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Is 2018 the Year Blockchain Will Come Out to Play?

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So, a lot has been said about blockchain tech and its possible impact on a range of different industries. 2016 and 2017 were the years when the tech really started gaining a lot of traction, and many projects were being developed.

In the last year and a half, we have seen blockchain based projects explode, but up to now, the emphasis has been more on explaining how the tech works. It is a completely new form of tech and thus not well understood by those outside of the tech industries.

However, now it is gaining wider acceptance and companies are beginning to understand what the potential for the tech is. They understand now that it has much wider applications than a simple cryptocurrency. This means an even greater drive toward development going forward, and the benefits are truly tremendous. According to , utilizing blockchain technology to replace conventional online transactions can result in a massive reduction of cloud computing costs (anywhere from 50% to 100%), and this is just the tip of the iceberg.

2018 will see a lot of those projects move from basic testing through to fully functioning platforms available for use. 2018 will see the supply chain management industry being able to fully appreciate the benefits of blockchain. 

IBM and Maersk

IBM and Maersk started the ball rolling by joining forces to get out a system that allows supply chain information to be digitally recorded from the point of origin through to the point of delivery. The aim is to allow users a real time tracking of international cargoes.

The platform is set to save billions annually and help the environment, as well by allowing companies to phase out outdated paper systems and also the EDI-system. It means greater efficiency in the movement of cargoes.

This system saves money because it provides all necessary information in one global ledger. The new system will streamline the tracking process a great deal and make it easier to apply for the approval of port authorities and customs officials.

Supply Chain Management is Big News

While there are a lot of interesting applications of blockchain tech, it does seem to be especially suited for the tracking of goods along the supply chain. It can be quite versatile in that it can record the movement within the company and from one company to the next.

Not Just for Tracking

But the blockchain apps are not just good for tracking cargo. Within the supply chain, there are many potential applications.

Supply Chain Validation

Consumers have become a lot more discerning about the sourcing of items. They want to know that items have been sourced fairly, preferably sustainably, and in a way that has the least impact on the environment.

Consumers have also become a lot less trusting, and very few will take what a company claims about its supply chain at face value. Blockchain based apps offer a transparent way for clients to check that the goods have been sourced where the company says they have.

Supply chain validation can be a useful exercise for the company when it comes to marketing its goods, but it has a very practical purpose as well – you can more easily identify potential issues with the supply chain.

Food Safety Verification

This is another area where using the tech could pay great dividends. The permanency of the record created through blockchain based tech will stand up to rigorous scrutiny and could provide the company with an effective way to identify causes of contamination and other potential issues.

These are just a few of the potential areas that a company could benefit from such apps, though. There are many, many more.

Private Networks

One of the selling points of blockchain tech is that it is very transparent and that everyone within the network can view any information added to the chain. Of course, not every company would like every detail of its supply chain broadcast to all and sundry.

For competitive reasons, it might not be wise to do so. They look at Bitcoin, and how public the data is and so might shy away from blockchain apps.

One thing that has not been as well understood, though, is that there is not just a single network. Sure, Bitcoin is open to all users, but it is only one of many apps. Companies can choose to set up private networks, where users need permission to access the information if they like.

They can control every aspect of access as it suits them. They could, for example, allow a trusted vendor like a cloud service provider to access as necessary or shut out everyone from outside the company completely.

Apps That Connect Companies

Of course, though, when it comes to the development of applications in this industry, it is usually more effective to create a data point that connects all the stakeholders and gives them access to the information they need.

An example of this kind of application in action would be something like this:

  • Joe Soap orders an item from XYZ company.

  • The order is added to the application.

  • The company works at fulfilling the order from the stock it has on hand. For the purposes of this exercise, though, let’s say that it has no stock and have to order from the manufacturer.

  • The order is placed with the manufacturer.

  • The order is dispatched to the company who then dispatches it to Joe.

At any time during the process, Joe can log in and check how far his order is and where it is coming from. He could track it in real time and see every update.

The company selling the item could also check, at any stage, where the product is. So, it could see when it was dispatched from the manufacturer, when it arrived at its offices, and how quickly it was sent on to Joe.

The manufacturer could also follow the progress of the order from the date it was dispatched.

Each stakeholder in the transaction would be able to independently check on the progress of the order and hold the correct party accountable for delays. If there is a problem somewhere along the chain, the source would be quick to establish.

So, the days of blaming the manufacturer for sending the goods out late, or blaming the company for not putting in the right order would be over. The increased accountability should, therefore, lead to better efficiency at each stage.

Cost Saving

The biggest advantage of these systems, however, is that they can be implemented relatively inexpensively. The costs of managing the system will be spread among all players within it, and so no one company would have to bear the brunt of the expense.

So, a small company that may at the moment be using an ineffective record keeping system like spreadsheets, for example, would more easily be able to adopt the system.

Because the blockchain runs on a distributed network of nodes, very little actual infrastructure is required to maintain it. So, a small coffee farmer in Kenya, for example, with very little equipment, would be able to make use of the system. All he would need is an internet connection.

In the future, all kinds of documents will transition over to API-based tech. This essentially means that the information is digitized and so easily accessible on the network. The information would be easy to verify, and impossible to delete once added.

Manufacturers could ensure that items are going to where they are supposed to be and not being diverted along the way. Companies buying the items could ensure that the source is a reputable one.

This could be useful in an industry where counterfeiting is an issue. Take the counterfeit drug industry, for example. With a blockchain based system, companies could check that the drugs  they were ordering were from a legitimate supplier and not being interfered with along the way.

Manufacturers could ensure that the right companies were getting the drugs and make sure that their shipments were not being diverted so that criminals could cut the legitimate product with less expensive ingredients and sell it on as genuine.

A Trustless Option

With blockchain systems, there is no need to establish trust between parties – the record exists for anyone to see and cannot be changed without all parties being aware of it.

Smart contracts could be enacted to ensure that both buyer and seller are protected. Smart contracts are blockchain based and executed automatically. Say, for example, that XYZ Company wants to buy products from a new supplier.

It could set up a smart contract that sends the money to the supplier automatically when the goods have been delivered, or when some other sort of condition has been met. There is no way to stop these contracts once they have been created.

Overall, 2018 is set to be an interesting year in the supply chain management industry. Eyes are on Maersk and IBM at present, but who knows how many other players will emerge with innovative ideas to streamline the process?

Faster verification, faster delivery, and faster payments – it is a win for everyone involved.

Finding the right Talent

According to a Deloitte study, 62% of CPOs do not believe their teams have the skills and capabilities to deliver their procurement strategies. Does your organization have the right talent in place to keep up with current supply chain trends and implement something as disruptive and innovative as blockchain? Read more about how to find and hire the right talent for the digital age - How to find the procurement talent that can drive your business. 

Click here to see the full and complete info-graphic.

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