Blockchain Technology - 4 Questions to Consider Before Adopting itBlockchain 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.

The 4 Greatest Hurdles Blockchain Technology Is Currently Facing

Blockchain technology continues to garner a lot of attention, but here are the 4 biggest obstacles it’s currently facing.

As supply chains continue to transform with the advent of a variety of technologies, their adoption of blockchain remains uncertain. Unlike technologies like artificial intelligence, automation, and IoT, blockchain has yet to prove itself as viable. It has displayed a great deal of promise and, in theory, could prove incredibly beneficial to a variety of industries, including supply chains. As of yet, however, there are a number of areas in which it needs to win over the masses.

CIO Dive elaborated on this earlier this year,

In its 2019 Hype Cycle for Blockchain Technologies, Gartner found most blockchain technologies remain stuck in an “experimentation mode.” The analyst firm said most applications are yet to live up to their hype, and that interest in them has waned as applications failed to deliver on their expected outcomes.

This article by Morai Logistics explains the four most significant barriers blockchain technology faces today.

Explaining it’s Value

Blockchain, in large part due to its complexity and nascency, is hard to explain. As a consequence of this, it can be incredibly difficult for decision-makers at companies to be convinced of its value. It can be reduced to a pithy line such as: blockchain is an immutable, transparent, and decentralized data base.

However, this hardly gets across the intricacies of the technology. Any elaboration on such a barebones explanation inevitably involves neologisms specific to the technology. This makes it even harder to understand than it already would be. Moreover, this is only made worse because even some that do understand the technology remain skeptical of its benefits. Thus, the burden for blockchain companies to prove the technology’s value remains incredibly high.

Lack of Maturity

In turn, just as blockchain suffers from its complexity, it also suffers from its recency. The technology has only been around for about a decade and only really taken off in the last few years. As a result of being such new technology, there are valid concerns over its maturity. Essentially, it’s yet to prove itself. It has been experimented with, yet there are very few instances of it being successful on a broad scale.

The previously CIO Dive article touched on this as well,

The immaturity of blockchain technology has been delaying its application in enterprise settings, as the majority of applications have either stalled at the experimentation space or will be in need of replacement in the near future.

Concerns About Reliability

Additionally, as blockchain technology isn’t proven, it’s hard to assuage fears about its reliability on some fronts. For example, how will it scale? So far, it’s proven not to be able to handle a large number of transactions, marking a considerable liability for large companies. Not only that, but there are additional concerns about how slow its transactions are due to the verification required of them.

Difficulty of Collaboration

Finally, in order for blockchain technology to work, it requires all actors involved to be on board. In the case of a supply chain, this means getting all the disparate parties involved to buy into the technology. Furthermore, this issue gets only more complicated as all parties also have to agree upon the best platform and development project for the technology. Without one outright blockchain leader in the field, this can be incredibly testing.

A recent Supply Chain Dive post explains the best way forward for blockchain collaboration,

Instead of having competing blockchain projects under development at different companies, success stories include the formation of standalone companies or consortiums in order to better articulate a strategy around a specific technology.

The Current and Future State of Block in the Supply Chain Industry Part Two

As blockchain technology is seeing considerable adoption in the supply chain industry, it’s important to see where it thrives and where it needs improvement if it’s going to continue its ascent. 

Blockchain technology is a revolutionary innovation for supply chains. Incredibly, despite how new it is, it’s already having a monumental impact upon them. We addressed this in our first ebook on blockchains. It covers just what blockchain is, how it works, and why it’s important to the industry.

Yet, given the recency of the technology’s invention, there remain concerns surrounding it. As such, it still requires a great deal of fine-tuning before it’s universally embraced. With that in mind, how well it does down the line is going to be dependent on how well it can adapt. With many demands currently being placed upon it, only time will tell if it will be able to.

This ebook explains what the current state of blockchain is in the supply chain industry, the technology’s strengths and weaknesses, and where it’s set to go in the coming years.

The Pros and Cons of Blockchain and Where it Will be in the Future
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With the growth of  blockchain as a viable mechanism to oversee supply chain processes, it’s worthwhile taking a look at how it currently stands in the industry and where it is going.

Blockchain has been talked about as a potential breakthrough technology for supply chains for a while. Yet, in the past couple of years the wait for the potential of the technology to meet the reality of technology has threatened to stall enthusiasm around it.

However, with the recent waves of progress surrounding the technology, including the launching of multiple blockchain platforms for supply chains, there is renewed interest afoot. Despite that, the question remains: can blockchain live up to its promise of being the transparent, secure, and democratic platform the industry is seeking?

This eBook covers just what blockchain is, how it works, its utility for supply chains and the impact it’s having and set to have on them.

How Blockchain is set to Transform the Supply Chain Industry

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That’s it for us this week! If you liked this blog post, why not subscribe to our blog? Interested in our 3rd party logistics services? If so, don’t hesitate to check out our services . We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Copy of Copy of Copy of Copy of How Supply Chain Orchestration Improves the Customer ExperienceClearly blockchain technology has major benefits for supply chains, but even with that being the case, there are some significant obstacles it still has to overcome.

