Blockchain technology may be shaking up a supply chain near you. It’s smarter, it’s faster, and yes it gets more participants fully briefed.
In the recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong notice that blockchain — an online globally distributed general ledger that keeps track of transactions via online “smart contracts” — will produce “dynamic demand chains rather than rigid supply chains, producing extremely effective resource use for all those.” They notice that numerous startups are springing up around blockchain-enabled supply chains, and companies including Walmart, IBM and BHP Billiton are launching efforts to raised track the movement of goods and information.
Blockchain — enhanced by electronic tracking technology — is only able to help speed up supply chains, while adding greater intelligence as you go along, they argue. “It could be especially powerful when coupled with smart contracts, in which contractual rights and obligations, like the terms for payment and delivery of goods and services, can be automatically executed by an autonomous system that’s trusted by all signatories.”
A panel discussion held at the recent 2017 SAP Ariba LIVE conference in Las Vegas grew more animated when the subject of Cheap Supply Chain Books came up. The panelists, tech leaders at SAP Ariba, explored the potential for advanced cloud services to help to utilize artificial intelligence and machine understanding how to a selection of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge affect just how people go through the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches in the market to the boundary of the network, to faraway places that we’re not even attached to, and brings that right into a governance model where your processes and your transactions are captured within the central network.”
Blockchain works in enabling more intelligence business processes because of its distributed trust and transparency, which experts claim brings more and more people into connected supply-chain networks, said Sanjay Almeida, senior v . p . and chief product officer of Network Solutions for SAP Ariba. “We have an overabundance than 2.5 million buyers and suppliers transacting about the SAP Ariba Network – but you can find hundreds of millions of other individuals who are not about the network. Obviously we wish to make them. If you use the blockchain technology to take that trust together, it’s a federated trust model. Then our supply chain would be much bigger efficient, much more trustworthy. It is going to enhance the efficiency, and all sorts of risk that’s related to managing suppliers will likely be managed better by using that technology.”
The ability in blockchain is its ability to scale, Almeida continued. “You have to have the scale of an SAP Ariba, hold the scale in the quantity of suppliers, the amount of business you do about the network. So you’ve got to get a scale and technology together to create that occur.”
You’ll find challenges that should be addressed before blockchain can proliferate across supply chains, however. First, there’s the must overcome embedded, calcified corporate thinking. Business leaders and organizations must open up to the sharing of info with mainly unseen network partners. “Enterprises are not employed to really exposing that sort of info in any shape or form – or they may be very secretive over it,” said Sudhir Bhojwani, senior v . p . with the product suite for SAP Ariba. “For these to suddenly be involved in this calls for a change on their side. It needs seeing ‘what could be the benefit to me, what’s the value that it offers me?'” This kind of thinking is slowly coming around, he added. “You learn more companies – especially about the payment side – needs to be involved in blockchain…. It’s still a technology only until the companies mean, ‘Hey, this is actually the value … on the other hand must change myself as well.'”
Within their article, Casey and Wong also notice that overall governance and standards are challenges to implementing blockchain to handle supply chains on the global scale. There is the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies also arise, as his or her members attempt to protect share of the market and profits.” In addition, “there has to be interoperability across private and public blockchains, that can require standards and agreements.”
Laws and regulations — which change from country to country — also pose an issue to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to guide this effort, and to do this within a globally coordinated way, industry must acknowledge guidelines and standards of technology and contract structure across international borders and jurisdictions.”
But alterations in thinking are inevitable, Bhojwani believes, noting that major shifts previously taken place within the consumer world. The incoming generation of employees and business leaders can help drive this change as well. “I personally trust next three to five years when you can find more-and-more Millennials within the workforce, you will notice people adopting blockchain and new ledgers with a faster pace,” he predicted.
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