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.
In a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong notice that blockchain — a web-based globally distributed general ledger that keeps track of transactions via online “smart contracts” — will produce “dynamic demand chains rather than rigid supply chains, producing more efficient resource use for all those.” They notice that numerous startups are bobbing up around blockchain-enabled supply chains, and companies such as Walmart, IBM and BHP Billiton are launching efforts to higher track the movement of items and knowledge.

Blockchain — enhanced by electronic tracking technology — could only help speed up supply chains, while adding greater intelligence in the process, they argue. “It could be especially powerful when along with smart contracts, through which contractual rights and obligations, such as the terms for payment and delivery of items and services, might 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 Sin city grew more animated in the event the subject of Supply Chain Books came out. The panelists, tech leaders at SAP Ariba, explored the potential of advanced cloud services in assisting to use artificial intelligence and machine learning to an array of business logistics processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.

Blockchain “will have huge influence on the way in which people consider 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 where we are really not even associated with, and brings that right into a governance model where all your processes and your transactions are captured in the central network.”

Blockchain works in enabling more intelligence business processes due to its distributed trust and transparency, which often will bring the best way to into connected supply-chain networks, said Sanjay Almeida, senior second in command 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 there are billions of other people who are not about the network. Obviously we’d like to get them. The use of the blockchain technology to get that trust together, it’s a federated trust model. Then our logistics will be many more efficient, far more trustworthy. It’s going to enhance the efficiency, and all the risk that’s linked to managing suppliers will probably be managed better by utilizing that technology.”

The power in blockchain is its capacity to scale, Almeida continued. “You have to have the scale of your SAP Ariba, have the scale through the variety of suppliers, the volume of business you do about the network. So you’ve got to experience a scale and technology together to create that occur.”
You will find challenges that should be addressed before blockchain can proliferate across supply chains, however. First, there’s the have to overcome embedded, calcified corporate thinking. Business leaders and organizations have to divulge heart’s contents to the sharing of information with mainly unseen network partners. “Enterprises are not employed to really exposing that kind of information in any shape or form – or these are very secretive over it,” said Sudhir Bhojwani, senior second in command of the product suite for SAP Ariba. “For them to suddenly engage in this calls for a big change on the side. It requires seeing ‘what will be the benefit for me, is there a value who’s offers me?'” This kind of thinking is slowly coming around, he added. “You hear more companies – especially about the payment side – beginning engage in blockchain…. It’s still a technology only until the companies mean, ‘Hey, here is the value … however i have to change myself also.'”

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

Regulations — which differ from state to state — also pose an issue to global scaling of blockchain, Casey and Wong add. “Even before governments might be convinced to compliment this effort, also to do so inside a globally coordinated way, industry must agree with guidelines and standards of technology and contract structure across international borders and jurisdictions.”

But adjustments to thinking are inevitable, Bhojwani believes, noting that major shifts have previously taken place in the consumer world. The incoming generation of employees and business leaders will help drive this modification also. “I personally have confidence 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 at the considerably quicker pace,” he predicted.
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