Complex supply chains have been the focus of blockchain innovators as of late as they explore how distributed ledgers can streamline and safeguard the transmission of paperwork and funds across borders and between companies. But the latest analysis from Chain Business Insights suggests supply chains will have to wait to see any positive disruption from blockchain.
The report, released last week, agrees that blockchain is making headway in supply chain management and finance. But it has a long way to go, said Chain Business Insights Co-Founder and research principal Sherree DeCovny.
“Blockchain in supply chain and trade finance is definitely in a nascent stage,” concluded DeCovny in a recent statement announcing the report, “Blockchain In Supply Chain: Edging Toward Higher Visibility.”
A survey conducted by Chain Business Insights found promise for future disruption of supply chain management by blockchain: More than a third of respondents said they are already implementing blockchain-based solutions, while a quarter noted they are at least knowledgeable about the technology.
Professionals already have an idea of how blockchain would impact operations. Eighty percent said they are most likely to use blockchain to “track products moving through the supply chain,” while 60 percent cited sharing information with suppliers, and the same figure said tracking payment information like purchase orders.
Improving supply chain visibility and transparency was cited as the most important advantage of blockchain in the supply chain by nearly half of respondents, with reducing transaction costs and enhancing trust between supply chain partners also high on the list.
This idea that blockchain can heighten visibility across the supply chain for all players involved is one of the most common arguments for integrating distributed ledger in this space. In a recent interview with PYMNTS, Paul Brody, global innovation leader, blockchain, at EY, explained why:
“Blockchain and supply chain management are an especially good fit [for blockchain] because of the distributed and multi-party nature of the business,” he said. “In complex supply chains, you have multiple parties who need to collaborate but don’t want to always share all their information. Historically, they have managed this by sending messages to each other on a one-to-one basis, but that results in lots of islands of information.”
“With blockchain,” he concluded, “we can get universal visibility and synchronization of data without having to compromise on security and privacy.”
When it comes to other technologies that are expected to complement blockchain, professionals in the Chain Business Insights report cited big data and analytics as their chief focus. Internet of things and cloud computing were similarly high on the list.
Nearly half (42.5 percent) said they plan to implement blockchain within the next year.
Overall, Chain Business Insights concluded, the data suggests supply chains will be among the first areas of enterprise to see blockchain disruption.
“Blockchain’s ability to maintain a tamper-proof, timely record of product movements and related transactions is of huge interest to supply chain practitioners,” said Chain Business Insights Co-Founder and research principal Ken Cottrill in a separate statement. “It comes at a time when the industry is under intense pressure to deliver improvements in these areas.”
But researchers said the remaining portion of supply chain professionals — those at the beginning of the learning curve when it comes to blockchain — are a better representation of the overall industry. The most common hurdle to implementing the technology is a lack of understanding and awareness of it. A lack of standards and interoperability — another sign of a technology’s infancy — was also a top concern, researchers found.
Nearly a third of professionals said they do not have a comprehensive timeline for which blockchain solutions may be implemented within the enterprise.
“The first development projects in the supply chain domain are emerging, but as our survey underlines, there is still a long way to go before the technology gains widespread acceptance,” said Peter Harris, also a co-founder and research principal at Chain Business Insights. However, he added, early adopters are likely to promote heightened visibility of blockchain in the supply chain moving forward. “In our view, capabilities such as product tracking and tracing and verifying product chain of custody will likely drive higher levels of awareness in the near to medium term,” he said.