When Supply Chains and Blockchains Become Pervasive

Supply chains are fluid and always changing with customer expectations, new product introductions and delivery mode updates. With these dynamic business models taking place across every industry, can the evolution of blockchain applications and the underlying technology evolve to support new paradigms?

Visions of what supply chains will look like in 2030 are as clear as a Ouija board. What is evident is that the success of next-generation supply chains will be tied to gaining increased clarity of what customers will order, where inventory is needed (and when), and the timing of replacement parts. A unified end-to-end supply chain, integrating visibility into planning and execution across all participants, will be the victor. This visibility into real-time customer demand and behaviours has to begin with product innovation and continue through upstream shipments from all suppliers, and forward to customer fulfillment.

In support of making supply chains more agile and visible, blockchain technology promises to improve the timelines of data, build partner trust, and drive payments faster. However, current use cases are only focused on gathering transactional data from a few participants and providing visibility into the transactions after the fact. So while being a learning ground for the future hope of the technology, current business network solutions are accomplishing these needs better.  

According to Gartner, blockchain adoption has a long way to go to support this seamless chain. Gartner predicts that through 2022, 80% of supply chain’s blockchain initiatives will remain at a proof of concept (POC) or pilot stage. Additionally, as other emerging technologies such as IoT, AI, and autonomous processes grow in adoption, 40% of all blockchain projects being tested are actually a mesh of these new emerging technologies.

The level of participation in blockchain tests is also worth noting. Gartner discusses that through 2023, 50% of all blockchain pilots across the supply chain will involve five or less key stakeholders or trading partners. Is this because the use cases being tested are not solving real industry problems that current technology can meet today or is the technology not ready for scalability and performance yet? It is probably a combination of both.

Blockchain has the potential to have the disruptive and transformative impact across supply chains that all the pundits speak of. Just not yet. Across all industries, new customer expectations and market dynamics are driving increased levels of urgency across digital supply networks. It will probably take closer to 10 years before the full value and realizations of the technology can be aligned and realized to solve the supply chain issues of tomorrow.

So what happens next?

The globalization and outsourcing of business processes have a significant impact on supply chain operations and supporting applications. It forces companies to realize that traditional enterprise-centric systems are not enough. Supply chain leaders are recognizing the requirement to join broader digital supply business networks with business applications that engage business partners in a “systems of engagement.”

Once greater adoption of connected supply chain participants becomes visible and those insights are leveraged, then companies can realize greater customer experience benefits. Companies now appreciate the dire need to address new business pressures, such as expanding supply chains, increasingly complex and personalized products, greater federated supply chains and prevalent outsourcing. Consider blockchains with strong upstream order collaboration capabilities, integrating with a specialty blockchain for ocean transport updates and to another specialized industry-specific blockchain with advanced planning. Or, consider how different regional blockchains can connect to offer a global network.

External forces or CEO strategic imperatives require organizations to introduce massive changes to their supply chains to address performance shortcomings, such as customer satisfaction or quality problems. Today, and for the foreseeable future, supply chain organizations must leverage both continuous improvement and transformational approaches to enhancing their supply chain performance. With increased global competition and more frequent disruptions to operating models, supply chain organizations need to react more quickly than ever before.

Blockchain must evolve to understand customer behavior quicker and be more customer aligned. This means coordinating demand, supply and product management across the value network. The technology and the distributed applications must be able to detect initial demand and issues that users experience immediately after a launch. The engagement model needs to provide customers the opportunity to have a voice rapidly upstream. This enables all participants to know exactly when and how the product is performing, address any issues, and deliver more or a better product for the customer to experience.

According to many futurists and crystal balls, supply chains across industries will change as the three “A’s” take hold: AI, Autonomy, and Automation. The last one being the next form of outsourcing. An example is in the pharmaceutical industry. There are predictions that by 2030, traditional pharmaceuticals will be replaced by hyper-individualized medicines that are manufactured at the time they are ordered.

Having cheap delivery mechanisms that could print pills using 3D printer technologies to an exact specification would enable legitimate pharmaceutical companies to regain at least some control over their distribution model. Having secured and trusted pharmaceutical recipes stored on the blockchain that can be downloaded directly into pill replicators will have huge implications for an industry that spends billions of dollars every year on research and development. Pharmaceutical companies will find ways to make the pipeline safe and secure. Blockchain could be one component.

AI, automation and blockchain will be the new outsourcing. Retail will see the rise of “click and mortar” brands, companies that will successfully bridge the gap between e-commerce and traditional in-person retail shopping. They will leverage AI to recognize your buying history and habits, then notify you on your phone or a dozen other connected devices about the newest store openings, mall events, and specific sales that might interest you. They will also understand your specific usage of the products and recommend updates or new versions in only a few months after purchase. 

As customer demands become more personalized, supply chains will continue to dynamically change and be more aware. Blockchain networks and distributed applications, along with the underlying technology stack, need to react accordingly to this new awareness. Today blockchain is focused on use cases that provide visibility and track past transactions, but it will not be pervasive until it can engage quicker with customer demands and newer delivery models.  

David Cahn photo

David is Director of Global Marketing at Elemica, The Digital Supply Network Provider for the Process Industry. He has been implementing, marketing, and product managing leading enterprise applications for over 30 years including ERP, SCM, TMS, and WMS solutions and lived the word of customer-facing solutions and customer experience for the past few years. David has held leadership positions at Phillips, KPMG, CA, AMR Research, Aptean, and Infor. Additionally, he has started, built, and sold his own e-commerce and supply chain software company during the dot-com days and had his own corporate development consulting company to the software industry for over ten years.