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Blockchain’s Moving Past Pilots To Real Use Reshaping Supply Chain Management

What used to be a buzz over the emerging blockchain technology is now turning into a roar, and it’s not because of its role in driving digital currencies.

Blockchain, described as a “distributed ledger” technology, has the potential to disrupt any number of industries and business practices and at the top of the list is supply chain management.

Having gone through the first two phases leading to wider acceptance – where benefits have been explained and pilots presented to prove them out – it’s now moving into the build-it phase.

Case in point: In January, Maersk, a global leader in container logistics, and IBM announced a new joint venture to create a blockchain-based shipping system that intends to digitize supply chains and track international cargo in real time. The aim is to replace the current EDI and paper-based systems that leave containers sitting for extended periods in receiving yards. The platform could save the shipping industry billions of dollars a year.

Jonathon Karelse, a partner with NorthFind Partners, with deep expertise in supply chain management, believes this venture is only the tip of a very large iceberg. Solutions grounded in blockchain will create much higher levels of transparency even as they solve a major issue by modernizing old-style and inefficient systems for record-keeping – like faxes, spreadsheets, emails, phone calls and paper.

Jonathon Karelse also notes that such inefficiencies hamstring organizations in their ability to accumulate and analyze meaningful supply chain data for its predictive value in sales and operations planning.

Even as blockchain moves into the build-it phase for supply chain management, it’s going to take time before more of the iceberg emerges. That’s because, for all the benefits, there are still big costs to put blockchain-based systems in place – from the software to run it, to the specialized hardware to run it on, to people who even know how to work with it.

CIOs of any number of big businesses are looking at the potential impact of blockchain on their supply chains but are also looking at some of the barriers to using it for any purpose. To that end, they are asking when to get involved – when getting on the bandwagon of some technologies too early can be a waste of time.

What will be helpful to understand as we move forward are the attributes of a good blockchain use case. In a Forbes article, IBM’s David Noller, Executive Architect Watson IoT – Blockchain and Industry 4.0, describes some of them:

  • Enterprise impact

Blockchain’s use should have significant impact here in supporting key organizational goals, like supply chain optimization.

  • Industry impact

It maybe a good solution for industry-wide problems, like information sharing among consortium partners.

  • Immutable record

This attribute is important for use cases for non-changeable records that need sharing among diverse supply chain partners.

And 2018 is likely to be the year when we see such attributes liberally applied in the supply chain as blockchain moves from pilots to real world business uses.