Search engine for touristic excursions to any place in the world Blockchain technology might be shaking up a logistics close to you. It’s smarter, it’s faster, and yes it gets more participants aboard.
In the recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong observe that blockchain — a web-based globally distributed general ledger that tracks transactions via online “smart contracts” — will produce “dynamic demand chains instead of rigid supply chains, producing more efficient resource use for all.” They observe that several startups are developing around blockchain-enabled supply chains, and companies such as Walmart, IBM and BHP Billiton are launching efforts to improve track the movement of merchandise and knowledge.
Blockchain — enhanced by electronic tracking technology — is only able to help speed up supply chains, while adding greater intelligence along the way, they argue. “It could possibly be especially powerful when combined with smart contracts, by which contractual rights and obligations, like the terms for payment and delivery of merchandise and services, can be automatically executed by an autonomous system that’s trusted by all signatories.”
A panel discussion held in the recent 2017 SAP Ariba LIVE conference in Vegas grew more animated if the subject of Supply Chain Books came up. The panelists, tech leaders at SAP Ariba, explored the potential of advanced cloud services to help to apply artificial intelligence and machine understanding how to a selection of business logistics processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge effect on the way people consider the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches out to the boundary of your network, to faraway places where we aren’t even attached to, and brings that right into a governance model where all your processes and all your transactions are captured within 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 on the SAP Ariba Network – but there are vast sums of other people who aren’t on the network. Obviously we would like to have them. If you are using the blockchain technology to bring that trust together, it’s a federated trust model. Then our logistics could be many more efficient, a lot more trustworthy. It will enhance the efficiency, as well as the risk that’s linked to managing suppliers is going to be managed better by using that technology.”
The electricity in blockchain is its ability to scale, Almeida continued. “You want the scale of your SAP Ariba, contain the scale in the amount of suppliers, the quantity of business that happens on the network. So you’ve to experience a scale and technology together to generate which happen.”
There are challenges that should 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 speak in confidence to the sharing of information with mainly unseen network partners. “Enterprises aren’t utilized to really exposing that type of information in different shape or form – or these are very secretive regarding it,” said Sudhir Bhojwani, senior v . p . with the product suite for SAP Ariba. “For these to suddenly be involved in this requires a difference on his or her side. It takes seeing ‘what could be the benefit to me, is there a value who’s offers me?'” This sort of thinking is slowly coming around, he added. “You hear more companies – especially on the payment side – needs to be involved in blockchain…. It’s still a technology only before the companies mean, ‘Hey, here is the value … on the other hand have to change myself at the same time.'”
Within their article, Casey and Wong also observe that overall governance and standards are challenges to implementing blockchain to manage supply chains on a 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 aim to protect business and profits.” Furthermore, “there needs to be interoperability across public and private blockchains, which will require standards and agreements.”
Laws and regulations — which consist of place to place — also pose an issue to global scaling of blockchain, Casey and Wong add. “Even before governments can be convinced to guide this effort, and also to do so in a globally coordinated way, industry must agree on tips 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 already taken place within 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 within the workforce, you will see people adopting blockchain and new ledgers at a considerably quicker pace,” he predicted.
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