ITOCHU Announces a Blockchain PoC for Traceability

Targeting the natural rubber supply chain in Indonesia

February 1, 2019

ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Yoshihisa Suzuki, President & COO; hereinafter “ITOCHU”) announced today that it has decided to start a Proof of Concept (PoC) with the aim of developing a blockchain traceability system that ensures stable procurement and supply of raw material for our investment companies and trading parties, improving the traceability of its distribution.

The PoC will take place in the natural rubber supply chain of Pt. Aneka Bumi Pratama (headquartered in Indonesia; President Director: Hisashi Yajima; hereinafter “ABP”), a natural rubber processing company fully owned by ITOCHU. ITOCHU Techno-Solutions Corporation (headquartered in Chiyoda-ku, Tokyo; President & CEO: Satoshi Kikuchi; hereinafter “CTC”) will develop a technology solution for this PoC.

Natural rubber is essential in our daily life. It is mainly produced in Indonesia and other Southeast Asian countries, and approximately 70% is used for tires. While the motorization pushes up the demand for natural rubber, deforestation and various violations of rights of local residents are a concern in relation to the production and distribution of natural rubber. It is critical to assure that our business activities demonstrate a strong respect for the environment and human rights. Currently, multiple operators (local collectors and raw material dealers) are involved in the supply chain from the production to the delivery to tire manufacturers, and greater transparency in the distribution of natural rubber is required.

Natural rubber supply chain and the PoC

The PoC plans to use a smartphone app that allows buyers and sellers to conduct mutual authentication and to record transaction details in the blockchain including date, time and location. This ensures the transparency of the supply chain of natural rubber up to the processing plant. In addition, ITOCHU plans to provide a system to offer an incentive for accurate recording in order to promote cooperation from the suppliers.

ITOCHU will work on “Reinventing its Business”, one of the basic policies set out in the medium-term management plan that aims to achieve continuous growth using a “reinvented sampo yoshi” approach (“Good for the seller, Good for the buyer, and Good for society”). It will also contribute to the achievement of the 17 Sustainable Development Goals listed in “The 2030 Agenda for Sustainable Development” adopted by the United Nations. In addition, ITOCHU has participated in the Global Platform for Sustainable Natural Rubber (GPSNR) as the only Japanese sogo shosha that has contributed to its establishment as a founding member. This organization was founded by natural rubber stakeholders, such as car manufacturers, tire manufacturers and natural rubber processing companies, with the aim to establish traceability and achieve higher sustainability through supply chain collaboration.

Related information

ITOCHU Corporation's Natural Rubber Procurement Policy
ITOCHU Corporation's Basic Policy on Sustainability
ITOCHU Corporation's Action Guidelines for Supply Chains

Overview of ABP

Representative Hisashi Yajima (President Director)
Sales Approximately 400 million dollars (FY2017 result)
Number of employees Approximately 1,800 employees