Why Blockchain Could be The next Logistics

Blockchain technology could be shaking up a supply chain towards you. It’s smarter, it’s faster, plus it gets more participants aboard.
In the recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong realize that blockchain — an internet globally distributed general ledger that keeps track of transactions via online “smart contracts” — will produce “dynamic demand chains in place of rigid supply chains, producing better resource use for many.” They realize that many startups are bobbing up around blockchain-enabled supply chains, and firms including Walmart, IBM and BHP Billiton are launching efforts to raised track the movement of merchandise and information.

Blockchain — enhanced by electronic tracking technology — is only able to help speed up supply chains, while adding greater intelligence as you go along, they argue. “It might be especially powerful when joined with smart contracts, where contractual rights and obligations, including the terms for payment and delivery of merchandise and services, might 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 Las Vegas grew more animated in the event the subject of Supply Chain Books emerged. The panelists, tech leaders at SAP Ariba, explored the potential of advanced cloud services to help to apply artificial intelligence and machine learning to a range 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 locations where we are not even linked to, and brings that right into a governance model where your processes and all your transactions are captured in the central network.”

Blockchain will work in enabling more intelligence business processes for the distributed trust and transparency, which often will bring 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 about the SAP Ariba Network – but you’ll find vast sums of individuals that aren’t about the network. Obviously we’d like to make them. If you are using the blockchain technology to take that trust together, it’s a federated trust model. Then our supply chain could be many more efficient, much more trustworthy. It’s going to increase the efficiency, and all sorts of risk that’s associated with managing suppliers will be managed better through the use of that technology.”

The ability in blockchain is being able to scale, Almeida continued. “You want the scale associated with an SAP Ariba, have the scale through the number of suppliers, how much business that happens about the network. So you’ve got to possess a scale and technology together to create which happen.”
There are challenges that must be addressed before blockchain can proliferate across supply chains, however. First, you have the have to overcome embedded, calcified corporate thinking. Business leaders and organizations have to open up to the sharing of info with mainly unseen network partners. “Enterprises aren’t accustomed to really exposing that sort of info in different shape or form – or they’re very secretive about it,” said Sudhir Bhojwani, senior vice president with the product suite for SAP Ariba. “For the crooks to suddenly engage in this involves an alteration on their own side. It will take seeing ‘what could be the benefit for me personally, what’s the value which it offers me?'” This type of thinking is slowly coming around, he added. “You hear more companies – especially about the payment side – needs to engage in blockchain…. It’s still a technology only before companies am getting at, ‘Hey, here is the value … however ought to change myself too.'”

Of their article, Casey and Wong also realize that overall governance and standards are challenges to implementing blockchain to manage supply chains on 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 share of the market and profits.” Moreover, “there needs to be interoperability across public and private blockchains, which will require standards and agreements.”

Legal guidelines — which change from nation to nation — also pose a challenge to global scaling of blockchain, Casey and Wong add. “Even before governments might be convinced to guide this effort, and to do this within a globally coordinated way, industry must acknowledge tips and standards of technology and contract structure across international borders and jurisdictions.”

But adjustments to thinking are inevitable, Bhojwani believes, noting that major shifts have previously taken place in the consumer world. The incoming generation of employees and business leaders will help drive this variation too. “I personally rely on next 3 to 5 years when you’ll find more-and-more Millennials in the workforce, you will note people adopting blockchain and new ledgers at the considerably quicker pace,” he predicted.
For more details about Supply Chain Books take a look at our new web portal: learn here