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Blockchain in the Supply Chain: Starting Blocks for Success

Topics: EDI, Supply Chain
Photo appears courtesy of Scott Robinson.

You’ve seen the increasing drumbeat of sensational headlines about supply chain blockchain, for example:

Yes, there’s plenty of excitement and cheering. And phrases like “game-changing” and “massive disruption.”  Reality check – beyond the technology providers who will make buckets of money and besides the extraordinary effort being put forth in transportation and logistics by Maersk to grow their business, there truly are major and influential supply chain companies like AmerisourceBergen, Unilever and Walmart who have pilot projects well underway, as described in Walmart and 9 Food Giants Team Up on IBM Blockchain Plans.  Walmart has already filed a blockchain use-case patent application, according to this Digital Journal article.  Note that much of the supply chain effort to date has focused on package, pharmaceutical, and food with tracking and provenance pilot projects.

Blockchain technology is nascent and has many challenges to resolve before widespread adoption. While such certainly will not occur in 2018 for supply chain projects, it will happen more rapidly than one can now imagine. Furthermore, this writer believes the technology will be adopted and advanced for supply chain projects far more rapidly than for public financial transactions. See  Fundamental challenges with public blockchains for more on the latter and note how many of the challenges would be minimal for private blockchains.

So, what should the forward-thinking supply chain company be doing now to be better prepared to win the race? What about our current investments in technologies like EDI? How can we continue to best address these common inefficiencies in the supply chain while we’re still at the starting line?

  • lack of transparency due to inconsistent or unavailable data
  • high proportion of manual work
  • lack of interoperability between systems

While lack of transparency within a given company can be addressed by today’s properly used IT systems, the B2B architectures to support emerging supply chain visibility requirements are still evolving. This piece from Todd Margo of IBM, From EDI to Blockchain, does a good job of illustrating the unique transparency nature of the blockchain as compared with EDI and other point-to-point B2B. He says, “Events representing the exchange of B2B documents, for example, could be recorded on a blockchain, and made visible to all participants in a particular supply chain process…The actual exchange of B2B documents that occurs today can continue to operate as is, and a blockchain could simply provide a shared visibility. “

The Starting Blocks…

More than ever, the unchanging company is at risk for being left at the starting line or not being around for the finish. There’s plenty we can and must continue doing – here are our starting blocks:

  • We must document our visibility requirements for sourcing, fulfilling/manufacturing, transportation, and sales for all three kinds of business information – transactional, planning, and unstructured.
  • If our worthy goal is to have the right business information in the right hands in the chain at the right time and to have the information flow as hands-free as possible, then we must understand exactly what we are doing today. Gap analysis of today’s processes as compared with our goal will clarify our work plan.
  • Armed with this documentation and understanding, we’re in an excellent position to build out our digital supply chain by investing wisely in digital tools to obtain, use and deliver useful real-time data. This means real-time inventory and sales channel results, warehouse management, shipping system integration. It means moving as much transaction activity as possible from manual/email/fax/snail mail to EDI, EFT and APIs/web services. Check out the excellent “Four Steps to a Digital Supply Chain” section in this article from by Bain & Company partners Sam Israelit, Peter Hanbury, Rodrigo Mayo & Thomas Kwasniok.

Along the path to digitization, we will resolve many stakeholder integration and interoperability challenges such as data harmonization for items, including identification, units of measure and pricing; location management for warehouse slots, known delivery points, and drop ships; authorities and permission models for data access; meeting compliance requirements; and trading under the latest security initiatives.

Further, to hear the starting gun, you must stay informed about industry and consortium efforts built on blockchain technology. Remember, it took less than 15 years for the internet to disrupt the supply chain, it will take even less for the blockchain.

For basic blockchain information, this IBM article Blockchain basics: Intoduction to distributed ledgers is a great resource.

Learn more about how to thrive in a world full of supply chain challenges in our free eBook: Supply Chain Insights

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