Why Blockchain Could possibly be Your Next Supply Chain

Blockchain technology could possibly be shaking up a supply chain near you. It’s smarter, it’s faster, also it gets more participants on board.
Within a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong realize that blockchain — a web based 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 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 improve track the movement of goods and knowledge.

Blockchain — enhanced by electronic tracking technology — is only able to help speed up supply chains, while adding greater intelligence along the way, they argue. “It could possibly be especially powerful when coupled with smart contracts, in which contractual rights and obligations, including 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 in the recent 2017 SAP Ariba LIVE conference in Las Vegas grew more animated once the subject of Supply Chain Books came out. The panelists, tech leaders at SAP Ariba, explored the potential for advanced cloud services in helping to apply artificial intelligence and machine learning to a variety of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.

Blockchain “will have huge influence on the best way people look at the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches in the market to the boundary of one’s network, to faraway places where we’re not even associated with, and brings that in a governance model where your processes and many types of your transactions are captured from the central network.”

Blockchain work in enabling more intelligence business processes due to its distributed trust and transparency, which often will bring 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 about the SAP Ariba Network – but you’ll find vast sums of other people who usually are not about the network. Obviously we want to have them. If you are using the blockchain technology to create that trust together, it’s a federated trust model. Then our supply chain would be much more efficient, a lot more trustworthy. It’ll increase the efficiency, as well as the risk that’s linked to managing suppliers will be managed better through the use of that technology.”

The ability in blockchain is its capability to scale, Almeida continued. “You want the scale of an SAP Ariba, have the scale from the quantity of suppliers, the volume of business that occurs about the network. So you’ve to possess a scale and technology together to create that occur.”
You will find challenges that should be addressed before blockchain can proliferate across supply chains, however. First, there is the must overcome embedded, calcified corporate thinking. Business leaders and organizations must divulge heart’s contents to the sharing of knowledge with mainly unseen network partners. “Enterprises usually are not accustomed to really exposing that sort of knowledge in any shape or form – or they’re very secretive about this,” said Sudhir Bhojwani, senior second in command in the product suite for SAP Ariba. “For the crooks to suddenly be involved in this calls for a change on their side. It requires seeing ‘what will be the benefit personally, is there a value who’s offers me?'” This sort of thinking is slowly coming around, he added. “You hear more companies – especially about the payment side – beginning to be involved in blockchain…. It’s still a technology only before companies want to say, ‘Hey, this is the value … on the other hand need to change myself at the same time.'”

In their article, Casey and Wong also realize 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, as their members aim to protect share of the market and profits.” Moreover, “there needs to be interoperability across private and public blockchains, which will require standards and agreements.”

Laws and regulations — which vary from nation to nation — also pose difficult to global scaling of blockchain, Casey and Wong add. “Even before governments could be convinced to compliment this effort, and do so inside a globally coordinated way, industry must concur with 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 previously happened from the consumer world. The incoming generation of employees and business leaders can help drive this change at the same time. “I personally trust next three to five years when you’ll find more-and-more Millennials from the workforce, you will notice people adopting blockchain and new ledgers with a considerably quicker pace,” he predicted.
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