When the Gartner Group conducted research among CIOs, 43% of respondents were interested in blockchain technology, but 34% had no interest. Remarkably, only a few had actually adopted blockchain: a mere 1% of respondents.
There is much brouhaha about blockchain technology nowadays, but not many people are using it. Why not? Gartner’s research found that for one, there's not a wealth of subject matter experts who can help implement it. This includes technicians and developers who are able to make IT networks communicate with each other in compliance with the requirements that blockchain imposes. But a second, bigger reason was that most respondents reported that they do not understand blockchain and have difficulty explaining how it functions.
If you go to Merriam Webster's Dictionary, blockchain is defined as "a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network." That still doesn't quite clear things up for most of us.
So, let’s start with the framework within which blockchain operates. One way to think about blockchain is to view it as a network of computers or IT base stations. Among these base stations, or "nodes" as they're referred to, are files of transactions. These transactions take place between nodes in the network. They are in the form of a ledger. More specifically, their transmission from node to node is through a distributed ledger; this mechanism is at the crux of blockchain technology.
Data is transmitted to other nodes through this distributed ledger. When another node accepts data, it is crypto-logically verified, then updated in real time. The data is secure, tightly controlled, and unalterable, thanks to the cryptography that enables this process.
It's ideal for a supply chain ecosystem with many stakeholders (nodes): shippers, transporters, warehouses, distribution facilities, fulfillment centers, and many others. A transaction might involve a shipment that has much accounting along its path. These include payments, foreign exchange rates within the currency, bills of lading, and different stop points within the shipment: distribution centers, fulfillment centers, and other storage areas.
For the supply chain, though, it affords what every stakeholder seeks: visibility and control. Information is updated about the shipment in real-time and is shared with others on a need-to-know basis.
The entire string of transactions is distributed in this ledger and doesn't rely on a third party, central authority, or any other clearinghouse to approve transactions. Consequently, the data flows without any intervention; it is unalterable. It trades in blocks, thus the name “blockchain.” With blockchain technology, data is current, updated, and controlled. It is also secure, tamper-proof, and quick-moving.
The emergence of blockchain is a common topic in supply chain talk. We will continue to hear more about how it can be used, what it means for the future, and what its benefits are. As it is more commonly used and embraced, we’ll better understand its value. Most importantly, it is ideal for supply chain accounting and will expedite the shipment of goods across the globe.
For now, it's a concept difficult to understand – which, as Gartner’s research found, may be why it’s not yet widely embraced. In the meantime, competitive supply chain firms will do well to not only understand it better, but also find the right people with the right skills to develop and implement it. The technology is disruptive and accurately enables the various stakeholders within the supply chain ecosystem to connect.
Indeed, it may be quite revolutionary. According to a February 2018 article in Deloitte Insights:
"Blockchain, in many ways, appears to signify the dawn of a new era as it relates to the way we store and exchange value. In fact, it can be considered one of the biggest technology breakthroughs in recent history, similar to the advent of the internet in the early 1990s."
When it’s fully integrated into our systems, we’ll likely find that blockchain is a boon to managing our worldwide supply chain. It will provide rapid, but secure, visibility and control for the movement of goods and services through the complexities of the global supply chain.
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