24th March 2020
“Anything that you can conceive of as a supply chain, blockchain can vastly improve its efficiency – it doesn’t matter if it’s people, numbers, data, money.”
That quote is from Ginni Rometty, the CEO of IBM and she isn’t alone in her views on this particular “disruptive technology”, rather there is a large swath of industry big hitters, thought leaders and evangelists all gathered in their praise and positive energy about the impact that blockchain is having or the further potential it can bring.
At EV Cargo Technology we are often asked about where we are in our journey with Blockchain. Customers, prospects, our investors and our colleagues, many of them point to the same issue that Ginni Rometty raises, when you are dealing with supply chains and your purpose is technology then why not use blockchain? However, widescale deployment of blockchain technology within supply chain and logistics has not yet been realised despite its obvious advantages. Why is this?
The Challenges for Blockchain
The primary challenges for blockchain in any use case scenario are firstly to achieve acceptance, organisation and standardisation of how it is to be used. To consider these challenges in the context of the supply chain we perhaps first have to consider the broader issues of who are the stakeholders within the supply chain, how many exist and what level of technology is applied to their processes today that would otherwise be replaced by the use of blockchain tomorrow. In any retail supply chain scenario, we should at least assume that there will be some, or all the following parties involved:
• raw materials providers
• port operations
Therein lies a problem, the large number of parties involved, with each one of them needing to trust in the blockchain in order to achieve the critical mass necessary to extract the value from it. If we consider the technology in use today by these various parties, some of these stakeholders won’t be using any kind of data capturing technology at all, relying instead purely on physical documentation. Others will invariably be using outdated systems as a means of recording information and managing their processes within the supply chain, however, these systems whilst often old in their underpinnings nevertheless often still fulfil their purpose and for some organisations that will usually be enough.
The Advantages of Blockchain
If we consider for a moment one of the architectural advantages of blockchain, its ability to hold data in an immutable and transparent form. Supply chains and the parties that operate within them rely heavily upon manual data entry or integration via outdated systems, where data integrity and accuracy of data capture is below optimum. However, whereas any such discrepancies can usually be amended today, use of the blockchain would result in a permanent record of that data and potential data quality associated issues for other stakeholders on the chain later in the process.
Of course, to utilise the blockchain requires technology applications to be developed that allow that in the first instance. This brings me back to the questions that get asked about our own journey. In technology there is always pressure to be innovative, to push boundaries and to be first to market with compelling products. For industry heavyweights such as Microsoft, big budgets help to break down any barriers, their R&D budget for 2019 was $16.9 billion USD. In smaller organisations, the ambition to innovate with blockchain or other such breakthrough technologies must be tempered with business as usual. Whilst ambition is strong, the risks are more inherent with any investment into a technology that hasn’t yet gained broad acceptance across multiple industry sectors. However, it will be from smaller organisations or start-ups where most industry disruption will likely occur.
In a sign of growing optimism the 2019 Deloitte global blockchain survey interviewed approx. 1,500 senior executives across a dozen countries, one of the highlights was that 53% of respondents said that blockchain had become a critical priority for their organisation, a 10-point increase over 2018.
The message is that blockchain is maturing and at a faster rate than ever before.