Blockchain is growing rapidly. According to TechJury, the blockchain market is set to have made 20 billion dollars by 2024. More pertinently, 53% of respondents to a 2018 Statista study said they’re using blockchain for their company’s supply chain. As such, the futures of supply chains and blockchains are very much intertwined. Yet, like with any new technology that has to grow at an immense pace in order to keep up with market demands, blockchain remains on unsteady ground.

This week’s article by Morai Logistics explores the most prominent hurdles blockchains have yet to overcome in the world of supply chains.

Novelty

The very fact that blockchains are such a new technology is their baseline barrier to any market. This includes the supply chain industry. Simply understanding the technology, how to talk about it, and how to use it to its fullest potential all have to be a part of an education process.

CoinDesk highlighted this in an article addressing blockchain limitations,

Blockchain technology involves an entirely new vocabulary. It has made cryptography more mainstream, but the highly specialized industry is chock-full of jargon.

Without acclimating each segment along supply chains to blockchain technology, it is unlikely be adopted by them. This is harder than it might seem. These segments are often disparate and will have different degrees of understanding and resistance—from those in warehouses to those driving trucks.

Security

Despite being known for the transparency they provide, blockchains aren’t foolproof when it comes down to data security.  This is particularly true when a blockchain isn’t large. Part of the strength of the technology is the size of its network. If, for example, there only a few actors along a chain, it’s more likely that that blockchain will be susceptible to poor/bad data. Large scale adoption is crucial to overcome this.

Additionally, not all blockchain platforms are made equal. Technological advancements in machine learning and automation are not always used in supply chains. This means the data that is entered in the blockchain is more likely to suffer from human error. Blockchain needs to be part of a larger evolutionary process by supply chains, not adopted in a vacuum.

Efficiency

Building off the previous point, blockchains are not only less secure but, in turn, less efficient without a holistic approach to their implementation. This means there needs to be integration of blockchain data into the supply chain platform being used. Moreover, without some kind of automated operation to make sure the data is clean, secure, and reliable, it can be a slow form of record keeping—human data entry being more time-consuming.

Maturity

In many ways, the topic of maturity is just all the issues raised in this article combined. All of them come together to make potentially the biggest obstacle that blockchains need to clear. Blockchain is a technology for the future. In the present, it is very new, hurt by that newness, and stymied by efficiency and security concerns.

Kasey Panetta of Gartner writes,

Confusing future blockchain technology with the present-day generation. Current blockchain platform technology is limited in scope, and falls short of meeting the requirements of a global-scale distribution platform that can enable the programmable economy.

Thus, one of the things blockchains require the most is simply time. However, that isn’t something they are receiving. As such, it is up to the countless blockchain projects in the world of supply chains to not rely on what they will be able to do down the line but rather respond to present-day pressures.

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With an ability to offer transparency, efficiency and speed, Blockchain has been coined a ‘game changer’ in the supply chain and logistics industry.

According to Research and Markets, the ‘global blockchain supply chain market’ is will grow ‘from USD 145.0 million’ this year to n expected ‘USD 3,314.6 million by 2023’.

This statistic represents the powerful impact this global digital ledger has made on the way industries make transactions. Supply Chains are currently facing challenges as markets expand, consumer demand increases and e-commerce platforms continue to emerge. However, only 11% of organizations with a working understanding of this technology. Therefore, it’s important to investigate the benefits this technology provides.

This infographic outlines how blockchain will continue to become a valuable technological asset to the supply chain and logistics industry. In addition, it aims to outline how this technology can help organizations improve transparency, cybersecurity and efficiency.

How Blockchain Improves Speed, Security & Transparency

 

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As consumer demands for efficiency and immediacy continue to rise, the supply chain industry is seeking out innovative technologies to meet these growing demands.

Canada Business Network provides recommendations to optimize the supply chain management processes of any business size. They advise companies to:

Invest in technology that will quickly transfer your requirements to suppliers and improve your time to market.

The development of improved measures is usually in response to current setbacks or issues within existing supply chain management systems. Research on the challenges facing supply chain and logistics revealed that transparency and visibility are at the top. The Financial Times defines supply chain transparency as:

The extent to which information about the companies, suppliers and sourcing locations is readily available to end-users and other companies in the supply chain.

With the origin of products becoming of interest to consumers, the ability for supply chains to guarantee visibility is an important component to their management systems.

In this e-book, the emergence of online currencies and ledgers will be explored, with specific attention to Blockchain. This beneficial platform is making headlines as a potential benefit for the logistics and supply chain industry.

How Would Blockchain Improve the Supply Chain Industry?

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Companies talk about the possibilities of blockchain tech, but with only 1% of the responding organizations are currently using blockchain in their supply chain operations, few are actively investing in it.

Around this time last year, we commented on a story about Europe’s largest shipping Port, Rotterdam Port, taking part in a Blockchain consortium. Blockchain news in the logistics sector isn’t new, but this instance was unique because of the scale of the project.

