Why Blockchain May Be Your Next Supply Chain

Blockchain technology may be shaking up a supply chain in your area. It’s smarter, it’s faster, plus it gets more participants fully briefed.
Within a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong notice 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, resulting in more efficient resource use for all.” They notice that many startups are springing up around blockchain-enabled supply chains, and companies for example Walmart, IBM and BHP Billiton are launching efforts to improve track the movement of items and details.

Blockchain — enhanced by electronic tracking technology — can only speed up supply chains, while adding greater intelligence on the way, they argue. “It could possibly be especially powerful when joined with smart contracts, in which contractual rights and obligations, such as the terms for payment and delivery of items 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 Nevada grew more animated if the subject of Buy Supply Chain Books emerged. The panelists, tech leaders at SAP Ariba, explored the potential for advanced cloud services to help to utilize artificial intelligence and machine learning to an array of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.

Blockchain “will have huge impact on the best way people glance at the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches over to the boundary of your network, to faraway places where we are not even attached to, and brings that in a governance model where your entire processes and all sorts of your transactions are captured in the central network.”

Blockchain works in enabling more intelligence business processes for the distributed trust and transparency, which will bring the best way to 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 of than 2.5 million buyers and suppliers transacting for the SAP Ariba Network – but you can find vast sums of other people who usually are not for the network. Obviously we want to have them. If you are using the blockchain technology to take that trust together, it’s a federated trust model. Then our supply chain will be many more efficient, a lot more trustworthy. It’s going to help the efficiency, and all the risk that’s linked to managing suppliers will likely be managed better by using that technology.”

The ability in blockchain is being able to scale, Almeida continued. “You want the scale of your SAP Ariba, possess the scale from your variety of suppliers, how much business that takes place for the network. So you’ve to have a scale and technology together to make that happen.”
You will find challenges that need to be addressed before blockchain can proliferate across supply chains, however. First, you have 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 usually are not accustomed to really exposing that kind of data in almost any shape or form – or they may be very secretive regarding it,” said Sudhir Bhojwani, senior second in command from the product suite for SAP Ariba. “For them to suddenly participate in this involves an alteration on their side. It takes seeing ‘what could be the benefit for me personally, what is the value it offers me?'” This type of thinking is slowly coming around, he added. “You hear more companies – especially for the payment side – starting to participate in blockchain…. It’s still a technology only until the companies mean, ‘Hey, this can be the value … but I have to change myself as well.'”

In 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 will be the open, public blockchains, but, “inevitably, private, closed ledgers run by a consortium of companies also arise, as his or her members seek to protect market share and profits.” Additionally, “there should be interoperability across private and public blockchains, that can require standards and agreements.”

Laws and regulations — which change from nation to nation — also pose difficult to global scaling of blockchain, Casey and Wong add. “Even before governments could be convinced to support this effort, and achieve this in a globally coordinated way, industry must agree on 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 previously occurred in the consumer world. The incoming generation of employees and business leaders can help drive this variation as well. “I personally trust next three to five years when you can find more-and-more Millennials in the workforce, you will observe people adopting blockchain and new ledgers at a considerably faster pace,” he predicted.
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