Blockchain technology could possibly be shaking up a logistics towards you. It’s smarter, it’s faster, plus it gets more participants up to speed.
In a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong observe that blockchain — an internet globally distributed general ledger that monitors transactions via online “smart contracts” — will produce “dynamic demand chains in place of rigid supply chains, causing more efficient resource use for many.” They observe that numerous startups are bobbing up around blockchain-enabled supply chains, and firms for example Walmart, IBM and BHP Billiton are launching efforts to better track the movement of goods and details.
Blockchain — enhanced by electronic tracking technology — could only hasten supply chains, while adding greater intelligence as you go along, they argue. “It might be especially powerful when combined with smart contracts, in which contractual rights and obligations, such as 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 on the recent 2017 SAP Ariba LIVE conference in Nevada grew more animated if the subject of Supply Chain Books emerged. The panelists, tech leaders at SAP Ariba, explored the opportunity of advanced cloud services to help to use artificial intelligence and machine learning how to a variety of business logistics processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge influence on the best way people look at 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 aren’t even associated with, and brings that into a governance model where your entire processes and all sorts of your transactions are captured from the central network.”
Blockchain work in enabling more intelligence business processes due to its distributed trust and transparency, which in turn will take more and more people into connected supply-chain networks, said Sanjay Almeida, senior vice president and chief product officer of Network Solutions for SAP Ariba. “We convey more than 2.5 million buyers and suppliers transacting around the SAP Ariba Network – but you’ll find vast sums of other people who are certainly not around the network. Obviously we want to get them. If you are using the blockchain technology to take that trust together, it’s a federated trust model. Then our logistics would be much bigger efficient, much more trustworthy. It is going to enhance the efficiency, as well as the risk that’s associated with managing suppliers will likely be managed better through the use of that technology.”
The power in blockchain is being able to scale, Almeida continued. “You have to have the scale of the SAP Ariba, possess the scale from your quantity of suppliers, the amount of business that takes place around the network. So you’ve got to get a scale and technology together to produce which happen.”
You will find challenges that must be addressed before blockchain can proliferate across supply chains, however. First, there’s the need to overcome embedded, calcified corporate thinking. Business leaders and organizations need to speak in confidence to the sharing of knowledge with mainly unseen network partners. “Enterprises are certainly not accustomed to really exposing that sort of knowledge in different shape or form – or they are very secretive over it,” said Sudhir Bhojwani, senior vice president of the product suite for SAP Ariba. “For these phones suddenly take part in this requires an alteration on the side. It requires seeing ‘what is the benefit for me personally, what is the value it offers me?'” These kinds of thinking is slowly coming around, he added. “You hear more companies – especially around the payment side – starting to take part in blockchain…. It’s still a technology only before companies mean, ‘Hey, this is the value … on the other hand ought to change myself also.'”
Inside their article, Casey and Wong also observe that overall governance and standards are challenges to implementing blockchain to manage supply chains with a global scale. There is also the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies also arise, as their members aim to protect business and profits.” Furthermore, “there must be interoperability across private and public blockchains, which will require standards and agreements.”
Regulations — which change from place to place — also pose challenging to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to support this effort, and also to do so inside a globally coordinated way, industry must acknowledge guidelines and standards of technology and contract structure across international borders and jurisdictions.”
But changes in thinking are inevitable, Bhojwani believes, noting that major shifts have already happened from the consumer world. The incoming generation of employees and business leaders will help drive this variation also. “I personally trust next 3-5 years when you’ll find more-and-more Millennials from the workforce, you will notice people adopting blockchain and new ledgers with a considerably quicker pace,” he predicted.
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