Blockchain technology may be shaking up a supply chain towards you. It’s smarter, it’s faster, also 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, causing more efficient resource use for those.” They notice that a number of startups are developing around blockchain-enabled supply chains, and firms like Walmart, IBM and BHP Billiton are launching efforts to better track the movement of merchandise and data.
Blockchain — enhanced by electronic tracking technology — could only hasten supply chains, while adding greater intelligence as you go along, they argue. “It could possibly be especially powerful when coupled with smart contracts, where contractual rights and obligations, such as the terms for payment and delivery of merchandise and services, can 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 Sin city grew more animated once the subject of Supply Chain Books showed up. The panelists, tech leaders at SAP Ariba, explored the opportunity of advanced cloud services to help to utilize artificial intelligence and machine understanding how to a variety of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge affect the way people consider the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches to the boundary of the network, to faraway locations that we are really not even linked to, and brings that right into a governance model where your processes and many types of your transactions are captured in the central network.”
Blockchain will continue to work in enabling more intelligence business processes for the distributed trust and transparency, which often brings lots more people into connected supply-chain networks, said Sanjay Almeida, senior vice president and chief product officer of Network Solutions for SAP Ariba. “We have an overabundance of than 2.5 million buyers and suppliers transacting about the SAP Ariba Network – but you’ll find vast sums of others who usually are not about the network. Obviously we’d like to get them. If you utilize the blockchain technology to create that trust together, it’s a federated trust model. Then our supply chain will be much more efficient, much more trustworthy. It’ll increase the efficiency, and all the risk that’s connected with managing suppliers is going to be managed better by utilizing that technology.”
The ability in blockchain is being able to scale, Almeida continued. “You have to have the scale of the SAP Ariba, have the scale from the number of suppliers, the amount of business that takes place about the network. So you’ve got to experience a scale and technology together to create that happen.”
There are challenges that must be addressed before blockchain can proliferate across supply chains, however. First, there is undoubtedly a should overcome embedded, calcified corporate thinking. Business leaders and organizations should speak in confidence to the sharing of data with mainly unseen network partners. “Enterprises usually are not used to really exposing that type of data in almost any shape or form – or they are very secretive over it,” said Sudhir Bhojwani, senior vice president from the product suite for SAP Ariba. “For the crooks to suddenly participate in this involves a big change on their own side. It takes seeing ‘what is the benefit for me, what is the value it offers me?'” These kinds of thinking is slowly coming around, he added. “You learn more companies – especially about the payment side – beginning to participate in blockchain…. It’s still a technology only prior to the companies want to say, ‘Hey, this can be the value … however i have to change myself also.'”
Inside their article, Casey and Wong also notice that overall governance and standards are challenges to implementing blockchain to manage supply chains on the global scale. There will be the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies will also arise, for their members look to protect market share and profits.” Additionally, “there has to be interoperability across public and private blockchains, which will require standards and agreements.”
Regulations — which consist of nation to nation — also pose a challenge to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to guide this effort, and do so in 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 taken place in the consumer world. The incoming generation of employees and business leaders can help drive this modification also. “I personally rely on next 3 to 5 years when you’ll find more-and-more Millennials in the workforce, you will see people adopting blockchain and new ledgers with a much faster pace,” he predicted.
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