Blockchain technology might be shaking up a supply chain in your area. It’s smarter, it’s faster, plus 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 monitors transactions via online “smart contracts” — will produce “dynamic demand chains in place of rigid supply chains, producing better resource use for those.” They realize that a number of startups are developing around blockchain-enabled supply chains, and firms such as Walmart, IBM and BHP Billiton are launching efforts to better track the movement of products and data.
Blockchain — enhanced by electronic tracking technology — is only able to speed up supply chains, while adding greater intelligence along the way, they argue. “It could be especially powerful when coupled with smart contracts, where contractual rights and obligations, such as the terms for payment and delivery of products and services, can be automatically executed by an autonomous system that’s trusted by all signatories.”
A panel discussion held at the recent 2017 SAP Ariba LIVE conference in Las Vegas grew more animated if the subject of Supply Chain Books Online showed up. The panelists, tech leaders at SAP Ariba, explored the chance of advanced cloud services in assisting to make use of 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 affect just how people consider the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches out to the boundary of your network, to faraway locations where we’re not even attached to, and brings that in a governance model where all your processes and all your transactions are captured in the central network.”
Blockchain work in enabling more intelligence business processes because of its distributed trust and transparency, which often provides 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 than 2.5 million buyers and suppliers transacting for the SAP Ariba Network – but there are hundreds of millions of individuals that are not for the network. Obviously we’d like to get them. If you use the blockchain technology to take that trust together, it’s a federated trust model. Then our supply chain could be much bigger efficient, a lot more trustworthy. It will help the efficiency, and all the risk that’s linked to managing suppliers will be managed better by utilizing that technology.”
The ability in blockchain is its ability to scale, Almeida continued. “You want the scale associated with an SAP Ariba, contain the scale in the variety of suppliers, the amount of business that happens for the network. So you have got to possess a scale and technology together to make that happen.”
You can find challenges that need to be addressed before blockchain can proliferate across supply chains, however. First, there is 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 are not employed to really exposing that kind of info in any shape or form – or these are very secretive regarding it,” said Sudhir Bhojwani, senior vice president with the product suite for SAP Ariba. “For these to suddenly engage in this involves a difference on their side. It will take seeing ‘what may be the benefit personally, what is the value who’s offers me?'” This kind of thinking is slowly coming around, he added. “You hear more companies – especially for the payment side – beginning engage in blockchain…. It’s still a technology only before the companies am getting at, ‘Hey, this can be the value … but I must change myself as well.'”
Inside their article, Casey and Wong also realize that overall governance and standards are challenges to implementing blockchain to control supply chains on the global scale. There will be the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies also arise, as his or her members look to protect market share and profits.” In addition, “there needs to be interoperability across private and public blockchains, which will require standards and agreements.”
Laws and regulations — which vary from place to place — also pose difficult to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to aid this effort, and also to do so in 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 happened in the consumer world. The incoming generation of employees and business leaders will help drive this transformation as well. “I personally trust next three to five years when there are more-and-more Millennials in the workforce, you will note people adopting blockchain and new ledgers at a faster pace,” he predicted.
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