How should business leaders approach blockchain?
Separating the signal from the noise in supply chain's most buzzworthy technology
Blockchain. Just about anyone who has attended a supply chain conference, kept up with business news, or even engaged in a conversation about the latest technology over the past couple years, has probably heard this term. And for good reason. The same immutable, distributed ledger that powered the rise of cryptocurrency, has great potential in helping companies monitor and track the physical, financial, and digital records of goods as they make their way across the global supply chain.
But what does it mean for business leaders today? And how should companies approach the nascent technology as they invest in achieving greater transparency and control across their global operations?
By nearly all accounts, blockchain will make a significant impact on technology’s landscape in the coming years. Gartner predicts that business value generated by blockchain will reach $176 billion by 2025, and $3.1 trillion by 2030. Expectations are lofty, and business leaders are questioning whether blockchain will deliver on its promise.
Blockchain believers say it will give greater visibility into the provenance of goods, rewrite the economic power grid, solve difficult global problems by democratizing wealth building, and empower people across the planet. While some of these claims may be hopeful, blockchain is undoubtedly a promising technology that has the potential to change and, in some cases, re-write the way we conduct business. Major names are putting their weight (and money) behind blockchain, including IBM, Maersk and Walmart. Meanwhile, across all industries and markets executives are concerned about missing out on the blockchain bandwagon. Should they?
Research and development is widespread, with both established and emerging technology firms exploring how to apply blockchain technology to just about any challenge imaginable. Vendors are running proof of concept projects and experimenting with the technology in varied fields, from traceability and data management to auditing and compliance automation. But blockchain remains a new and evolving type of technology. For all the energy and hype, a series of questions and challenges emerge. We are truly in the lessons learned phase, trying to figure out what works and what doesn’t. As a result, there is no shortage of experimentation in blockchain use cases. Let’s look at a few that Infor have explored.
- One startup focused on responsible sourcing by helping businesses track and trace materials throughout the production lifecycle to ensure safe, responsible production of goods. By tracing materials to the end customer, they can prevent conflict minerals or counterfeit goods from entering the supply chain. Companies and their suppliers share data on a blockchain. Purchase orders, invoices, ASNs and other documents flow from Infor Nexus to a Hyperledger-based blockchain platform. This enables verification of receipt and transfer of goods by numerous parties throughout the product lifecycle. But challenges remain, such as how to ensure accurate data is entered by trading partners and how to be certain that the goods on hand are truly those that the platform is tracking.
- We have also conducted a proof of concept with a start-up company that describes itself as a “smart bill of lading service.” Infor Nexus customers that opt into the service would share ASN, milestone and bill of lading data with the platform, where it is stored on their publicly accessible blockchain. Smart contracts built on Ethereum are executed the moment goods arrive or change hands. The service potentially eliminates paper from the transfer of goods and provides a decentralized way to track the history of transactions. But again, questions remain about adoption and feasibility to constitute ROI. We still believe this is a great use case for blockchain.
- One high-profile blockchain experiment is IBM’s Food Trust. IBM has partnered with Walmart to develop a blockchain platform for tracking food to the end consumer, attempting to ensure quality and safety of goods. IBM has made a lot of buzz and investment around blockchain and this project. Walmart has a history of shaping the technology industry and that may be the case here as well. Food and Beverage manufacturers are interested in understanding how they will need to connect to the platform. But the platform itself is in its early stages and the company is working on the technical details for taking on more developer partners. Infor continues to work with IBM as more details become available.
At Infor, we continue to keep our ear to the ground, evaluating blockchain platforms and conducting our own proof of concept projects. We are constantly in search for the right fit when it comes to this technology. To date, there has not been much return on investment for early adopters of blockchain in the supply chain. Cryptocurrency is one area that has gained traction and established itself as a disruptor. But the majority of projects have failed to deliver value due to various issues related to standardization, scalability, adoption and overall feasibility. Blockchain is a powerful technology, but there are still many real-world hurdles to overcome.
- Supply Chain
- Food & Beverage
- High Tech & Electronics
- Industrial Manufacturing
- Life Sciences
- Logistics & 3PL
- Infor Nexus