Blockchain technology could possibly be shaking up a supply chain near you. It’s smarter, it’s faster, plus it gets more participants fully briefed.
Within a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong remember that blockchain — a web-based globally distributed general ledger that keeps track of transactions via online “smart contracts” — will produce “dynamic demand chains instead of rigid supply chains, producing better resource use for all those.” They remember that a number of startups are arising around blockchain-enabled supply chains, and firms such as Walmart, IBM and BHP Billiton are launching efforts to improve track the movement of items and information.

Blockchain — enhanced by electronic tracking technology — are only able to help speed up supply chains, while adding greater intelligence in the process, they argue. “It might be especially powerful when along with smart contracts, through which contractual rights and obligations, including the terms for payment and delivery of items 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 Vegas grew more animated in the event 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 use artificial intelligence and machine learning how to an array of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.

Blockchain “will have huge affect the way people consider the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches to the boundary of the network, to faraway places that we aren’t even connected to, and brings that right into a governance model where your entire processes and many types of your transactions are captured within the central network.”

Blockchain will continue to work in enabling more intelligence business processes for the distributed trust and transparency, which in turn brings more and 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 on the SAP Ariba Network – but there are vast sums of other people who are certainly not on the network. Obviously we’d like to make them. If you are using the blockchain technology to create that trust together, it’s a federated trust model. Then our supply chain could be many more efficient, a lot more trustworthy. It is going to enhance the efficiency, and all the risk that’s related to managing suppliers is going to be managed better by using that technology.”

The energy in blockchain is its capability to scale, Almeida continued. “You have to have the scale associated with an SAP Ariba, hold the scale from your quantity of suppliers, how much business that happens on the network. So you’ve to possess a scale and technology together to create that happen.”
You can find challenges that should 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 knowledge with mainly unseen network partners. “Enterprises are certainly not utilized to really exposing that sort of knowledge in a shape or form – or they may be very secretive regarding it,” said Sudhir Bhojwani, senior vice president from the product suite for SAP Ariba. “For these phones suddenly engage in this calls for an alteration on their side. It will take seeing ‘what may be the benefit personally, what’s the value which it offers me?'” This sort of thinking is slowly coming around, he added. “You learn more companies – especially on the payment side – starting to engage in blockchain…. It’s still a technology only before the companies mean, ‘Hey, this can be the value … however i ought to change myself too.'”

Of their article, Casey and Wong also remember 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 also arise, as his or her members seek to protect market share and profits.” Moreover, “there has to be interoperability across private and public blockchains, which will require standards and agreements.”

Legal guidelines — which change from country to country — also pose an issue to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to compliment this effort, and accomplish that within a globally coordinated way, industry must concur with tips and standards of technology and contract structure across international borders and jurisdictions.”

But modifications in thinking are inevitable, Bhojwani believes, noting that major shifts have already happened within the consumer world. The incoming generation of employees and business leaders can help drive this transformation too. “I personally rely on next 3-5 years when there are more-and-more Millennials within the workforce, you will observe people adopting blockchain and new ledgers at a faster pace,” he predicted.
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