4 ways blockchain will change supply chain forever and 4 things preventing it from doing-so
The supply chain industry isn’t known for being a first adopter – it’s still learning to use data, leverage mobile devices and take advantage of the sharing economy. This might be changing though.
- Smart contractscan automate key processes – Smart contracts are contracts that can executed automatically based on the fulfilment of certain conditions. Given the amount of complex paperwork in supply chain, there is the potential for creating smart contracts in many areas for speed, trust and security to name a few.
- Increase trust and security - Blockchain has the potential for adding trust and security to the transfer of assets in the supply chain (documents, physical assets, currency etc.) Can be hugely beneficial especially with – for example, helping SMEs with speeding up payment processes (credit checks, payment terms, shorten the order to cash cycle etc.)
- Change data exchange methods - Blockchain could also fundamentally change how data is exchanged in supply chain – for example replacing the documentation between parties during shipments through some carefully executed blockchains and smart contracts could eliminate major steps in shipping or moving goods: bill of lading, customs papers, etc. It also can eliminate a number of third parties involved in many transactions.
- CSR, quality control and maintenance reporting are other areas blockchain could be used effectively in the supply chain leveraging the trust, security and automation aspects of the technology.
- Convincing all parties to join – it’s been difficult enough getting most supply chain partners to agree on current data exchange standards, what’s going to change with regards to blockchain?
- Tech barriers: the difficulties of scaling blockchain – a blockchain is inherently inefficient because it involves the continuous updating of the ledger. If a system is to be widely adopted, can technology cope?
- Bridging trust between what the block says vs. physical reality – Blockchain might help guarantee that transactions have happened and when, but they don’t guarantee anything if anything physical is associated with the transaction. Ie. Blockchain can’t verify a product’s authenticity or if two parties are colluding on something.
- Blockchain doesn’t prevent parties from colluding. While the blockchain is visible to all, anything that happens outside of the ledger is anyone’s guess. There are workarounds to this such as using IoT to automatically fulfil smart contracts and avoid any type of tampering, but these are all in their very early days.
- The European Logistics CIO Forum, Amsterdam, March 16-17
- The 3PL Summit and Supply Chain Summit, Chicago, June 14-16