Last week at SAP Ariba’s annual user conference, AribaLive, held at Caesar’s Palace in Las Vegas, “Procurement with purpose” was more than just a slogan; it was a business model. Day after day and session after session, attendees heard from Ariba’s executive team and keynote speakers on how procurement can be a force for good in the world. There’s more to business than saving money and driving enterprise performance; that’s table stakes. Now, corporate social responsibility, ethical sourcing, and sustainability are seen by many as the new high-water marks for Chief Procurement Officers (CPOs) and other supply management leaders. Achieving strong marginal savings and healthy bottom lines is respectable; but so is defending consumer interests, the dignity of life, and the environment. And with procurement and procurement technology, these goals are not mutually exclusive.
For more than a year, solution providers, like SAP Ariba, and industry analysts, like this one, have touted Blockchain distributed digital ledgers as secure, reliable, and automated platforms that can (or will) disrupt B2B relationships, and be another arrow in the quiver of businesses that are trying to make a positive difference in the world. Blockchain certainly has that potential, and it has been disrupting the technology industry (witness the rise in frequency with which we cover Blockchain R&D, partnerships, and integrations on CPO Rising). Other observers have declared in no uncertain terms that Blockchain will be revolutionary — that it will completely change the dynamics of commerce. That is debatable, for sure.
But for now, let us consider how Blockchain ledgers, when integrated with other technologies, like RFID sensors and ERP platforms, can help procurement and supply chain leaders gain visibility across extended and often murky supply chains — a familiar and important use case for the technology. By itself, Blockchain is a promising tool that can do impressive things, but it will truly shine when it is linked to networks.
Stronger Together: Blockchains, Connected Devices, and Beyond
Picture this: at a Norwegian salmon farm, one of the most reputable and highly certified fish farms is using sustainable fish farming methods. On the farm, the day’s harvest is collected, processed, and packed in climate-controlled shipping containers embedded with RFID tags and GPS sensors. Included with the harvest is the name of the fish farm, its certifications, the place, date, and time the fish were harvested, their live weight, and temperature at time of shipping. The farm has a contract with a Boston-based restaurant chain to provide them with regular lots of fresh farmed salmon, and they negotiated and signed this contract on an open Blockchain that is integrated with the company’s ERP platform.
As soon as the RFID tag is activated, it “pings” the Blockchain its baseline supplier and shipping information; and it, along with the GPS tracker, will regularly “ping” the Blockchain as it makes it way across the Atlantic Ocean — from the port of Sture to Boston Harbor. Along the way, the restaurant’s procurement and supply chain teams will be able to monitor the status of the shipment in near real-time via the GPS sensor, and validate the shipment’s location, weight, temperature, and time since harvest along various check points. Upon arrival in Boston, the RFID tags will ping the Blockchain, and when the shipment is picked up at the pier for last-mile shipping and distribution, the RFID will ping the Blockchain once again, until it reaches the restaurant or distribution center. Upon arrival, the Blockchain will alert stakeholders via email or text. Anyone from a supply chain team member to the restaurant manager to the executive chef will be able to visually confirm the quality and quantity of the shipment; and by dinner that night, inform their customers in good faith of the quality, provenance (point of origin), and freshness of the catch. And the Blockchain will provide a permanent, unalterable, and auditable record.
Although everything turned out just fine (and the salmon was outstanding), the use case illustrates how Blockchain digital ledgers, when integrated with RFID sensors and ERP platforms, can help procurement and supply chain teams establish and verify a product’s provenance, track it from point of origin to point of sale, and ensure that the product maintained its volume, safety, and quality along the way. Just by establishing the salmon’s provenance with a certified and trusted supplier, buyers and business leaders can ensure that they are not serving their customers a fraudulent, tainted, or unsafe product, a product that was illegally harvested, or a product that was harvested with child or forced labor.
Final Thoughts
Imagine how this combination of Blockchain and RFID technology could help to ensure that tin from Central Africa did not employ slave labor and does not fund armed groups; that shrimp from Thailand was not caught by slaves and is safe to consume; or that clothing from Bangladesh was not cut from slave-harvested cotton in an unsafe factory. They can also help to ensure that product shipments were not skimmed, did not “fall of the back of a truck,” and were not swapped out for counterfeits. In short, Blockchain ledgers could go a long way toward cleaning up extended supply chains and suppliers operating in the grey, which, once enabled on a Blockchain, would be compelled to adhere to environmental, health, and safety, and trade laws and regulations, or risk being blackballed from legitimate trade or put out of business altogether.
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Dispatch from SAP Ariba Live: Blockchain, and the Rise of the Benevolent Supply Chain – Part One
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