thinking about this from our day to day, consumer awareness perspective, we know that historically, we've trusted brands. And brands are powerful, right, I put on my marketing hat. Right. And I know that if I am, you know, in the marketplace, they're their brand messaging that I want. And it could be high end luxury. It could be midstream, impractical, it could be just a low cost provider, because it's all I need. And brands have worked diligently and spent millions and millions of dollars creating that brand. I think one of the things that people need to understand is now as consumers, we're going to trust your brand. And we're going to want some verification when you make claims that are slightly different to what we're seeing before. Again, in that meat industry. For example, if you're saying we have pure black angus grass fed beef, right, we're now going to say, Okay, tell me more about that. What more can I get? Right? I've trusted you to this point. Now you've made the next level of claim. Now I'm going to ask the next question. And I think everybody has to be prepared for that. I think the other thing, Tom, that's important to that is a little bit of how you're breaking down the units. And what I mean by that is, we now know that with the ability to have better electronic identification in place, you're going to want to know, you know, at the least saleable unit level, right? Is this product, exactly what I think it is, meaning, you know, it's managing that authenticity of the product as it goes through there. I know that many supply chains haven't necessarily offered serialization at the least syllable unit level. But I really think that companies that are in the manufacturing sector are going to have to think about how do we identify serial, only that least saleable unit product, so that we can have that traceability. And again, we know from the ledger perspective with smart contracts and immutable records blockchain, that we can help fortify that as it goes through there. But that's one of the things that in the future, you're going to see manufacturers work to it's one thing just to have a UPC code on it. It's another thing to say, oh, but it is this specific item produced at this particular plant for distribution in this marketplace. And we know that, pardon me at the distribution, it didn't get switched up. So those are some things that I think people really need to think about going forward is how do you do serialization at the lease sale, but unit level?

Tom Raftery: 33:30

Cool, cool, interesting. Set, that's been great. If people want to know more about yourself, or the block apps, or any of the things we talked about today? Where would you have me direct them? Yeah, I

Sid Siefken: 33:41

think the first thing your listeners can do is just simply go to traceharvest.com and get some information there. My email is Sid at block apps.net. And likewise, our corporate website is blockapps.com and jump right on there and away you go. So we'd be we'd be happy to have you join. Click around, send me a direct message. I think it would be fabulous.

Tom Raftery: 34:06

Superb, superb, said that's been great. Thanks again for coming on the podcast today.

Sid Siefken: 34:10

Tom pleasure. Let me know if I can talk again. And good luck to you in the podcast.

Tom Raftery: 34:15

Thank you. Okay, we've come to the end of the show. Thanks, everyone for listening. If you'd like to know more about digital supply chains, head on over to sa p.com/digital supply chain or, or simply drop me an email to Tom raftery@sap.com. If you'd like to show please don't forget to subscribe to it and your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. catch you all next time.