Blockchain and the Supply Chain

Concepts, Strategies and Practical Applications

Nick Vyas, Aljosja Beije, Bhaskar Krishnamachari

• Publisher: Kogan Page
• Year: 2019
• ISBN:
  9780749484033
• Edition: 1
• Topic: Business
• Subtopic: IT Industry
• Index: Business

Blockchain can transform companies when successfully integrated into existing supply chain ecosystems and practices. The key benefits include dispute resolution, foolproof track and trace, event management, operational as well as financial transparency, speed to market, visibility, elimination of heavy reliance on intermediary, integration of IoT technology, machine learning, and artificial intelligence. Blockchain and the Supply Chain highlights how to use blockchain as an enabler and key driver for solutions in the end-to-end supply chain. Blockchain and the Supply Chain examines the business case for blockchain, including increased efficiency of transactions. It also covers the broader set of technologies relevant to supply chains, such as IoT, Big Data and Cyber Security basics and the capabilities they offer. The team of authors look at the evolution of the network, systems and finance, as well as basics of blockchain such as peer-to-peer transactions, consensus-based algorithms and smart contracts. The book includes cases which highlight the opportunities within the different nodes of systems, sales and operations planning and provide practical examples from specific supply chains, such as the movement of temperature-controlled goods, dry goods and precious commodities, as well as general cargo flow.

06

What supply chain management processes and metrics will be affected by blockchain?

Introduction

While having examined in the previous chapter the various meaningful applications of blockchain technology in the supply chain, we are still left with a wide-ranging number of possible use cases. SCM practitioners need a way to identify where they can expect to find ‘the biggest bang for their buck’. In this chapter we will provide a framework, based on the Supply Chain Operational Reference model, that can help in finding those supply chain processes where greater efficiency and effectiveness can be realized by using blockchain technology as well as provide insight on what metrics will be affected. Our approach is a practical one; by looking at today’s supply chain processes and pains we look at the business case in the ‘here-and-now’ and not in ‘what-could-be’.

And while we do believe that technologies such as blockchain will lead to new business models and even destroy existing ones, this process will be, as Iansiti and Lakhani pointed out (2017), a transitional one, as the technology further matures and we get to grips with the way the technology impacts the underlying processes and transactions in the supply chain. This should not be underestimated. The analogy between the early years of Transmission Control Protocol/Internet Protocol (TCP/IP)1 and blockchain technology is in that respect very powerful (Iansiti and Lakhani, 2017); the first, and for quite some time only, TCP/IP based killer-app was email. Now this technology allows us to rent out our apartment to strangers from the other side of the globe.

Key to the successful implementation of technology is that we have to look at familiar problems from a different perspective, otherwise we continue to treat the symptoms and not cure the disease. And while a full coverage of innovation or change management is beyond the scope of this book, we would like to illustrate the importance of this point by citing two anecdotes.

Early 2018 I (Aljosja Beije) gave a presentation about the impact of innovation on the road haulage industry in the Netherlands. Having finished my presentation I asked whether there were any questions. A gentleman in the audience raised his hand, and after thanking me for the interesting presentation he said that his industry has different problems right now, and that in particular the current shortage of truck-drivers in the Netherlands was the one that was keeping him up at night. I then asked him whether he had ever looked at the problem the other way around; how about if we don’t have a shortage of truck-drivers, but simply too many trucks? Which is not a stretch to imagine considering that average loadfactor in the Netherlands for trucks hovers at around the 60 per cent.

It is safe to say that the invention of the shipping container has transformed the physical flow in the supply chain. Today’s global trade volumes would not be possi...