When a young business starts to make the transition to a larger enterprise, it is widely accepted that the supply chain will go through varying levels of dysfunction as it moves through each stage of transformation.
Yet as natural as these cycles of transformation and dysfunction are, it is an interesting coincidence that the rise of blockchain is playing an increasingly larger role when it comes to the evolution of the 21st century supply chain.
For a good recap on how today’s enterprise technology has arrived at blockchain, TechCrunch sums it uo quite well. The new technology was birthed from the need to accelerate the spread of accurate information throughout the organization, combined with the need to extend this further to a network of outside organizations where visibility becomes increasingly important but difficult.
The latter sums up the issues of many supply chains today (even those supposedly serving top brands)! That said, perhaps it is time to check how the evolution of your own supply chain could also lead to a similar conclusion about implementing blockchain solutions.
The signs can be very telling as you struggle through the various stages of dysfunction. But by knowing where you are, you can make a better decision on what you have to adopt in order to move forward. Furthermore, you don’t necessarily have to take all the steps of those that have gone before you. You may even be able to smartly leapfrog some of these further dysfunctional phases to better achieve your needs!
Phase #1: Narrow focus and limited information technology resources.
The early stages of a supply chain’s development are often mired by short-term decision-making with little factual assistance other than vague assumptions and poor quality information. This is easily abetted by the fact that the technology being used is still focused on raw data integration. The organization is simply transferring the data but have little to zero means to determine if said data is valid or accurate.
In other words, they are still stuck in the stage where they are sharing blocks of information in a very time-consuming manner and it is not even guaranteed that they are using information that is up-to-date. Whether you are just passing on files over an FTP network or had even stuck to using file cabinets, having parties in your supply chain that still run things this way is a sign that you must immediately modernize your technological infrastructure (such as moving things to the cloud, opting for a SaaS solution etc).
Phase #2: Silo barriers are breaking down, enabled by more accessible technology.
The adoption of better technology that allows for faster, real-time spread of information is only the beginning for an evolving supply chain. In this phase, it is likely that your organization still finds it difficult to communicate with external parties because there is no guarantee that they use the same tools or perform the agreed upon processes for delivery, manufacturing, labor etc.
After all, enterprise and supply chain solutions still tend to only focus on improving things within the company and helping everyone inside stay on the same page. It becomes a different matter when third parties become involved, requiring constant clarification, follow-ups and increased visibility.
At this point, you may have to consider decisions such as having more control over every aspect of the supply chain (thereby reducing reliance on partners) or using blockchain to essentially lift the veil and require everyone to follow the exact business process using a single source of truth, and adding only the information that is unique to the partners, suppliers or third parties business process.
Phase #3: Blockchain is used to keep everyone in line with established supply chain processes.
Given the urgency of maintaining the extended enterprise, opting for blockchain is arguably the faster solution as it will allow you to stay in the loop and place your demand for transparency right on the table.
As of now, blockchain is yet to fully apply itself in many business processes but the supply chain is at least one area where development is accelerating. The very nature of the extended enterprise demands that companies seek out the most immediate partners without the risk of losing visibility. Consider the examples of the Walmart trials which include mangoes from Mexico and pork from China. These trials are all about food security and in cases where that food security is threatened, having the ability to rapidly identify the source, and address, to minimize risk of damage/disease and even fatalities to customers, allowing a rapid return to business as usual and improved crisis management and risk containment.
Now, while blockchain technology in general heralds the capacity for ensuring that everyone in the supply chain is immediately informed (thereby allowing decisive action can be taken in times of crises to mitigate risk), the biggest obstacle is the decision about which platform to adopt.
Competing platforms mean that companies cannot guarantee that their preferred suppliers will indeed be on the same platform without uniform agreement up front around how the blockchain will work for everyone in the value chain. Furthermore this issue complicates the question around industry standardization and even global standardization. (Which platform will win out in the end or will someone create a generic platform that guarantees interoperability?)
In fact, let’s go back to the Walmart trials. They had a selection of the largest food manufacturers in the world working together to develop their joint approach to food security using blockchain. What impact would this have on the global food industry if it became the de facto status quo? Will any supplier want to break away from the platform to be adopted by the largest suppliers in the world? What about independence of decision making for organisations, antitrust, collusion anti-competitive behaviour? It can certainly create a minefield!
This does not even put into consideration the new capabilities being implemented on these platforms to further differentiate them and make them attractive for broader solutions. IBM, for example, demonstrates this by providing access to A.I. capabilities via Watson.
So, watch this space very closely! There is no doubting the fact that many of us are moving towards the use of blockchain technology as a means to address the persisting issues of lacking visibility in evolving supply chains. We definitely need faster and smarter decision making and further transformation in our supply chains beyond the historical cycles of growth/development and dysfunction that we have experienced in the past!