Inside Logistics

Blockchain gaining ground in supply chain

Supply chain professionals are increasingly aware of blockchain, with about a third saying they are already implementing the technologies


October 2, 2017
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Supply chain professionals are increasingly aware of blockchain and see its potential, with about a third saying they are already implementing the technologies.

This is one of the findings highlighted in Chain Business Insights’s first benchmark survey on blockchain in supply chain.
“Blockchain in supply chain and trade finance is definitely in a nascent stage,” says Sherree DeCovny, co-founder and research principal at Chain Business Insights. “Blockchain in Supply Chain: Edging Toward Higher Visibility provides a benchmark on the current state of play, and allows us to effectively monitor change going forward.”

The analyst firm defines blockchain as: “a class of software technology that is composed of other technologies including data storage, distribution and synchronization, cryptography and identity… [it is] a technology that enables large, complex communities of trading partners to transact business securely in real time.”

The survey was conducted this spring among a sample of 42 supply chain practitioners along with shipping agents, technology providers, consultants and more, from companies of all sizes. Just over two thirds were from companies with global supply chains. Respondents were asked about their awareness of blockchain, how they might use it, what its advantages are and potential obstacles to adoption.

Awareness was found to be relatively high. One-third of respondents are already implementing blockchain, about one-quarter of respondents indicated they are knowledgeable about the technology, and the remainder are at the beginning of the learning curve.
In Chain Business Insights’ opinion, the latter group are more representative of the industry as a whole.

Most of the blockchain development activity to date has been in financial services, but other industries—and notably supply chain management—are now actively evaluating the technology.

Survey respondents indicated that the primary use case for blockchain is improving supply chain transparency and traceability. Eighty percent said they could see it being used to track product as it moves through the supply chain.

When asked about the most important advantages, they said it: improves supply chain visibility/transparency, reduces transaction costs and enhances trust between supply chain partners.

“Blockchain’s ability to maintain a tamper-proof, timely record of product movements and related transactions is of huge interest to supply chain practitioners,” says Ken Cottrill, co-founder and research principal at Chain Business Insights. “It comes at a time when the industry is under intense pressure to deliver improvements in these areas.”

Chain Business Insights pointed out that the acid test of any innovative technology is the number of players actively engaged in implementing it. This is especially important in the supply chain community, which in the past has experienced its fair share of false starts and new ideas that did not reach their promised potential.

Just over 40 percent of respondents reported they plan to implement blockchain within the next year, and one-fifth intend to implement the technology within two years. This result is compatible with the relative high awareness of the survey sample.

Still, 30 percent of respondents had no idea when blockchain might be implemented, reflecting the uncertainty that still surrounds the technology. Lack of understanding/awareness and lack of standards and interoperability were noted as the top obstacles to adoption.

Finally, Chain Business Insights asked survey participants which other technologies will likely have an impact on supply chain management. As we expected, big data/analytics, IoT, cloud computing, and RFID came out on top.

“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, co-founder and research principal and Chain Business Insights.

“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.”