Reducing Friction in Trade (RFIT) - Observatory of Public Sector Innovation

The Reducing Friction in Trade (RFIT) project was initiated in March 2019 as a proof of concept to establish how blockchain distributed ledger technology and associated technologies can be used to seamlessly integrate supply chain data with HM Revenue & Customs and the Food Standards Agency’s systems. The project intends to do so by guaranteeing the timeliness and provenance of critical data and avoiding the need for discrete declarations.

Innovation Summary

Innovation Overview

The RFIT project was initiated in March 2019 as a proof of concept to establish how blockchain distributed ledger technology and associated technologies can be used to seamlessly integrate supply chain data with HM Revenue & Customs and the Food Standards Agency’s systems, guaranteeing the timeliness and provenance of critical data and avoiding the need for discrete declarations.

The project was conceived after a blockchain presentation from several different solution vendors. In this case, Chainvine Limited had shown the "intelligent Wine" application, a specific module that powers the Chainvine platform and in principle, helps users (in this case, importers and exporters) trace health, wealth, and happiness of a good digitally. In doing so, the application reduces the cost of trust in the supply chain ecosystem.

The proof of concept collected upstream data from wine producers that is relevant to Port Health Authorities and Customs and Border agencies, distributing it to authorised parties downstream in a secure manner within a Blockchain. This reduced the administrative effort required of traders at the border and showed potential for realising additional efficiencies through expanding early work into "intelligent/smart contracts" that can further automate processing.

The Chainvine platform is built in an open way with scope for extension avoiding proprietary systems or interfaces and is enabled to provide tracking capabilities using Internet of Things (IoT) tracking devices that are capable of capturing and relaying relevant parameters including location, temperature, and humidity. The platform allows for true democratic sharing of data between multiple parties.

RFIT has demonstrated the many benefits to both traders and the government of an integrated data source that is immutable, secure, distributed, and trusted across the supply chain. Reduction in data duplication and the need to manually enter data yielded a corresponding reduction in administrative overhead and submission errors, simultaneously improving data visibility, traceability, and tracking. At the same time, reducing risks associated with government use of upstream data.

This early work shows the potential benefits of creating a utility platform for trade, where government works with industry to connect and integrate decentralised data to facilitate international trade.

Innovation Description

What Makes Your Project Innovative?

Distributed Ledger Technology (DLT) offers a step-change for service delivery in both the public and private sectors. By reducing data fragmentation and enhancing traceability and accountability, DLT promises cost savings and efficiencies on a scale sufficient to impact national finances. DLT's facilitation of business processes, based on common and authoritative reference and transaction data, provides the means to derive improved returns and efficiencies from past and future investments, including legacy systems, through enhanced interoperability.

What is the current status of your innovation?

As of May 2021, this project has already completed its first proof of concept and pilot phase. We are now at the stage of the formative evaluation of the pilot. This evaluation uses a mixed-methods approach, compiling data from quantitative surveys, qualitative narratives, and stakeholder interviews.

Further, this pilot has sparked additional work and the Covid crisis has offered more use cases and additional observations. More importantly, it has helped the government to look at a wider decentralised utility platform that projects, such as RFIT, can plug into.

Innovation Development

Collaborations & Partnerships

HMRC brought government willingness to investigate and explore new technologies and processes. Chainvine Limited brought next-generation technology through the blend of Blockchain and Internet of Things (IoT). Surrey University brought a balanced opinion. Food Standards Agency brought an in-depth knowledge of government processes. Finally, Wine & Spirits Trade Association, Alliance Wine, Casella Wine, and Wine Australia brought industry knowledge.

Innovation Reflections

Results, Outcomes & Impacts

The project continues to gather support and is growing internationally with more patterns looking to participate and trial the technology through the programme.

Challenges and Failures

Challenges so far have been around an evenly distributed way of funding such projects.

Conditions for Success

Both human and financial resources, as well as personal values and motivation served as crucial conditions for success.

Furthermore, there must be a good mix between private industry and government: the government can lead and invest in minimal requirements in order to attract more private industry.

Replication

Other sectors have demonstrated interest in joining the project and learning how they can benefit.

Lessons Learned

The pilot gave us insight into industry and government, particularly the need for more connected systems and ways of sharing data that can benefit both players in the economy.

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