This article is part 2 in a series of interviews with Beatrix Madarasz of Blockchain experts Novigo. For an introduction to the key challenges raised by Blockchain, please click here for the first article.
With transportation management, my organization was one of the first movers with SAP, holding over 40 successful transformations already. We are also now involved in more innovative, disruptive topics, such as blockchain.
Bringing Blockchain into the supply chain
Blockchain as a platform has massive potential in the supply chain across numerous industries, particularly in the way supply chain-heavy organizations can trade.
Blockchain is currently at the stage that the internet was 20 years ago – everyone will start to use it, but they may not fully understand it. We are currently in the very early stages of Blockchain being implemented – everyone is interested, everyone is talking about it, but there will be a need for real use cases to encourage this implementation. The question is between becoming a ‘first mover’, or staying safe and not being able to keep up further down the line.
If you look, for example, at the problems KFC faced recently, this was one failing in the process that was not addressed until it literally reached the customer. This lack of visibility simply would not occur with Blockchain in place.
There are a limited number of use cases available today, but primarily this implementation will come out of necessity. One of the use cases SAP identified is the case of International Trade.
International Trade: Ocean Shippers and Blockchain
Within International Trade you have a buyer and a seller, but you have several different parties working in between. You have the freight for order, the carriers moving the products, authorities that are approving goods, banks insuring the product, numerous players. These companies are usually dealing with their own system, their own security systems – but it’s just a small part of the truth, a short chapter in the story. You can never say that one party within this chain has all the information.
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 (rather than receiving an order notification). Another area that is helped is in the authorization of the product – hundreds of thousands of checks are carried out every year, resulting in masses of paperwork being exchanged.
The Bill of Lading
This is the document that Ocean shippers are required to provide every time cargo is received for shipment. The doc provides the origin, contents of the container, who is picking it up etc. If you are transporting 20,000 containers, imagine the sheer amount of paperwork. What blockchain provides with a secure platform is an automatic confirmation of each process, sent to every party. Rather than sending and receiving numerous requests back and forth, this information is disseminated, and immediately encrypted.
The next stage in the process would be the delivery of the cargo to the port to be picked up by the carrier – once more, this tracking is attached, disseminated, and encrypted with the previous transactions. You are left with 100% accurate, 100% consistent information, from beginning to end.
Encryption in the Blockchain
This is why it’s called ‘Blockchain’, and a key area of the value of this system. Usually, in the case of hacking or cybersecurity breaches, it is impossible to recover the original content of the documents. With Blockchain, the information cannot be altered by any party after the fact, ensuring that there is one single version of the truth for all involved.
The data has also been shared with numerous parties, securing access to the original information. If there is the case that the information must be altered before it is written, all parties will receive notification of these changes for approval as well. This enables trust, but also accountability.
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. In the B2B environment, organizations must first identify their set of players that they want to include in the process, before implementing a platform. The faster that big players such as SAP implement Blockchain, the sooner other organizations will pick this up.
The current trade-off is between being a leader in the process, and minimizing risk – you cannot be a pioneer without taking that first jump.
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.