AVC Global’s challenges to delivering supply chain transparency

The AVC Global platform was developed in response to the myriad of threats to pharmaceutical supply chains that stand in the way of moving drugs safely and securely, from production all the way to the consumer. These threats include overall complexity of existing systems, multiple and dispersed stakeholders all working in their own interests, the potential for substandard drug quality, and a lack of end-to-end process transparency that invites fraud and drug counterfeiting. Counterfeit drugs alone is an especially large problem, with as much a 30% of pharmaceuticals globally being counterfeited. In total, these threats cost stakeholders their investments in their respective step in the chain, drug companies their public trust as well as profits, local governments expected tax revenues, and can even cost consumers their lives. AVC recognized that there was no existing mechanism of trust in place to absolutely ensure the reliable movement of drugs from the original manufacturer all the way through the supply chain to the patients that needed them.

In order to combat this, AVC Global felt that it was critical to develop a blockchain platform with a consensus mechanism that would be able to reliably and securely validate and record all of the transactions across these complex, multi-party supply chain networks in an immutable, transparent, and secure way. Additionally, the consensus mechanism needed to be capable of handling high transaction volumes and could not be cost prohibitive.

Another deciding factor that drove AVC was the need for a consensus mechanism that was based on an effective and auditable governance structure. The reason being that the AVC platform needed to be capable of servicing supply chains, regardless of their location. Drug manufacturing has become much more decentralized and now takes place in almost every country in the world. These supply chains are international, meaning that AVC needed to be able ensure compliance with various national regulatory conditions, as well as customs requirements - not just for the movement of these pharmaceuticals into and out of different country jurisdictions, but also the collection of taxes and customs duties on these drugs, or drug components. This particular point is of high importance due to the large amounts of revenue that can be lost without a trusted and secure system of track and trace from the original manufacturer all the way through the supply chain.

AVC’s Track and Trace Program relies on Hedera to ensure trusted, secure, and verifiable supply chains

AVC Global was able to solve the challenges experienced by traditional supply chain processes by building their value chain platform on top of Hyperledger and the Hedera Consensus Service (HCS). Hyperledger is used to record all the transactions that occur between the various parties in the supply chain, from manufacturer to the end consumer. AVC depends on HCS as a critical piece of their platform thanks to its ability to deliver high-throughput, encrypted content, trusted timestamps and ordering, fast finality, and an immutable and verifiable log and auditable of events. This combination of Hyperledger and HCS completely eliminates incidences of fraud or theft of drugs at any step in the chain. How does AVC accomplish this?

AVC does this by leveraging a “double digital notary” system that verifies every step of a drug through the supply chain. Once a drug is produced by a manufacturer, it is given a GS1 compliant serial number (a globally recognized traceability identifier) which is recorded and verified by Hyperledger and HCS. As the product physically moves to the next phase of its journey, these codes are scanned, and each necessary transaction is verified through this non-corruptible, dual notary system. At traditional points of vulnerability, most notably at the export/import stage within customs, this process removes the risk of these serial numbers being faked or modified in any way, both eliminating the potential for theft, while also ensuring that tax and tariff payments are recorded and verified, thereby optimizing cash flow across the supply chain as well.

AVC’s value chain platform guarantees the integrity of supply chains and their payment flows – from producer to consumer - using Hyperledger and HCS

The AVC platform has two main components: the SmartHub and the SmartPass, both of which are dependent on HCS to do their jobs. SmartHub, handles the flow of transactional data into and off of the platform, ensures that materials and commodities being moved through the supply chain meet the requirements of all stakeholders involved, while maintaining a cryptographically verified digital record of each transaction with proper documentation and certificates, signature(s), and fees. While SmartPass collects proof of events and documentation in an immutable notary designed with a privacy-first approach and a tamper-proof record.

This combination has helped AVC Global to achieve its mission of transforming how supply chains perform by ensuring their efficiency and trustworthiness, reducing risk and fraud, while also unlocking and enabling secure financing throughout the chain.

An HCS enabled Value Chain – proven out

In a partnership with its Bahrain-based subsidiary Medical Value Chain (MVC) who provides the Kingdom of Bahrain the leading supply chain track-and-trace platform for global pharmaceutical supply chain compliance, AVC has been able to prove out the efficacy of their value chain platform. This AVC/MVC partnership is now fully operational within Bahrain’s pharmaceutical supply chain. Following the success in Bahrain, AVC/MVC has also signed a five-year Cooperative Agreement with the Republic of Lebanon’s Ministry of Public Health to provide its GS1-compliant system to secure its entire medical supply chain.

AVC Global’s roadmap for supporting diverse supply chains and sustainability

The success of AVC Global has allowed for the team to look beyond pharmaceuticals and apply the use of their HCS based platform to track and trace and customs processing of all asset classes (products and even services), such as oil and gas, mobile devices, Halal certified product provenance, humanitarian aid and precious metals. In other words: Any supply chain where the potential for fraud is high.

AVC has already launched their Value Chain “Supply Chain” Finance module or VCF, which acts as a gateway between the AVC platform ecosystem and the global financial system. The VCF enables documentation, contracts, and data traditionally used in supply chain transactions to act as a cryptographic “SmartContract,” allowing liquidity to flow based on “ground truth” maintained by the platform.

Another characteristic of the Hedera network that is important to AVC Global’s ongoing roadmap is the sustainability aspect. Knowing that every transaction that is written to the Hedera ledger is carbon negative, thanks to the Hedera governing council’s guidance, and purchase of carbon offset credits, gives AVC the assurance that their overall carbon footprint is minimized. According to co-founder and chairman Leo Giacommeto, “this is a great selling point for AVC, that we can share that everything we track on Hedera, all of these transactions, are carbon negative, and that we can prove that out”.

Hedera prides itself on providing a DLT and services that guarantee a truly fast, fair, and secure future for all participating applications. Based on what the team at AVC Global has accomplished to this point, their future is bright indeed.