Blockchain technology could possibly be shaking up a logistics close to you. It’s smarter, it’s faster, also it gets more participants on board.
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 monitors transactions via online “smart contracts” — will produce “dynamic demand chains in place of rigid supply chains, leading to more effective resource use for all.” They notice that a number of startups are bobbing up around blockchain-enabled supply chains, and firms including Walmart, IBM and BHP Billiton are launching efforts to higher track the movement of products and knowledge.

Blockchain — enhanced by electronic tracking technology — is only able to hasten 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, such as terms for payment and delivery of products and services, could be automatically executed by an autonomous system that’s trusted by all signatories.”

A panel discussion held on the recent 2017 SAP Ariba LIVE conference in Sin city grew more animated once the subject of Buy Supply Chain Books emerged. The panelists, tech leaders at SAP Ariba, explored the potential for advanced cloud services in aiding to apply artificial intelligence and machine understanding how to a range of business logistics processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.

Blockchain “will have huge effect on the way people glance at the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches over to the boundary of one’s network, to faraway places where we are really not even associated with, and brings that into a governance model where your entire processes and many types of your transactions are captured in the central network.”

Blockchain works in enabling more intelligence business processes because of its distributed trust and transparency, which brings more and more people into connected supply-chain networks, said Sanjay Almeida, senior vp and chief product officer of Network Solutions for SAP Ariba. “We have more than 2.5 million buyers and suppliers transacting around the SAP Ariba Network – but there are hundreds of millions of other people who are not around the network. Obviously we wish to make them. The use of the blockchain technology to take that trust together, it’s a federated trust model. Then our logistics can be much more efficient, additional trustworthy. It’ll help the efficiency, and all the risk that’s associated with managing suppliers will be managed better by making use of that technology.”

The energy in blockchain is being able to scale, Almeida continued. “You have to have the scale associated with an SAP Ariba, have the scale through the variety of suppliers, the volume of business that takes place around the network. So you have to possess a scale and technology together to create that happen.”
There are challenges that need to be addressed before blockchain can proliferate across supply chains, however. First, there is undoubtedly a need to overcome embedded, calcified corporate thinking. Business leaders and organizations need to open up to the sharing of knowledge with mainly unseen network partners. “Enterprises are not employed to really exposing that type of knowledge in a shape or form – or these are very secretive over it,” said Sudhir Bhojwani, senior vp from the product suite for SAP Ariba. “For them to suddenly be involved in this implies a change on their side. It takes seeing ‘what is the benefit for me personally, is there a value which it offers me?'” This sort of thinking is slowly coming around, he added. “You learn more companies – especially around the payment side – beginning to be involved in blockchain…. It’s still a technology only prior to the companies want to say, ‘Hey, here is the value … but I must change myself at the same time.'”

Inside their article, Casey and Wong also notice that overall governance and standards are challenges to implementing blockchain to handle supply chains with a global scale. There will be the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies will also arise, for their members look to protect business and profits.” In addition, “there needs to be interoperability across private and public blockchains, that will require standards and agreements.”

Legal guidelines — which differ from country to country — also pose a challenge to global scaling of blockchain, Casey and Wong add. “Even before governments could be convinced to compliment this effort, also to do this within a globally coordinated way, industry must agree with best practices and standards of technology and contract structure across international borders and jurisdictions.”

But alterations in thinking are inevitable, Bhojwani believes, noting that major shifts have happened in the consumer world. The incoming generation of employees and business leaders can help drive this modification at the same time. “I personally believe in next three to five years when there are more-and-more Millennials in the workforce, you will see people adopting blockchain and new ledgers with a considerably quicker pace,” he predicted.
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