Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2019 articles as we reflect on the year and prepare for the new year ahead.
In mid-2019, it should be no secret that Blockchain distributed ledger technology is disrupting the business world across the board (if you’ve been asleep since 2016 and are just waking up, have I got some stories to tell you….). Like school-aged antics, everyone’s talking about Blockchain, but few are actually doing it. Those that are dabbling in it typically have partnered with big tech names, like IBM, Oracle, and SAP, to complement each other’s inherent strengths, and are in the very beginning stages of pilot programs. SAP Ariba and Tradeshift have jumped in, plus some big household names, like Target, Wal-Mart, and many others. Let’s admit it: some of these guys and gals look good together.
Hope or Hype?
Journalists and industry analysts have been writing about Blockchain, including and especially on this website by this author. I remember like it was yesterday, writing about what Blockchain is, how it works, and what its reported advantages are. I believed (and still believe) that it could revolutionize the way that procurement and supply chain organizations discover suppliers; source, purchase, and codify agreements; ship, track, trace, and receive goods; and deliver on its lofty promises of automated track-and-trace, greater transparency and accountability, greater trust, and ultimately more ethical and sustainable supply chains.
When you stop and think about it, it’s a tall order for a technology that in many cases is still unproven and has many early critics and skeptics. I also remember like it was yesterday, hammering away at one of my favorite use cases for Blockchain in procurement: providing enhanced track-and-trace capabilities. I got hung up on the following questions:
- How are organizations going to connect physical widgets to the digital supply chain?
- How are they going to ensure that raw materials, components, finished parts, and/or assembled items are authentic, and not some cheap knock-off that was swapped in for the Real McCoy?
- More to the point, how are they going to ensure that everyone operating in the supply chain, with or without the Blockchain, is ethical? Is telling the truth about the source or provenance of that widget, or the manner in which it was derived?
Indeed, my early critiques were born out of a blend of skepticism of the technology and not fully appreciating how it works, which have only driven my curiosity in the intervening years. How to connect the physical and digital supply chains? With near-field communications (NFC), bar codes, QR codes, wireless transmitters and tracking devices, GPS tracking devices, and smart pallets. These connected devices get attached to or embedded with or within the product at the outset of their journey. By leveraging the “Internet of Things” (IoT) in tandem with Blockchain, organizations can track and trace their goods and products as they traverse global supply chains. The devices will automatically collect, store, and transmit data in transit, “ping” their linked Blockchain, and record its movements on the chain at each point in the physical supply chain. Boom. Done.
As to the second and third questions, the answers are less straightforward and, quite frankly, a little disappointing. Human beings have always been and, I’m sorry to say, will likely always be the weakest link in the Blockchain. There are always going to be bad actors out there — actors who successfully obscure their intentions and actions. Black Hats who make their living (and their getaway) posing as White Hats. People are always going to let us down; corrupt employees and officials are always going to make quick bucks looking the other way while the bad guys skim, divert, counterfeit, forge, smuggle, and so on.
But it’s not just me that has had doubts. Go to any user conference in this industry and you will, as I have, hear or engage in conversations about Blockchain wherein someone throws cold water on the whole affair.
“I don’t really see any use cases for procurement.”
“It’s data and energy intensive — it’s not practical.”
“Yeah, it can do track-and-trace, but we already have that capability with other platforms and programs.”
“It’s cool, and it’s fun to talk about; but the fact is that most organizations struggle with adopting traditional technologies, nevermind Blockchain.”
That last one is my favorite, in part because I said it and because it’s true; but also because it’s probably the tallest hurdle for this relationship to overcome. Most organizations struggle to adopt basic process automation tools, like spend analysis and eSourcing. It’s a big leap for them to jump onto a Blockchain (even though it would perform very different functions than spend analysis and eSourcing). The point is that an organization that has not automated basic elements of its sourcing and procurement operations, right now, can only dream of Blockchains. It’s just a fantasy — it’s not the real thing.
Final Thoughts
I do believe that endeavoring to make supply chains ethical, safe, and sustainable is noble. And technology, particularly Blockchain and IoT, can help organizations do that. Solution providers, particularly larger ones, continue their love affair with the technology, having seen its potential to deliver great things to users. I continue to write about one of Blockchain’s principal use cases: supply chain track-and-trace, in large part because big tech companies, niche providers, and commercial partners continue to partner and invest in pilot programs to test these use cases. But, like other analysts in this space, I continue to retain at least some skepticism that this marriage of sorts between Blockchain and procurement, or Blockchain and supply chain will last. It may or it may not — it’s too early to tell.
Relationships are based on mutual attraction and admiration, hard work and determination, faith and trust, sacrifice and investment, and time. Lots of it. Both parties have to be in it for the long haul. I believe we have a long way to go before we know how this one turns out.
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