CSCMP's Supply Chain Quarterly
November 22, 2017
Supply Chain Executive Insight E-Newsletter
Each month the Supply Chain Executive Insight e-newsletter will include brief articles about developments that are often overlooked by other supply chain publications. We will present you with summaries of the latest research as well as new ideas on how to make your supply chain operations more effective. And we'll offer commentary that sheds light on what's happening in supply chains today.
Sign up now!

Most Read Articles

News from our sister publication
DC Velocity
Perspective
Perspective

If you don't know what blockchain is, start studying

Comment
Get familiar with this technology now. Originally designed for managing digital currency, it's well on its way to adoption as a means of tracking supply chain transactions.

Before we get into any discussion about blockchain, let me say right up front that I am no technical expert, nor am I especially knowledgeable about finance. I won't profess, either, to fully understanding how blockchain works. But I do recognize that some very astute, respected analysts and a host of technology providers believe that blockchain has the potential to fundamentally change the way global supply chains share information and conduct transactions. That idea is very quickly gaining momentum. For that reason, it's important to be aware of what blockchain is and to start investigating, if you haven't already, how it might benefit your company.

Blockchain technology originally was developed for managing payments in digital currencies like Bitcoin. As finance executive Enrico Camerinelli explains in the CSCMP's Hot Topics publication "Blockchain in the Supply Chain," it is basically a database that runs across a global network of independent computers. It serves as an open ledger, where every transaction on the network is recorded and available for all participants to see and verify. By providing a common view, a blockchain eliminates the need to transfer information between organizations through such things as e-mails, spreadsheets, and direct electronic connections, and it helps to reconcile any differences in data between suppliers and customers. Importantly, the database is immutable; in other words, it cannot be changed without all participants' agreement.

Experts believe there are many ways blockchain technology could be applied in global supply chains. For a useful overview of that topic, I recommend the Harvard Business Review article "Global Supply Chains Are About to Get Better, Thanks to Blockchain." The authors, both digital currency experts, also include a clear explanation of blockchain's advantages and potential roadblocks to adoption.

We've published a couple of articles on this topic ourselves. In "Why blockchain is not just for banks," Alexander van Tuyll van Serooskerken, a senior management consultant at the technology services and consulting firm Synechron, offered some examples of how organizations such as exporters, importers, insurance companies, and credit rating agencies could benefit from being part of a blockchain. However, he argues, nobody will gain the full benefit of blockchain unless everyone in a supply chain participates.

In "Time for a change in direction: Seven use cases for hyperledger," Lora Cecere, founder and chief executive officer of the research firm Supply Chain Insights, discusses the Hyperledger project, an open-source blockchain platform launched by the Linux Foundation. Cecere foresees supply chain applications in such areas as chain of custody, product security, document sharing and data exchange, supply chain finance, and social responsibility.

With many tests already underway, all this could become a reality more quickly than you might think. IBM has taken a prominent role, working with companies like the ocean carrier Maersk Line and the retail giant Wal-Mart Stores and rolling out its Blockchain Founder Accelerator program to support successful adoption of the technology. Microsoft has launched a supply chain blockchain group called Project Manifest. An online search of "blockchain supply chain" will show that many other technology firms, both established giants like SAP and small startups, are jumping on the blockchain bandwagon.

It appears inevitable that blockchain will become integral to many supply chains. That's why it's a good time to start learning about what's coming and why it will matter to you and your company.

Toby Gooley is Editor of CSCMP's Supply Chain Quarterly.

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.


Want more articles like this? Sign up for a free subscription to Supply Chain Executive Insight, a monthly e-newsletter that provides insights and commentary on supply chain trends and developments. Click here to subscribe.

We Want to Hear From You! We invite you to share your thoughts and opinions about this article by sending an e-mail to ?Subject=Letter to the Editor: Quarter : If you don't know what blockchain is, start studying"> . We will publish selected readers' comments in future issues of CSCMP's Supply Chain Quarterly. Correspondence may be edited for clarity or for length.

Want more articles like this? Subscribe to CSCMP's Supply Chain Quarterly.