I’ve been writing about blockchain for several years now, but I’ve got to admit that I empathize with the reader who told me recently, “My eyes just kind of glaze over whenever somebody starts talking about blockchain and bitcoin and cryptocurrency and all those buzzwords.” It’s very hard to succinctly describe what exactly blockchain is; even the simplest attempts at a definition include phrases like “distributed ledger” and “tokenization” that themselves need to be defined if you actually want to try to understand how the technology works.
At the risk of oversimplification (if such a thing is possible with blockchain), the technology offers a way of sharing transactional data that can’t be traced or hacked. So while its applications in financial services are obvious, blockchain is also seen as ideal for enabling supply chain collaboration.
Blockchain technology is considered by many to have the potential to disrupt or create competitive advantage, according to the 2018 Industry Report from MHI and Deloitte. The biggest barrier to its adoption, though, not surprisingly, is that hardly anybody has a good grasp on what it is or how it can be useful to their operation. In the same MHI/Deloitte report, which was compiled from a survey of 1,100 supply chain and manufacturing industry leaders, 43% of respondents admit they have little to no understanding at all of what blockchain is; another 45% say they have just a cursory understanding of what it is. That’s a tough sales job if nearly nine out of 10 supply chain leaders don’t get it; try convincing somebody with even less authority and knowledge of how their companies work why they should care about blockchain.
And yet, “We are about to see more change than we could imagine with blockchain,” predicts Khwaja Shaik with IBM Academy of Technology. Speaking at the recent MODEX 2018 show in Atlanta, Shaik was part of a panel of thought leaders invited by MHI and Deloitte to opine on the impact of disruptive technologies to the supply chain, and how companies can overcome the barriers to adopting those technologies. Part of the key to blockchain living up to the hype lies in understanding its potential. Though 29% of survey respondents say they don’t think they’ll ever adopt blockchain, in point of fact, companies are using it, with the expectation of gaining real-world benefits.
Samsung Electronics, for instance, is developing a blockchain system to track its global shipments, with the goal of reducing shipping costs by 20%—which would represent a substantial return on investment. Coca-Cola is working with the U.S. State Department to create a secure registry for workers that will help fight the use of forced labor worldwide. Food and pharmaceutical companies are working on blockchain projects that would ensure the safety of their products throughout the supply chain. The automotive industry is working on blockchain applications to securely share vehicle sensor data.
Well over 100 companies are already members of Blockchain in Transportation Alliance, including marquee names such as C.H. Robinson, FedEx, GE Transportation, SAP, Union Pacific and UPS. They all share the common goal of developing a common framework and standards from which they can build revolutionary blockchain-based applications.
The possibilities may not be endless—as with all emerging technologies, there are far fewer experts than there are companies looking to hire one—but they are significant. In fact, blockchain is following a predictable pattern common to all disruptive technologies, notes Scott Sopher, leader of the global supply chain practice at Deloitte Consulting. The main barriers to adoption, he says, are:
• identifying a clear business case and ROI.
• lack of adequate talent.
• lack of understanding of the technology landscape.
• lack of access to capital to make investments.
• cybersecurity issues.
With blockchain, as with the other technologies identified in the MHI/Deloitte study (such as robots, predictive analytics, Internet of Things, autonomous vehicles and drones), the key is to get started now, Sopher says. “Start small and act fast. You don’t need to invest a lot to start testing these technologies.”