Blockchain technology could be shaking up a supply chain in your area. It’s smarter, it’s faster, and yes it gets more participants up to speed.
In a recent piece at Harvard Business Review, Michael J. Casey and Pindar Wong remember 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, leading to better resource use for many.” They remember that several startups are springing up around blockchain-enabled supply chains, and companies for example Walmart, IBM and BHP Billiton are launching efforts to higher track the movement of goods and details.
Blockchain — enhanced by electronic tracking technology — is only able to help you speed up supply chains, while adding greater intelligence as you go along, they argue. “It could possibly be especially powerful when joined with smart contracts, where contractual rights and obligations, such as the terms for payment and delivery of goods and services, could 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 Nevada grew more animated if the subject of Buy Supply Chain Books came up. The panelists, tech leaders at SAP Ariba, explored the potential for advanced cloud services in helping to apply artificial intelligence and machine learning to a range of business supply chain processes. Dana Gardner, principal analyst at Interarbor Solutions, moderated.
Blockchain “will have huge effect on the way people go through the business network,” predicted Dinesh Shahane, chief technology officer for SAP Ariba. “Blockchain reaches in the market to the boundary of your respective network, to faraway locations that we aren’t even associated with, and brings that in a governance model where your processes and your transactions are captured from the central network.”
Blockchain will continue to work in enabling more intelligence business processes because of its distributed trust and transparency, which will take lots 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 about the SAP Ariba Network – but you can find hundreds of millions of other people who aren’t about the network. Obviously we would like to make them. The use of the blockchain technology to get that trust together, it’s a federated trust model. Then our supply chain could be much bigger efficient, additional trustworthy. It’ll improve the efficiency, as well as the risk that’s connected with managing suppliers will likely be managed better by using that technology.”
The ability in blockchain is its capacity to scale, Almeida continued. “You have to have the scale of the SAP Ariba, hold the scale from your variety of suppliers, how much business you do about the network. So you have to get a scale and technology together to make which happen.”
You can find challenges that should be addressed before blockchain can proliferate across supply chains, however. First, there is undoubtedly a must overcome embedded, calcified corporate thinking. Business leaders and organizations must speak in confidence to the sharing of information with mainly unseen network partners. “Enterprises aren’t employed to really exposing that kind of information in almost any shape or form – or these are very secretive about this,” said Sudhir Bhojwani, senior vp with the product suite for SAP Ariba. “For these phones suddenly participate in this implies an alteration on the side. It will take seeing ‘what will be the benefit personally, is there a value it offers me?'” These kinds of thinking is slowly coming around, he added. “You learn more companies – especially about the payment side – beginning to participate in blockchain…. It’s still a technology only until the companies mean, ‘Hey, this can be the value … on the other hand need to change myself also.'”
Within their article, Casey and Wong also remember that overall governance and standards are challenges to implementing blockchain to deal with supply chains on a global scale. There will be the open, public blockchains, but, “inevitably, private, closed ledgers operated by a consortium of companies will also arise, as his or her members aim to protect share of the market and profits.” In addition, “there should be interoperability across public and private blockchains, that may require standards and agreements.”
Laws and regulations — which differ from state to state — also pose challenging to global scaling of blockchain, Casey and Wong add. “Even before governments could be convinced to guide this effort, and to do so inside a globally coordinated way, industry must agree on guidelines 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 previously occurred from the consumer world. The incoming generation of employees and business leaders will help drive this change also. “I personally have confidence in next 3 to 5 years when you can find more-and-more Millennials from the workforce, you will note people adopting blockchain and new ledgers in a much faster pace,” he predicted.
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