One of our 2017 Predictions for Industry and Global Supply Chains called for a renaissance in supply chain management focused business services and technology investments during this year. We included in that prediction, the opportunities for blockchain technology being applied to supply chain management focused business process needs and challenges. These past few weeks, there have been many announcements from IBM focused on blockchain proof-of-concept efforts with the largest and more significant coming this week.
In a nutshell, blockchain technology supports a decentralized ledger of two-way transactions to exchange monetary or physical assets. Originally developed to support digital bitcoin currency use, this technology is a shared digital ledger, or a continually updated list of incremental transactions. This decentralized ledger keeps a record of each transaction that occurs across a fully distributed or peer-to-peer network, either public or private. Blockchain is increasingly being explored by enterprise and supply chain focused technology providers for applicability in providing higher levels of intelligence regarding the movement of materials across a supply chain or B2B network. Our prediction was that the technology is likely to gain broader recognition specifically due to its applicability in recording, authenticating, and keeping track of assets and materials. While we do not anticipate wide-scale mainstream investment in this technology in the near-term horizon, we urged teams to play close attention as to technology vendor developments and planned process support areas since this type of technology has breakthrough potential when fully developed and applied to meaningful business needs.
Thus far, IBM has announced efforts to collaborate with companies in areas such logistics and global transportation as well as food safety. Regarding the former, Maersk Line and Pacific International Line announced joint proof-of-concept collaborations for leveraging blockchain technology for increased security, transparency, and trade finance efficiencies. An earlier joint announcement coupled IBM and Wal-Mart in proof-of-concept efforts directed at enhanced food safety traceability needs among China based food supply chains.
This week, a further significant announcement broadens blockchain proof-of-concept efforts involving 10 major CPG companies as well as retailers Kroeger and Wal-Mart, representing significant players in packaged foods supply chains. The consortium companies include:
Driscoll’s Golden State Foods
Golden State Foods
McCormick and Company
As Supply Chain Matters has highlighted in our numerous blogs highlighting major recalls of food products, it often takes weeks and months to investigate a root cause of food contamination. Meanwhile, the specific food production continues to be distributed and offered, increasing the illness exposure to consumers and risk exposures of food suppliers. According to the latest announcement, this new consortium will work to identify and prioritize areas where blockchain can positively impact global food traceability.
For IBM, the stakes are high in terms of maintaining a technology first-mover advantage while convincing industry participants that the economics, business value and services implementation cost factors of its blockchain technology compels initiatives to move beyond proof-of-concept.
IBM is further introducing IBM Blockchain Platform, with what the provider terms to be a fully integrated, enterprise-grade blockchain transactional and business analytics Cloud platform that includes tamper-proof encryption standards. The Cloud deployment pricing model allows the cost of the network to be shared across all network members. Probably one of the more important determinants for wider scale deployment is whether early-adopter companies opt of private or public Cloud deployment model or combinations of both.
First-mover advantage further requires gaining attention from developers to help host workshops concerning the technology and influence further compelling supply chain focused use cases. Expanding a blockchain ecosystem among academic and start-up communities is an important consideration as-well. To achieve the latter, IBM indicates the offering six months of access to the IBM Cloud for use of IBM Blockchain Cloud, along with training and partnerships to more than 1,000 universities among the IBM Academic Initiative.
Other enterprise and B2B network technology providers are also positioning for industry and business process specific blockchain proof-of-concept initiatives.
Over the coming weeks, we will continue to highlight more of these developments.
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