A number of supply chain and manufacturing organizations appreciate the idea of Blockchain, but don’t necessarily understand the implementation or reality of the process.
It’s often associated with Bitcoin, shrouded in mystery – the real-life implications and potential are not yet understood. For many in supply chain management, it’s important first to have a practical understanding of what Blockchain means.
Increased Complexity and a need for Blockchain
Let’s examine the basic idea of trading. In the past, when people traded with one another, you would go to a market, take the item, and pay immediately. In these transactions, you had the simplicity of understanding what you are buying, knowing exactly what you had.
As the world has grown more complex, it is getting harder and harder to fully understand what you are purchasing – the product may be made of many parts, from different companies and locations, along a massive chain of production. You lack the visibility that a more simplistic society provided. Like reading a tuna can, it may say ‘ethically sourced’ – however, you are placing trust in the system providing this information, rather than knowing this yourself.
In this sense, the technology is not really the problem, there are numerous organizations that are able to provide this and implement it – it’s whether you are really willing to embrace this level of transparency, and democratize your information.
The question here is simple: Are you ready for this information to go live?
What Blockchain has to offer
What Blockchain brings you is the technology that can enable this trust through decentralized peer-to-peer trading. You are able to deal with different people and businesses in a secure, almost impossible to hack environment, that provides total certainty to the consumer.
Essentially, what blockchain offers is automatic, democratized information – simultaneously, the information is distributed across all relevant parties, for instance when the initial product is produced, the party ordering the product will receive the information that the product is produced, the carrier will be informed that the product is ready for shipping.
However, for many larger organizations, the question here is simple: Are you ready for this information to go live?
Accountability and transparency – can do vs. should do
We already know the benefits of Blockchain – secure data, transparency, speedier processes of authorization. However, this transparency brings massive accountability.
A number of major organizations today would be hesitant to share every stage of their supply chain with partners and clients. Are you really willing to tell your partner that a product is delayed, or that something is running behind, or something has gone wrong? In a time where data and information are so crucial, will businesses be happy to open up the inside of their process?
Ultimately, in this day and age, there are multiple versions of the ‘truth’ that everyone seeks out for themselves. Blockchain provides a single truth from end to end, but it is unbiased, fully transparent information.
If you already have a culture of transparency and trust, Blockchain will be a process that comes naturally. If not, there may be a way to go.
About the Author
Beatrix Madarasz is a senior supply chain management and transportation management consultant at Novigo, the supply chain execution company, with a strong focus on SAP modules, as well as more innovative, disruptive topics, such as Blockchain.