Blockchain technology may be shaking up a logistics towards you. It’s smarter, it’s faster, also it gets more participants fully briefed.
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 tracks transactions via online “smart contracts” — will produce “dynamic demand chains in place of rigid supply chains, resulting in extremely effective resource use for those.” They notice that many 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 goods and information.
Blockchain — enhanced by electronic tracking technology — could only help speed up supply chains, while adding greater intelligence as you go along, they argue. “It may be especially powerful when combined with smart contracts, through which contractual rights and obligations, such as the terms for payment and delivery of goods and services, might 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 Nevada grew more animated once the subject of Supply Chain Books emerged. The panelists, tech leaders at SAP Ariba, explored the potential for advanced cloud services to help to make use of artificial intelligence and machine learning to a range of business logistics processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge impact on the way people look at the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches out to the boundary of the network, to faraway locations that we’re not even linked to, and brings that in to a governance model where your entire processes and all your transactions are captured in the central network.”
Blockchain will work in enabling more intelligence business processes due to its distributed trust and transparency, which experts claim will bring 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 than 2.5 million buyers and suppliers transacting about the SAP Ariba Network – but there are vast sums of others who are not about the network. Obviously we want to make them. If you are using the blockchain technology to bring that trust together, it’s a federated trust model. Then our logistics could be much more efficient, a lot more trustworthy. It’ll improve the efficiency, as well as the risk that’s associated with managing suppliers will probably be managed better by making use of that technology.”
The power in blockchain is being able to scale, Almeida continued. “You have to have the scale associated with an SAP Ariba, hold the scale through the number of suppliers, how much business that occurs about the network. So you’ve to have a scale and technology together to create which happen.”
You’ll find challenges that ought to be addressed before blockchain can proliferate across supply chains, however. First, there’s the must overcome embedded, calcified corporate thinking. Business leaders and organizations must confide in the sharing of data with mainly unseen network partners. “Enterprises are not used to really exposing that type of data in almost any shape or form – or they may be very secretive about it,” said Sudhir Bhojwani, senior v . p . of the product suite for SAP Ariba. “For them to suddenly take part in this involves a difference on his or her side. It requires seeing ‘what is the benefit for me, what’s the value it offers me?'” These kinds of thinking is slowly coming around, he added. “You hear more companies – especially about the payment side – needs to take part in blockchain…. It’s still a technology only before companies mean, ‘Hey, this can be the value … however have to change myself also.'”
In their article, Casey and Wong also notice that overall governance and standards are challenges to implementing blockchain to deal with supply chains on a global scale. There is also the open, public blockchains, but, “inevitably, private, closed ledgers run by a consortium of companies will also arise, as his or her members look to protect share of the market and profits.” Furthermore, “there should be interoperability across public and private blockchains, that can require standards and agreements.”
Regulations — which consist of place to place — also pose challenging to global scaling of blockchain, Casey and Wong add. “Even before governments might be convinced to guide this effort, also to achieve this in a globally coordinated way, industry must concur with best practices 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 occurred in the consumer world. The incoming generation of employees and business leaders might help drive this change also. “I personally have confidence in next less than six years when there are more-and-more Millennials in the workforce, you will see people adopting blockchain and new ledgers in a much faster pace,” he predicted.
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