I’m sure you’ve all been hearing the hype about Bitcoin and Ethereum etc. but have you been ignoring the underlying technology – Blockchain? While labels like disruptive technology are thrown about too often, Blockchain is certainly deserving of that label and its impact on Supply Chain and Procurement cannot be overstated. For a basic explanation, you can go to our previous posts or I can send you some primers. But this should be one of your goals for 2018 – to ensure Blockchain is on your radar and you have a strategy to capitalize on its impact. I assure you, it will be a game changer and a huge competitive differentiator.
Here are just some of the advantages associated with utilizing Blockchain technology in Supply Chains – see which ones don’t apply to your company:
Traceability: Prove where the product comes from (helpful for product recalls, eliminating counterfeit products, etc.)
Smart self-executing contracts: Efficiency, faster payments, eliminate paperwork
Recording movement of assets amongst supply chain components
Tracking every single document associated with supply chains
Connecting physical goods to information about them
Knowledge sharing (specifications and processes) between customers and suppliers and managing changes to them
Higher security reducing audits
Significantly higher Innovation
Transparency: Customers demand more and more transparency
Process efficiency: Significant reduction in costs, cycle time and human errors
And the list goes on and on. It is estimated that Blockchain will drive over $500B (that’s billion with a B) in less than 8 years. This comes from cost reductions, Risk Management, Innovation and many other Value Drivers. How much of that will be in your industry or your supply chain and how are you going to ensure you get a fair share of it?
There are many examples of companies taking advantage of it and as usual the early adopters will reap the largest benefits. The financial sector has been in the lead followed by retail and manufacturing with healthcare not far behind. IBM and Maersk just launched a joint venture in the shipping industry. Many banks are forming consortiums to take advantage of it and replacement of SWIFT (interbank money transfer) is around the corner. Faster transactions, lower costs and total transparency are key drivers for this sector and Blockchain delivers on all three. Walmart was able to reduce tracing fruit from over 6 days to 2 seconds – and no that’s not a typo. Can you imagine the impact of that if that supply chain got contaminated and a recall was necessary? Do you think that gives them a competitive advantage? Reduce insurance premiums? “Incumbent businesses in countless industries, from finance to energy to health care to food, are peeling back the layers on this budding technology, seeing the potential to trim costs, share and secure information more efficiently, and unleash new products at unprecedented speed. And they’re doing so knowing that one day their survival may be at stake…” (Robert Hackett).
It is quite obvious that this is a major disruptive technology and that’s why we’re writing about it again. This needs to be on your radar screen and on your agenda for 2018. What can you do? Here’s a good list to get started with.
- Educate yourself on the technology – there’s lots of information available.
- Educate everyone on your team.
- Hold brainstorming sessions on how it can impact you and how you can take advantage of it.
- Prepare a deck and go present it to your stakeholders and their staff meetings – you will gain tons of credibility. Canvass your suppliers and ask them what they are doing in this space – you might be shocked and surprised.
- Check and see what your industry and your competitors are doing.
If you do nothing more than these, you will have made significant progress and you will start formulating a strategy on how to take advantage of it. Oh yeah – the tripling of the stock price. That just happened a few days ago when Kodak’s stock price tripled when they figured out a way to monetize this technology and came up with a brand-new product offering – go check out the story.