Blockchain technology might be shaking up a logistics near you. It’s smarter, it’s faster, and yes it gets more participants fully briefed.
Within a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong notice that blockchain — a web-based globally distributed general ledger that tracks transactions via online “smart contracts” — will produce “dynamic demand chains instead of rigid supply chains, causing more efficient resource use for those.” They notice that a number of startups are developing around blockchain-enabled supply chains, companies such as Walmart, IBM and BHP Billiton are launching efforts to better track the movement of merchandise and information.
Blockchain — enhanced by electronic tracking technology — can only speed up supply chains, while adding greater intelligence along the way, they argue. “It could possibly be especially powerful when joined with smart contracts, through which contractual rights and obligations, such as terms for payment and delivery of merchandise and services, can 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 in the event the subject of Supply Chain Books came out. The panelists, tech leaders at SAP Ariba, explored the opportunity of advanced cloud services in assisting to apply artificial intelligence and machine understanding how to a variety of business logistics processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge influence on the best way people go through the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches in the market to the boundary of your network, to faraway locations that we’re not even attached to, and brings that right into a governance model where all your processes and all sorts of your transactions are captured inside the central network.”
Blockchain works in enabling more intelligence business processes for the distributed trust and transparency, which in turn 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 have more than 2.5 million buyers and suppliers transacting for the SAP Ariba Network – but you’ll find hundreds of millions of other people who usually are not for the network. Obviously we would like to buy them. If you are using the blockchain technology to create that trust together, it’s a federated trust model. Then our logistics could be lot more efficient, much more trustworthy. It is going to help the efficiency, and all the risk that’s related to managing suppliers will be managed better through the use of that technology.”
The energy in blockchain is its ability to scale, Almeida continued. “You have to have the scale of the SAP Ariba, possess the scale from your variety of suppliers, the volume of business that takes place for the network. So you’ve to experience a scale and technology together to produce that occur.”
You will find challenges that should be addressed before blockchain can proliferate across supply chains, however. First, there’s the have to overcome embedded, calcified corporate thinking. Business leaders and organizations have to divulge heart’s contents to the sharing of data with mainly unseen network partners. “Enterprises usually are not accustomed to really exposing that type of data in almost any shape or form – or they’re very secretive over it,” said Sudhir Bhojwani, senior vice president of the product suite for SAP Ariba. “For them to suddenly participate in this implies an alteration on the side. It takes seeing ‘what may be the benefit to me, is there a value which it offers me?'” These kinds of thinking is slowly coming around, he added. “You learn more companies – especially for the payment side – beginning to participate in blockchain…. It’s still a technology only before companies am getting at, ‘Hey, here is the value … however must change myself as well.'”
Within their article, Casey and Wong also notice that overall governance and standards are challenges to implementing blockchain to control supply chains with a global scale. There is the open, public blockchains, but, “inevitably, private, closed ledgers run by a consortium of companies also arise, his or her members aim to protect business and profits.” Moreover, “there should be interoperability across private and public blockchains, that can require standards and agreements.”
Regulations — which change from country to country — also pose difficult to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to compliment this effort, and to accomplish that in a globally coordinated way, industry must agree with recommendations 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 inside the consumer world. The incoming generation of employees and business leaders will help drive this change as well. “I personally believe in next three to five years when you’ll find more-and-more Millennials inside the workforce, you will observe people adopting blockchain and new ledgers at a faster pace,” he predicted.
For additional information about Supply Chain Books explore our new web page: click for more