Is it time to put blockchain in your supply chain?

In the OpenText™ Business Network – top ten supply chain predictions for 2018 blog post, prediction number 3 was Blockchain starts to be embraced across the supply chain. The full prediction stated:

2017 was a year of blockchain speculation, pre-announcements, partnerships and pilots in the supply chain. Examples include: supply chain finance, food track and trace (for both authenticity and food safety), shipping container tracking (most blockchains for tracking also include using Internet of Things (IoT) technology to help automate tracking) and tracking raw materials from point of origin to prove absence of conflict minerals or use of slave labor. Gartner Hype Cycle for Supply Chain Strategy, 2017 forecasts that the plateau of productivity will not occur for 10 or more years. Gartner sees ‘Blockchain in the supply chain’ on the rising slope of expectations for the technology and the peak of inflated expectations hasn’t been reached yet. In 2018 we’ll start to see pilot projects begin to show success (and a few failures) as companies learn how to best implement this technology and make it accessible.
Today, companies are looking for ways to apply blockchain technology to the supply chain. As with any new technology, the first step is to conduct pilot projects to test how the technology might be applied to solve specific problems. As Gartner Hype Cycle for Supply Chain Strategy predicts, it could be more than 10 years before use of blockchain in supply chain reaches the point where it is in common usage and reaches the “plateau of productivity.”

In the meantime, companies continue to announce blockchain efforts that apply directly to supply chain activities. Typically, when discussing the use of blockchain technology in any industry, you start with possible use cases. In the prediction above, I mention supply chain finance and several track and trace use cases (food, shipping containers, and raw materials).

The supply chain finance use case is frequently mentioned because the use of blockchain started with Bitcoin and financial transactions. Supply chain finance sits at the intersection of supply chain and finance. The core idea for using blockchain is that a lending institution could monitor supply chain events and evaluate risks for lending money to make payments. In addition, the lending process could happen automatically via the blockchain with appropriate terms for each loan.

The freight industry, a key element of supply chains, has created a consortium called Blockchain in Transport Alliance (BiTA).

The purpose of BiTA is to assist in development of blockchain standards and education for the freight industry.

BiTA list 8 possible use cases. You can find them in the BiTA public deck here.

The list includes use cases for performance history, vehicle maintenance, quality assurance, compliance, capacity monitoring, payments and pricing, fraud detection and theft prevention. A number of companies have signed up – including shippers, logistics providers, software companies, and services providers.

One thing not mentioned in the prediction, but is critical for thinking about blockchain. It is highly likely that companies will be asked to participate in multiple blockchains.

For instance, consider the use of blockchain for customs processes. How many countries do you ship to or receive goods from? You may need to participate in a blockchain for each country. Even for seemingly simple activities, you should get ready to participate in multiple blockchains.

Consider the idea of tracking diamonds. The Kimberley Process – an UN-backed initiative aimed at keeping conflict diamonds out of the global precious stones market is looking at how to use blockchain for tracking diamonds and helping certify that some stones are not conflict diamonds. Simultaneously, De Beers is planning to do the same – building out its own platform. If a company buys diamonds from De Beers (the world’s largest miner of diamond) and one or more of its competitors – they will likely need to participate in both blockchain implementations.

What should you do? First, learn about Blockchain technology and start considering potential use case for blockchain in your business. You may also want to join relevant standards groups or consortiums. If possible, try creating a pilot project.

A recent article titled “The Truth about Blockchain” from Harvard Business Review suggests creating solutions that are “relatively high in novelty (uniqueness) but need only a limited number of user to create immediate value, so it’s still relatively easy to promote their adoption.”

Greg Horton

Greg Horton is a Product Marketing Director for OpenText Business Network. Greg is responsible for sharing how OpenText B2B Integration services and Active Applications can impact business agility, profitability and growth. Greg brings more than 20 years of enterprise software experience. Prior to joining OpenText, he held positions in marketing, product planning and product management at Microsoft, Relex Software, M*Modal, Epicor Software and Serena Software.

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