As part of its border strategy, the UK government is currently supporting six pilot schemes bringing together distributed ledger and supply chain technologies to reduce requirements for checks on goods entering Britain.
The essential idea of the ‘Ecosystem of Trust’ pilots is to securely collect data points throughout the supply chain to give government the information needed to more intelligently identify and manage risk on cross-border shipments.
In recent weeks, the IOE&IT Daily Update has interviewed members of one of the six consortia running Ecosystem of Trust pilots to give an insight into the technologies involved.
These interviews have looked at how the data being collected gives government the assurance it needs to confidently and compliantly reduce the number of border checks undertaken on imports, thereby increasing border efficiency while reducing administrative burden and risks of delays for British importers and their suppliers.
Jens Munch Lund-Nielsen from IOTA Foundation spoke about the role of blockchain technology in ensuring the data collected on the goods is secure and “immutable”. Eric Gill from Supply Chain Tracking (SCT) Technology explained the importance of digital seal technology in providing in-transit visibility.
This week, the IOE&IT Daily Update spoke to Graham Parker and Faisal Ashfaq from Retail & Asset Solutions (RAS) about the role of inventory and auditing technology in the pilot.
Supply chain auditing
RAS’s sales and accounts director, Graham Parker, tells me that the firm is an inventory and auditing business which supports companies across the grocery, DIY, apparel and high street sectors. Its main operations are in the UK, although it has small teams in Europe. It has over 90 distribution centres and supports eight of the UK’s top 10 grocery firms.
Of particular relevance to the pilot, its supply chain auditing division ensures accurate stock inventory at various points in a goods movement, including delivery into a store or into a distribution centre. It uses technology to scan products, verify reports and check deliveries, producing data to customers to ensure their stockpile and valuations are correct, with inaccuracies or errors reported.
[Pictured: Graham Parker, sales and accounts director, Retail & Asset Solutions]
RAS’s assurance and accuracy is evidenced by its compliance with the Groceries Supply Code of Practice (GSCOP) and it has also adopted the sector’s successful Good Faith Receiving (GFR) programme, which has been found to reduce payment claims by between 70% and 90%.
Faisal Ashfaq, the firm’s head of supply chain and operations, tells me that RAS’s role in the Ecosystem of Trust is centred around providing assurance and integrity. He explains:
“We complement the pilot by checking the integrity of the stocks and giving assurance. The underpinning aim is to make sure we’ve got the right product going into the right place, in the right quantity, at the right time.
“With the Ecosystem of Trust, there are a lot of new technologies. RAS underpins them by bringing in an independent market spot check so that we can say everything is how it should be. This gives you a fully rounded, robust and trusted solution.”
GFR, he explains, has a particular importance in allowing RAS to do this in a trusted and efficient way. Used by eight of the UK’s top 10 retailers and over 700 suppliers, under GFR, a small portion of goods is checked but in greater depth than normal inspections.
[Pictured: Faisal Ashfaq, head of supply chain and operations, Retail & Asset Solutions]
This provides assurance that you don’t need to inspect a larger portion, because you can be confident that the smaller portion is representative of the whole. The success of this programme in the grocery sector indicates it could have a role to play in the UK’s plans for the borders.
“There's no reason to check the large portion now. If this works for the biggest UK and European retailers and over 700 suppliers, why can we not use this to underpin good faith borders?”
Ashfaq explains that this approach also combines with the solutions provided by RAS’ consortium partners to give the government the visibility it needs to trust traders.
Coffee from Mombasa
The pilot is being trialled on movements of coffee, cut flowers and tea bags from Kenya to the UK. Ashfaq explains how it will be used for the coffee shipment:
“The coffee came out of Mombasa in Kenya back in September and it arrived into Felixstowe and then Bury St Edmunds in late October. There’s two parts to RAS’s role in this.
“One is giving the trader a status based on regular intervention checks. This comes from information relating to whether they are completing the declarations and bills of lading correctly, as well as whether the checks and balances at the point of dispatch are in order.
“The second part is regarding what’s been declared to HMRC and what we need to do to give Border Force assurance so that it doesn’t need to intercept the number of containers it currently does. That’s the quantity check.
“RAS has built a bespoke system called Prosper for this. We went out to Mombasa on this particular occasion, though you can’t do checks on 100% of the goods – it’s got to be spot checks at the point of dispatch or destination.
“We did a compliance and assurance check on the trader. We made sure that the checks and balances from the exporter were correct. We intercepted the shipment at the point of delivery and checked that the number of sacks coming off, the weight and the condition of the container, as well as the seal number that was on the container, were all in check
“We could then go back to the consortium, HMRC, Border Force, Defra, and anyone else involved, and say this trader is in the ‘green’ because what they said the goods were going to be was correct. The goods could then be ‘green laned’”.
Moving checks from the border to the point of destination could reduce border checks significantly, Ashfaq argues.
“At the moment, HMRC will intercept a percentage of the containers that land at Dover or Felixstowe. It’s then anything from 5 to 15 days that they’re sitting in the ports. The importer’s not got their stock and doesn’t know when it will arrive.
“If you can trust the trader, you don’t need to stop the shipments. If the trader is not trusted, you can still intercept them. So if you can trust the majority of traders, you can reduce the checks – for example from 20% to 5%. That would be a 15% reduction.
“We’ve heard endless news stories of the A20 or M20 being bottlenecked and Dover bursting at the seams. That’s not the fault of Border Force, HMRC or Dover. It’s simply the amount of trade coming into the UK and what you’re going to get if you check 20% of goods.
“Instead, only intercept the goods where you’ve got a question or doubt about the trader that’s backed up by independent checks. That’s how you bring the cost and amount of checks down hugely. This can hopefully then bring the price of the commodity down.”
Bringing trade into the future
Graham says that, should the pilots prove successful, the Ecosystem of Trust scheme would effectively be “bringing trade into the future”.
“Businesses will actually be able to send products very quickly and efficiently through a channel that at the moment goes through multiple checks and balances. Hopefully the pilots will provide evidence of the speed and the adaptability of a better system.
“We’ve supported the GFR approach for 10 years. There have been many benefits of sample-based checks for both the retailer and supplier. There’s no reason why that concept can’t apply to trade borders and across multiple countries.
“Knowing the UK's situation, it's exciting to be part of the pilot and to be able to support it.”