Blockchain technology may be shaking up a supply chain near you. It’s smarter, it’s faster, and yes it gets more participants fully briefed.
In the recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong notice that blockchain — an internet globally distributed general ledger that monitors transactions via online “smart contracts” — will produce “dynamic demand chains in place of rigid supply chains, causing extremely effective resource use for all.” They notice that a number of startups are arising around blockchain-enabled supply chains, and companies like Walmart, IBM and BHP Billiton are launching efforts to improve track the movement of items and data.

Blockchain — enhanced by electronic tracking technology — can only speed up supply chains, while adding greater intelligence in the process, they argue. “It could possibly be especially powerful when coupled with smart contracts, through which contractual rights and obligations, such as the terms for payment and delivery of items and services, could be automatically executed by an autonomous system that’s trusted by all signatories.”

A panel discussion held with the recent 2017 SAP Ariba LIVE conference in Vegas grew more animated when the subject of Supply Chain Books came out. The panelists, tech leaders at SAP Ariba, explored the potential for advanced cloud services in assisting to utilize artificial intelligence and machine learning to an array of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.

Blockchain “will have huge impact on just how people go through the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches over to the boundary of your respective network, to faraway places that we’re not even associated with, and brings that right into a governance model where your processes and your transactions are captured in the central network.”

Blockchain will work in enabling more intelligence business processes due to the distributed trust and transparency, which will take the best way to into connected supply-chain networks, said Sanjay Almeida, senior v . p . and chief product officer of Network Solutions for SAP Ariba. “We have more than 2.5 million buyers and suppliers transacting about the SAP Ariba Network – but you can find billions of others who usually are not about the network. Obviously we’d like to buy them. The use of the blockchain technology to get that trust together, it’s a federated trust model. Then our supply chain could be much bigger efficient, additional trustworthy. It’ll help the efficiency, as well as the risk that’s related to managing suppliers will likely be managed better by utilizing that technology.”

The energy in blockchain is its capacity to scale, Almeida continued. “You want the scale of an SAP Ariba, have the scale through the variety of suppliers, the volume of business that happens about the network. So you have got to get a scale and technology together to generate which occur.”
You can find challenges that need to be addressed before blockchain can proliferate across supply chains, however. First, there is the must overcome embedded, calcified corporate thinking. Business leaders and organizations must speak in confidence to the sharing of data with mainly unseen network partners. “Enterprises usually are not accustomed to really exposing that type of data in different shape or form – or they’re very secretive about this,” said Sudhir Bhojwani, senior v . p . from the product suite for SAP Ariba. “For these phones suddenly take part in this requires an alteration on their own side. It requires seeing ‘what is the benefit for me personally, what’s the value that it offers me?'” This sort of thinking is slowly coming around, he added. “You learn more companies – especially about the payment side – needs to take part in blockchain…. It’s still a technology only before the companies mean, ‘Hey, this is actually the value … on the other hand must change myself also.'”

In their article, Casey and Wong also notice that overall governance and standards are challenges to implementing blockchain to manage supply chains on the global scale. There is also the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies will also arise, as their members attempt to protect business and profits.” Additionally, “there has to be interoperability across public and private blockchains, that will require standards and agreements.”

Laws and regulations — which differ from nation to nation — also pose challenging to global scaling of blockchain, Casey and Wong add. “Even before governments could be convinced to guide this effort, and also to accomplish that within a globally coordinated way, industry must acknowledge recommendations 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 previously occurred in the consumer world. The incoming generation of employees and business leaders may help drive this variation also. “I personally trust next less than six years when you can find more-and-more Millennials in the workforce, you will see people adopting blockchain and new ledgers at a much faster pace,” he predicted.
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