Blockchain technology could be critical to supply chains going forward, but its implementation shouldn’t be taken for granted.
Blockchain, despite the many concerns remaining around it, continues gaining traction in the world of supply chains. This interest is only being accelerated by the increased digitization of supply chains operations by businesses. As such, increasingly, companies are either entering the consideration phase or early adoption phase in regards to the technology. With that in mind, its critical that those companies that are still in the consideration phase or are about to enter it know the unique challenges that come with blockchain technology before they proceed.
As an article by Consensys explains,
The list of industry-leading enterprises building on the blockchain spans tech leaders (Microsoft), financial institutions (JP Morgan, Santander), and even national governments (Singapore, Dubai, Brazil). But as with any emerging technology, there are some particular and unique quirks and obstacles that all early adopters will face along the way for which even the savviest business leaders considering blockchain solutions should be prepared.
This article by Morai Logistics presents 4 questions that are integral to optimally integrating blockchain into your supply chain operations.
Why do Your Operations Require Blockchain?
When evaluating the need for something, you have to start from the ground up. Blockchain is no different. Why does your supply chain need it? How will it be elevated by it? You need to have a good understanding of the nature of the technology and have it align with the running of your supply chain and the goals you have for it.
A piece by Supply Chain Management Review underscores the nature of a blockchain project,
Blockchain is not an IT or R&D project; it is a fundamental business transformation tool which, if properly implemented, will significantly impact revenue and cost. Blockchain excels where information is shared across an enterprise, as well as with suppliers and customers.
Essentially, you have to assess blockchain and its key features. Upon doing so, you have to ask why your supply chain requires those features.
Do you have the Infrastructure for it?
Blockchain has certain requirements in order to be applicable. If your company doesn’t have the architecture in place for its supply chain to support the technology, then that’s another undertaking it’ll have to commit to alongside blockchain implementation. Key amongst these requirements is digital transformation. Without being digitized, the technology will have nothing to run on.
Are you Planning to Scale Your Operations?
One of the persistent concerns surrounding blockchain technology is its trouble scaling. With that said, you need to know if your company plans on expanding its supply chains operations. If so, implementing blockchain might hurt and slow down those efforts. However, there are a variety of blockchain platforms providers. So looking into which provider is best suited to supporting your plans to scale might somewhat mitigate this issue.
Are you Prepared for the Regulatory Hurdles?
Despite being a technology largely based around transparency, certain facets of blockchain can make it push up again government regulations. In fact, ironically, some of its key features that see it touted as transparent and secure, are features that can run afoul of the regulatory hoops companies have to jump through. Thus, one more consideration you have to take on board, is whether you’ll be compliant with the rules that are in place.
The previously mentioned Supply Chain Management Review article highlights this point,
While regulatory compliance is a frequently mentioned application, in reality, compliance and regulatory issues can present a challenge. As an example, immutable records are a part of blockchain, but this can be a problem when records need to be changed.