This Week in Logistics News (January 15-19, 2018)

I’m short on time this morning, so let’s go straight to the supply chain and logistics news that caught my attention this week:

Remember the old time medicine shows, when showmen and storytellers posed as doctors and peddled miracle elixirs for all sorts of ailments?

Maybe I got up on the wrong side of bed this morning, but that’s the first thought that crossed my mind when I read the announcement by IBM and Maersk about their new blockchain joint venture. Here are some details from the press release:

The aim of the new company will be to offer a jointly developed global trade digitization platform built on open standards and designed for use by the entire global shipping ecosystem. It will address the need to provide more transparency and simplicity in the movement of goods across borders and trading zones.

Maersk [and] IBM…will use blockchain technology to power the new platform, as well as employ other cloud-based open source technologies including artificial intelligence (AI), IoT and analytics, delivered via IBM Services, in order to help companies move and track goods digitally across international borders. Manufacturers, shipping lines, freight forwarders, port and terminal operators and customs authorities can all benefit from these new technologies –and ultimately consumers.

The new company initially plans to commercialize two core capabilities aimed at digitizing the global supply chain from end-to-end:

– A shipping information pipeline will provide end-to-end supply chain visibility to enable all actors involved in managing a supply chain to securely and seamlessly exchange information about shipment events in real time.

– Paperless Trade will digitize and automate paperwork filings by enabling end-users to securely submit, validate and approve documents across organizational boundaries, ultimately helping to reduce the time and cost for clearance and cargo movement. Blockchain-based smart contracts ensure all required approvals are in place, helping speed up approvals and reducing mistakes.

Blockchain, the miracle cure for all of the inefficiencies in global trade management! Suffer from poor supply chain visibility? Blockchain will restore your vision and let you see more of your supply chain than ever before!

Ok, I’m exaggerating a bit here — but just a bit.

Don’t get me wrong, I believe blockchain has the potential to improve supply chain processes, but like every other technology on the planet, it’s not a silver bullet solution, it’s not a miracle cure.

Blockchain doesn’t erase the fact that supply chains still suffer from crappy data. It doesn’t erase the integration challenge of aggregating, cleansing, and linking together data that is spread out across many different applications (some of them built in the 1970s), across many different companies and countries (some with limited or no IT capabilities), and stored and sent in many different formats (including email and faxes).

Aside from enhanced security/chain-of-custody capabilities, is blockchain a better mousetrap than the technology currently used by GT Nexus, Descartes, Elemica, C.H. Robinson, and many others to power their existing visibility and control tower solutions?

Will blockchain make it easier to integrate the long tail of supply chains or is this just another 80/20 solution — that is, a solution that only 20 percent of trading partners (the very large ones), responsible for 80 percent of transactions, will use? If that’s the case, then companies will still have significant blind spots in their supply chains.

How scalable is blockchain? In a research brief about blockchain, CB Insights highlights scalability as an issue:

If we were to look at how technology has developed over the past fifteen years, blockchain runs counter to the logic behind cloud computing. Cloud computing trends toward a single database that multiple nodes can access. These nodes don’t have to hold their own private copy of this database.

Further, nodes holding copies of the blockchain receive constant updates. These nodes are distributed around the world. Because of this, blockchains have high latency (latency is the amount of time it takes for data to move through the network). As a result, blockchains face scaling issues. Bitcoin can process about 3-4 transactions per second. Ethereum maxes out at about 20 transactions per second. Visa can process over 1,500 transactions per second.

Scaling is just one of the issues facing blockchain technology, but it’s an important one.

Simply put, there are certainly many promising opportunities for using blockchain in supply chain management, but also many open questions.

As I’ve said many times before, there is no silver bullet for supply chain visibility. Despite all the buzz about supply chain visibility software, control towers, and now blockchain, they’re all worthless investments if companies don’t also invest the time, money, and resources to see and walk their supply chain, from start to finish, with their own eyes and feet. Simply put, achieving true end-to-end supply chain visibility takes considerable more time, money, and resources than many companies have been willing to invest. For related commentary, see The World’s Oldest Supply Chain Analyst Report.

And with that, have a happy weekend!

Song of the Week: “Faded Heart” by BØRNS