Blockchain technology could possibly be shaking up a supply chain towards you. It’s smarter, it’s faster, and yes it gets more participants fully briefed.
In a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong remember that blockchain — a web-based globally distributed general ledger that tracks transactions via online “smart contracts” — will produce “dynamic demand chains rather than rigid supply chains, causing better resource use for those.” They remember that many startups are arising around blockchain-enabled supply chains, companies including Walmart, IBM and BHP Billiton are launching efforts to better track the movement of goods and details.
Blockchain — enhanced by electronic tracking technology — are only able to help speed up supply chains, while adding greater intelligence as you go along, they argue. “It could possibly be especially powerful when coupled with smart contracts, in which contractual rights and obligations, such as the terms for payment and delivery of goods and services, could be automatically executed by an autonomous system that’s trusted by all signatories.”
A panel discussion held with the recent 2017 SAP Ariba LIVE conference in Vegas grew more animated when the subject of Buy Supply Chain Books emerged. The panelists, tech leaders at SAP Ariba, explored the potential of advanced cloud services in assisting to utilize artificial intelligence and machine learning how to a variety of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge affect just how people look at the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches in the market to the boundary of your network, to faraway locations that we are not even linked to, and brings that in a governance model where all your processes and your transactions are captured inside the central network.”
Blockchain works in enabling more intelligence business processes because of its distributed trust and transparency, which in turn provides the best way to 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 there are hundreds of millions of others who are not around the network. Obviously we wish to have them. If you utilize the blockchain technology to get that trust together, it’s a federated trust model. Then our supply chain could be much more efficient, much more trustworthy. It is going to increase the efficiency, as well as the risk that’s associated with managing suppliers will likely be managed better by using that technology.”
The ability in blockchain is its capability to scale, Almeida continued. “You have to have the scale of an SAP Ariba, hold the scale from your number of suppliers, the volume of business that takes place around the network. So you have got to get a scale and technology together to make that occur.”
There are challenges that need to be addressed before blockchain can proliferate across supply chains, however. First, there is the need to overcome embedded, calcified corporate thinking. Business leaders and organizations need to open up to the sharing of data with mainly unseen network partners. “Enterprises are not accustomed to really exposing that kind of data in almost any shape or form – or these are very secretive regarding it,” said Sudhir Bhojwani, senior vice president from the product suite for SAP Ariba. “For the crooks to suddenly be involved in this implies a difference on their side. It takes seeing ‘what is the benefit for me personally, is there a value it offers me?'” This type of thinking is slowly coming around, he added. “You hear more companies – especially around the payment side – starting to be involved in blockchain…. It’s still a technology only before the companies am getting at, ‘Hey, this is the value … but I ought to change myself too.'”
Of their article, Casey and Wong also remember that overall governance and standards are challenges to implementing blockchain to control supply chains over a global scale. There will be the open, public blockchains, but, “inevitably, private, closed ledgers run by a consortium of companies also arise, his or her members attempt to protect share of the market and profits.” Additionally, “there should be interoperability across private and public blockchains, that can require standards and agreements.”
Legal guidelines — which consist of place to place — also pose a challenge to global scaling of blockchain, Casey and Wong add. “Even before governments could be convinced to support this effort, and achieve this inside a globally coordinated way, industry must acknowledge tips 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 occurred inside the consumer world. The incoming generation of employees and business leaders will help drive this change too. “I personally trust next three to five years when there are more-and-more Millennials inside the workforce, you will notice people adopting blockchain and new ledgers at a considerably faster pace,” he predicted.
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