Using blockchain technology driven by Global Trade Management (GTM) applications, a GTM blockchain can reveal previously hidden information and enable users to make informed, automated decisions related to import and export compliance as it affects all areas of international supply chains, from sourcing, to deliveries, to financials. (See Part 2 of our series for a deeper dive into applying blockchain technology in GTM)
GTM is comprised of equal parts risk management and trade optimization. For example, risk management encompasses regulatory compliance, trade security, and disruption planning and preparedness. Trade optimization includes best practices associated with import duty-tax minimization, reduced cost of trade operations, and optimized logistics and transportation routing. In this final installment of our three part blog series, we will discuss the design of GTM Blockchain and how it works.
An integrated hierarchical GTM blockchain system powered by a complete suite of GTM applications and multi-national content assimilates blockchain and off-chain functions within the unified business model, creating more efficient dynamic demand chains instead of rigid supply chains with pre-defined participants and fixed long-term contracts.
The main GTM blockchain is connected to its satellite childchains. Each childchain performs specifically designated functions and is allowed off-chain transactions. The results of off-chain transactions, such as calculations and compliance verifications, populate the childchain. The resolved childchain-level smart contracts then flow into the main GTM blockchain. In turn, the GTM blockchain may serve as sidechain to the international supply chain blockchain.
This approach limits distribution of data to the decision-involved parties or the supply chain participants that are directly responsible for collaboration between vendors or for the visualization of supply chain processes. Calculations, verifications, and error corrections are confined to the remote nodes, which would not consume resources of the main blockchain.
The extensive acceptance of Blockchain in international trade will help in decreasing the friction in the international economy. It is expected to benefit specifically the importers and exporters, as it will grant them access to the financial support in areas where the current financial arrangement is lacking.
Blockchain allows businesses to broaden their international trade opportunities by eliminating redundant methods and effectively limiting the costs associated with international transactions and processes. Blockchain is enabling businesses to generate profits with simpler automatic workflows and smart contracts in trade finance.