Why Blockchain Could be Your Next Supply Chain

Blockchain technology could be shaking up a supply chain near you. It’s smarter, it’s faster, plus it gets more participants up to speed.
Inside a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong remember that blockchain — a web-based globally distributed general ledger that monitors transactions via online “smart contracts” — will produce “dynamic demand chains rather than rigid supply chains, producing extremely effective resource use for all those.” They remember that many startups are developing around blockchain-enabled supply chains, and firms like Walmart, IBM and BHP Billiton are launching efforts to higher track the movement of items and data.

Blockchain — enhanced by electronic tracking technology — can only hasten supply chains, while adding greater intelligence on the way, they argue. “It may be especially powerful when combined with smart contracts, by which contractual rights and obligations, such as the terms for payment and delivery of items and services, may 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 Sin city grew more animated if the subject of Supply Chain Books showed up. The panelists, tech leaders at SAP Ariba, explored the chance of advanced cloud services to help to use 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 impact on just how people consider 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 in to a governance model where your entire processes and your transactions are captured from the central network.”

Blockchain work in enabling more intelligence business processes for the distributed trust and transparency, which in turn brings lots more people into connected supply-chain networks, said Sanjay Almeida, senior second in command and chief product officer of Network Solutions for SAP Ariba. “We have an overabundance than 2.5 million buyers and suppliers transacting around the SAP Ariba Network – but you’ll find vast sums of other individuals who are certainly not around the network. Obviously we’d like to get them. If you use the blockchain technology to get that trust together, it’s a federated trust model. Then our supply chain would be much bigger efficient, much more trustworthy. It’ll improve the efficiency, and all the risk that’s connected with managing suppliers will be managed better by making use of that technology.”

The electricity in blockchain is its ability to scale, Almeida continued. “You want the scale of your SAP Ariba, possess the scale through the number of suppliers, how much business that happens around the network. So you have got to experience a scale and technology together to make which happen.”
You will find challenges that need to be addressed before blockchain can proliferate across supply chains, however. First, you have the should overcome embedded, calcified corporate thinking. Business leaders and organizations should confide in the sharing of data with mainly unseen network partners. “Enterprises are certainly not utilized to really exposing that sort of data in a shape or form – or they are very secretive over it,” said Sudhir Bhojwani, senior second in command with the product suite for SAP Ariba. “For these phones suddenly be involved in this requires a big change on the side. It will take seeing ‘what is the benefit to me, what’s the value which it offers me?'” These kinds of thinking is slowly coming around, he added. “You learn more companies – especially around the payment side – needs to be involved in blockchain…. It’s still a technology only before the companies am getting at, ‘Hey, this can be the value … but I ought to change myself too.'”

In their article, Casey and Wong also remember that overall governance and standards are challenges to implementing blockchain to control supply chains with a global scale. There is also the open, public blockchains, but, “inevitably, private, closed ledgers run by a consortium of companies also arise, as their members aim to protect business and profits.” Additionally, “there has to be interoperability across private and public blockchains, that may require standards and agreements.”

Legislation — which consist of state to state — also pose a challenge to global scaling of blockchain, Casey and Wong add. “Even before governments may be convinced to compliment this effort, and also to achieve this inside a globally coordinated way, industry must concur with guidelines and standards of technology and contract structure across international borders and jurisdictions.”

But adjustments to thinking are inevitable, Bhojwani believes, noting that major shifts previously taken place from the consumer world. The incoming generation of employees and business leaders might help drive this transformation too. “I personally have confidence in next three to five years when you’ll find more-and-more Millennials from the workforce, you will note people adopting blockchain and new ledgers at a considerably quicker pace,” he predicted.
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