Blockchain technology could be shaking up a supply chain towards you. It’s smarter, it’s faster, and it gets more participants on board.
In the recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong notice that blockchain — a web based globally distributed general ledger that tracks transactions via online “smart contracts” — will produce “dynamic demand chains as opposed to rigid supply chains, causing more effective resource use for all those.” They notice that numerous startups are springing up around blockchain-enabled supply chains, and corporations like Walmart, IBM and BHP Billiton are launching efforts to improve track the movement of merchandise and details.
Blockchain — enhanced by electronic tracking technology — could only hasten supply chains, while adding greater intelligence on the way, they argue. “It may be especially powerful when combined with smart contracts, where contractual rights and obligations, such as the terms for payment and delivery of merchandise 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 Sin city grew more animated in the event the subject of Supply Chain Books emerged. 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 a variety of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge impact on the way in which people look at the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches in the market to the boundary of the network, to faraway places that we aren’t even connected to, and brings that in a governance model where all of your processes and many types of your transactions are captured inside the central network.”
Blockchain works in enabling more intelligence business processes because of its distributed trust and transparency, which will take the best way to 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 on the SAP Ariba Network – but you’ll find billions of other people who usually are not on the network. Obviously we would like to make them. If you utilize the blockchain technology to bring that trust together, it’s a federated trust model. Then our supply chain can be lot more efficient, much more trustworthy. It’ll enhance the efficiency, and all sorts of risk that’s linked to managing suppliers will be managed better by making use of that technology.”
The power in blockchain is its capacity to scale, Almeida continued. “You want the scale of your SAP Ariba, hold the scale in the quantity of suppliers, the quantity of business that happens on the network. So you’ve got to get a scale and technology together to create that occur.”
There are challenges that must 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 employed to really exposing that kind of data in almost any shape or form – or they may be very secretive about this,” said Sudhir Bhojwani, senior vp from the product suite for SAP Ariba. “For them to suddenly engage in this implies a change on their own side. It needs seeing ‘what is the benefit for me personally, exactly what is the value which it offers me?'” This type of thinking is slowly coming around, he added. “You hear more companies – especially on the payment side – beginning to engage in blockchain…. It’s still a technology only before the companies want to say, ‘Hey, this is the value … however i have to change myself as well.'”
Of their article, Casey and Wong also notice that overall governance and standards are challenges to implementing blockchain to control supply chains on the global scale. There is the open, public blockchains, but, “inevitably, private, closed ledgers run by a consortium of companies will also arise, for their members seek to protect share of the market and profits.” In addition, “there must be interoperability across public and private blockchains, that will require standards and agreements.”
Regulations — which change from place to place — also pose challenging to global scaling of blockchain, Casey and Wong add. “Even before governments could be convinced to aid this effort, and 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 modifications in thinking are inevitable, Bhojwani believes, noting that major shifts have taken place inside the consumer world. The incoming generation of employees and business leaders will help drive this change as well. “I personally trust next 3 to 5 years when you’ll find more-and-more Millennials inside the workforce, you will note people adopting blockchain and new ledgers at a much faster pace,” he predicted.
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