Among the findings in the 2018 MHI Annual Industry Report, “Overcoming Barriers to NextGen Supply Chain Innovation,” released last April, the 1,100 survey respondents noted that one of the biggest demands being placed upon their supply chains was customers’ expectations for complete transparency and digital access to information. Today’s consumers expect to be able to log in to their account with a retailer, for example, and easily retrieve data about the origin and history of the items they purchase and consume. However, some companies fret that by meeting customers’ demand for increased transparency will also make their supply chain networks more vulnerable to cyber attacks, such as data theft or ransomware.
Enter Blockchain, which is increasingly being recognized as a potential solution for secure data sharing among different parties—including with customers and across network trading partners. But just because the term is increasingly used within the public lexicon doesn’t mean supply chain executives understand it. Indeed, 88% of respondents admit to having minimal to no understanding of Blockchain—but 54% anticipate adopting it over the next five years.
It’s understandable that supply chain leaders would not yet be well versed on the ins and outs of Blockchain, says Luca Bertuccelli, chief technology officer at supply chain visibility provider Sensitech, in an article in the third-quarter 2018 issue of MHI Solutions magazine.
“The statistics around the understanding of the Blockchain are very telling: this technology is largely the fusion of many different technologies, is complex, and is in constant evolution,” he explains. “There are also some potential misconceptions around the quality of the data on the Blockchain. Finally, there are a large number of use cases—beyond supply chain—for which this technology can be applied, and this also adds to the complexity of understanding the space.”
To the point, however, Blockchain directly addresses the need for transparency across supply chains, says Nick Vyas, assistant professor of clinical data sciences and operations, and executive director of the Center for Global Supply Chain Management at the University of Southern California. (Vyas’ book, “Blockchain in Supply Chain,” will be published this coming December.)
“Current supply chain systems operate in silos and might be linked internally, but are rarely integrated across supplier and customer networks,” he explains. “As the industry moves more toward interconnectedness, Blockchain’s distributed ledger technology creates transparent, anonymous and secure transactions. It also eliminates the need for a centralized data storage server, which makes the chances of getting hacked next to impossible.”
Because the technology also enhances supply chain trading partners’ ability to track and trace products with pinpoint accuracy should a defect or contamination be detected, brands can leverage it to quickly and discreetly recall products, minimizing reputational damage, costs and customer inconvenience. That’s why Vyas anticipates that supply chains handling human consumables—including food, beverages, agricultural products, pharmaceuticals and any raw ingredients used in their productions—will be among the first Blockchain adopters.
Khwaja Shaik, a thought leader within the IBM Academy of Technology and regular contributor to IBM’s Blockchain Blog, agrees.
“Currently, it takes a major retailer six days to get information about spoiled eggs because there are so many trading partners exchanging, updating and refining information across multiple layers,” he explains.
“With Blockchain it only takes a couple of seconds for transparency and traceability because it enables direct interaction between the impacted trading partners. And since each trading partner is assigned its own key through Blockchain’s encryption and consensus mechanisms the data is trustworthy and safe.”
Shaik also sees potential for Blockchain to have a significant impact within transportation, as it enables far more accurate communications about scheduling, for example, than how the process is conducted today.
“With a Blockchain-based system supported by all trading partners—who supply just the data that is needed for the other participants to see where everything is—the trucking company can realign its own moving parts [to accommodate delays] and get great efficiencies. And those efficiencies add up to a tremendous amount of economic value,” he adds.
Read more Blockchain insights from Bertucelli, Vyas and Shaik in the article, “Plan to be Disrupted,” here.