Blockchain technology could possibly be shaking up a logistics near you. It’s smarter, it’s faster, plus it gets more participants on board.
Inside a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong remember that blockchain — an online globally distributed general ledger that keeps track of transactions via online “smart contracts” — will produce “dynamic demand chains as opposed to rigid supply chains, causing extremely effective resource use for many.” They remember that many startups are bobbing up around blockchain-enabled supply chains, companies including Walmart, IBM and BHP Billiton are launching efforts to better track the movement of products and knowledge.
Blockchain — enhanced by electronic tracking technology — could only speed up supply chains, while adding greater intelligence as you go along, they argue. “It could possibly be especially powerful when joined with smart contracts, by which contractual rights and obligations, including the terms for payment and delivery of products and services, might 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 Nevada grew more animated once the subject of Supply Chain Books showed up. The panelists, tech leaders at SAP Ariba, explored the potential of advanced cloud services in assisting to use artificial intelligence and machine learning to a variety of business logistics processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge impact on the way people go through the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches to the boundary of your network, to faraway places that we are not even connected to, and brings that in a governance model where your entire processes and all sorts of your transactions are captured from the central network.”
Blockchain will continue to work in enabling more intelligence business processes due to the distributed trust and transparency, which will take more people into connected supply-chain networks, said Sanjay Almeida, senior vp and chief product officer of Network Solutions for SAP Ariba. “We have an overabundance of than 2.5 million buyers and suppliers transacting around the SAP Ariba Network – but there are vast sums of others who usually are not around the network. Obviously we would like to get them. If you use the blockchain technology to take that trust together, it’s a federated trust model. Then our logistics would be many more efficient, far more trustworthy. It will improve the efficiency, and all the risk that’s related to managing suppliers will likely be managed better by utilizing that technology.”
The power in blockchain is its capability to scale, Almeida continued. “You have to have the scale associated with an SAP Ariba, have the scale in the number of suppliers, the amount of business you do around the network. So you have got to experience a scale and technology together to produce which occur.”
You’ll find challenges that ought to be addressed before blockchain can proliferate across supply chains, however. First, there is the should overcome embedded, calcified corporate thinking. Business leaders and organizations should open up to the sharing of data with mainly unseen network partners. “Enterprises usually are not used to really exposing that type of data in any shape or form – or these are very secretive over it,” said Sudhir Bhojwani, senior vp with the product suite for SAP Ariba. “For them to suddenly participate in this requires a change on the side. It takes seeing ‘what may be the benefit for me personally, what’s the value that it offers me?'” This kind of thinking is slowly coming around, he added. “You learn more companies – especially around the payment side – needs to participate in blockchain…. It’s still a technology only until the companies want to say, ‘Hey, this can be the value … however need to change myself too.'”
Within their article, Casey and Wong also remember that overall governance and standards are challenges to implementing blockchain to deal with supply chains on a global scale. There is the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies also arise, his or her members look to protect business and profits.” Moreover, “there has to be interoperability across private and public blockchains, that can require standards and agreements.”
Legal guidelines — which vary from state to state — also pose challenging to global scaling of blockchain, Casey and Wong add. “Even before governments might be convinced to support this effort, and do so inside a globally coordinated way, industry must acknowledge guidelines and standards of technology and contract structure across international borders and jurisdictions.”
But modifications in thinking are inevitable, Bhojwani believes, noting that major shifts previously happened from the consumer world. The incoming generation of employees and business leaders might help drive this transformation too. “I personally believe in next 3-5 years when there are more-and-more Millennials from the workforce, you will see people adopting blockchain and new ledgers in a faster pace,” he predicted.
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