Blockchain technology might be shaking up a supply chain close to you. It’s smarter, it’s faster, plus it gets more participants up to speed.
Inside a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong observe that blockchain — an internet globally distributed general ledger that tracks transactions via online “smart contracts” — will produce “dynamic demand chains rather than rigid supply chains, leading to better resource use for many.” They observe that a number of startups are bobbing up around blockchain-enabled supply chains, and firms like Walmart, IBM and BHP Billiton are launching efforts to improve track the movement of goods and data.

Blockchain — enhanced by electronic tracking technology — is only able to hasten supply chains, while adding greater intelligence along the way, they argue. “It may be especially powerful when along with smart contracts, through which contractual rights and obligations, such as terms for payment and delivery of goods 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 when the subject of Supply Chain Books emerged. The panelists, tech leaders at SAP Ariba, explored the potential for advanced cloud services to help 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 just how people look at the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches out to the boundary of your network, to faraway places that we aren’t even linked to, and brings that right into a governance model where all your processes and many types of your transactions are captured from the central network.”

Blockchain will continue to work in enabling more intelligence business processes due to its distributed trust and transparency, which often provides lots more people into connected supply-chain networks, said Sanjay Almeida, senior v . p . and chief product officer of Network Solutions for SAP Ariba. “We have an overabundance of than 2.5 million buyers and suppliers transacting on the SAP Ariba Network – but you will find hundreds of millions of individuals that usually are not on the network. Obviously we would like to get them. If you utilize the blockchain technology to take that trust together, it’s a federated trust model. Then our supply chain will be much more efficient, far more trustworthy. It will improve the efficiency, and all sorts of risk that’s associated with managing suppliers will likely be managed better through the use of that technology.”

The energy in blockchain is its ability to scale, Almeida continued. “You want the scale of an SAP Ariba, possess the scale in the variety of suppliers, the quantity of business that takes place on the network. So you’ve to get a scale and technology together to create that occur.”
You can find challenges that should be addressed before blockchain can proliferate across supply chains, however. First, there is undoubtedly a must overcome embedded, calcified corporate thinking. Business leaders and organizations must open up to the sharing of knowledge with mainly unseen network partners. “Enterprises usually are not used to really exposing that sort of knowledge in different shape or form – or these are very secretive regarding it,” said Sudhir Bhojwani, senior v . p . in the product suite for SAP Ariba. “For the crooks to suddenly participate in this implies a big change on the side. It requires seeing ‘what is the benefit to me, what is the value that it offers me?'” This sort of thinking is slowly coming around, he added. “You hear more companies – especially on the payment side – starting to participate in blockchain…. It’s still a technology only prior to the companies mean, ‘Hey, this is the value … however i must change myself at the same time.'”

Of their article, Casey and Wong also observe that overall governance and standards are challenges to implementing blockchain to manage supply chains with a global scale. There is the open, public blockchains, but, “inevitably, private, closed ledgers run by a consortium of companies will also arise, as his or her members attempt to protect business and profits.” Furthermore, “there needs to be interoperability across public and private blockchains, that will require standards and agreements.”

Legislation — which vary from place to place — also pose challenging to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to guide this effort, and to 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 have happened from the consumer world. The incoming generation of employees and business leaders may help drive this transformation at the same time. “I personally believe in next 3-5 years when you will find more-and-more Millennials from the workforce, you will see people adopting blockchain and new ledgers at a considerably faster pace,” he predicted.
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