Since this story, blockchain technology (as it relates to Bitcoin) has received a lot of coverage recently. Just last week, many news outlets reported on how Bitcoin hit a record $19,340 on Coinbase, before falling to $15,198.83 last Thursday. More impressively, by 2025, industry experts expect over 10% of gross domestic product (GDP) to be tied into blockchain.

These figures have made some organizations in the logistics and supply chain sector curious. However, surveys show that roughly half of supply chain organizations are not even looking at the possibilities of the technology. With this being the case, how big is the gap before blockchain can be used across the industry?

Blockchain in a Nut Shell

Many articles detail the impact blockchain-based technologies are having on different industries. Few actually go into the technical details of how it works. Lexology.com writer,
Marc S. Blubaugh, summarizes some of its the features in his article.

  • Blockchain is a decentralized database or spreadsheet (often referred to as a “digital ledger”) that is maintained and updated by a network of participating computers.
  • This highly secure technology permits parties to create a record (known as a block) that is timestamped and linked to the previous block such that it cannot be altered retroactively without the alteration of all subsequent blocks.
  • The digital ledger is typically available to the public but can also be made private.
  • Blockchain is the technology infrastructure for cryptocurrencies like Bitcoin.
  • Blockchain has many uses beyond cryptocurrencies, much like the Internet has many used beyond email.

High Potential but Little Investment So Far

Supply Chain Management Review writer, Becky Partida wrote an article earlier this week about a survey conducted by APQC.

The researchers interviewed 101 supply chain professionals. They found:

About one-third indicated that blockchain has the potential to create a competitive advantage for their organizations over the next 10 years. About 10% of respondents felt that blockchain would be a potential disruptor for their industry within the same time period

Partida points out, however, that Digital Supply Chain Institute (DSCI) conducted their own study of supply chain professionals. One-third of this group is “either extremely or moderately unfamiliar with blockchain.”

The research conducted by DSCI and APQC indicates that only 1% of the responding organizations are currently using blockchain in their supply chain operations, and only 35% are currently exploring the use of blockchain.

Of those surveyed (in both studies), almost 50% of organizations are neither using or exploring blockchain or its possibilities.

Part of the reason for these figures has to do with how new the technology is. It’s only been in the last couple of years that Bitcoin and blockchain have been taken seriously by the public at large. As more knowledge about the technology is disseminated, organizational interest in blockchain will better translate into investment.

If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

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The Port of Rotterdam tests blockchain logistics which can kickstart a revolution in the level of transparency within the industry.

The Port of Rotterdam, Europe’s largest shipping port, is taking part in a Blockchain consortium which is focusing on logistics, reported Coin Desk. The project has the support of more than fifteen public and private sector companies based in the Netherlands.

Consortium members will spend the next two years designing and developing applications for blockchain technology in the logistics sector. There have been similar efforts in the past, but according to the founders, this blockchain project is unique because of its scale in the logistics chain.

What is Blockchain Technology?

According to the Economist, a blockchain is a distributed database that maintains an ever-growing list of records called blocks. The information in a block cannot be altered retrospectively as each block contains a timestamp and a link to a previous block. The nature of blockchains makes it function like a public, digital, distributed ‘ledger’.

The technology is relatively recent having first been put into practice by Satoshi Nakamoto in 2009 as a core component for the digital currency known as bitcoins.

Since its debut, blockchain technology has had a disruptive impact on several industries. Financial technology was the first to start adopting blockchains, but its started to move into the logistics sector as well.

How Blockchain Technology Can Benefit Logistics

There have been several articles published online about the benefits blockchain technology can bring to the logistics and supply chain sector. Here are a few ways the technology can improve the industry.

  • Transparency for customers. For most people, little is known about the products they use. As LetsTalkPayment.com phrases it, “an almost incomprehensible network of retailers, distributors, transporters, storage facilities and suppliers stand between us and the products we use.”

    With blockchain technology, customers will be able to see every part of the journey their product took before arriving in their hands. The network behind the store shelf will no longer be hidden, allowing the customer to make better informed decisions.

  • Transparency for auditors. Because the history of transactions is locked into each block, auditors will have an easier time understanding where items and resources have gone. This, as Adam Robinson of Cersasis puts it, “help[s] supply chain leadership, such as C-level executives understand how to make the supply chain more efficient and productive.”
  • Greater security. The technology will enable supply chain companies to identify attempted fraud more easily.

    “For example, an employee that goes into the system to change past events will alter the coding of the event” writes Robinson. “However, the altered coding appears so differently that it would be practically impossible to not notice the change. This will allow companies to recognize the fraud and who initiated the change almost immediately.”

The two-year project undertaken by Port of Rotterdam will give insight into the scope of the benefits, but the technology has already shown promise.

“With a world that is becoming more connected on a daily basis, blockchain technology will inherently develop into a symbiotic relationship with the Internet of Things and today’s advanced logistics and supply chain management systems” concludes Robinson.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.