Blockchain technology may be shaking up a supply chain near you. It’s smarter, it’s faster, and yes it gets more participants on board.
In the recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong notice that blockchain — an online globally distributed general ledger that keeps track of transactions via online “smart contracts” — will produce “dynamic demand chains rather than rigid supply chains, resulting in better resource use for all.” They notice that several startups are arising around blockchain-enabled supply chains, and companies such as Walmart, IBM and BHP Billiton are launching efforts to improve track the movement of merchandise and information.
Blockchain — enhanced by electronic tracking technology — are only able to speed up supply chains, while adding greater intelligence along the way, 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 merchandise 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 Sin city grew more animated once the subject of Supply Chain Books emerged. The panelists, tech leaders at SAP Ariba, explored the opportunity of advanced cloud services in aiding to utilize artificial intelligence and machine learning how 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 consider the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches to the boundary of one’s network, to faraway places where we are really not even attached to, and brings that in a governance model where your entire processes and many types of your transactions are captured from the central network.”
Blockchain will continue to work in enabling more intelligence business processes because of its distributed trust and transparency, which experts claim provides the best way to 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 on the SAP Ariba Network – but you will find billions of others who are certainly not on the network. Obviously we want to make them. If you utilize the blockchain technology to bring that trust together, it’s a federated trust model. Then our supply chain would be many more efficient, much more trustworthy. It’s going to enhance the efficiency, and all sorts of risk that’s related to managing suppliers will likely be managed better by using that technology.”
The electricity in blockchain is its capability to scale, Almeida continued. “You want the scale of an SAP Ariba, contain the scale from the variety of suppliers, the quantity of business that happens on the network. So you’ve got to experience a scale and technology together to make that occur.”
You can find challenges that ought to be addressed before blockchain can proliferate across supply chains, however. First, there’s the must overcome embedded, calcified corporate thinking. Business leaders and organizations must confide in the sharing of information with mainly unseen network partners. “Enterprises are certainly not employed to really exposing that sort of information in a shape or form – or they may be very secretive about it,” said Sudhir Bhojwani, senior vice president in the product suite for SAP Ariba. “For these to suddenly take part in this requires a difference on their own side. It requires seeing ‘what will be the benefit to me, is there a value that it offers me?'” This sort of thinking is slowly coming around, he added. “You learn more companies – especially on the payment side – beginning take part in blockchain…. It’s still a technology only before the companies am getting at, ‘Hey, here is the value … however i must change myself as well.'”
Of their article, Casey and Wong also notice that overall governance and standards are challenges to implementing blockchain to deal with supply chains on the global scale. There is the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies will also arise, as his or her members aim to protect share of the market and profits.” In addition, “there has to be interoperability across private and public blockchains, that may require standards and agreements.”
Legal guidelines — which change from nation to nation — also pose an issue to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to aid this effort, also to do this inside a globally coordinated way, industry must agree on best practices 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 taken place from the consumer world. The incoming generation of employees and business leaders may help drive this modification as well. “I personally rely on next 3 to 5 years when you will find more-and-more Millennials from the workforce, you will see people adopting blockchain and new ledgers at the much faster pace,” he predicted.
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