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3 predictions for blockchain in the supply chain in 2019

When the supply chain conversation becomes a blockchain, the list of features and benefits is often preceded by the word "may".

The technology is here. We understand what an immutable register could make for supply chains, but widespread adoption is still far away.

At the beginning of 2018, a Gartner survey put the CIO number (in all sectors) with the effective implementation of blockchain in their organizations at 1% globally; 8% were experimenting and 77% were not interested.

In addition, Gartner Hype Cycle predicts the time when larger and focused blockchain investments will begin in 2022 and large-scale global added value will not start before 2027.

"We are still in the process of investigating and testing with only a few [companies] further along that road test, "said Brian Reed of the blockchain consulting firm Laguna Consulting, who told Supply Chain Dive that in his view there are no blockchain supply chain initiatives that have yet to reach operational size.

An important obstacle to the large-scale implementation of blockchain in the supply chain is participation. Unlike financial or insurance applications, to use blockchain technology to achieve efficiency and transparency in supply chains, all players must work together.

Cooperation, in this case, means accepting to join a shared platform and adopt an agreed set of standards. In 2018, industries and companies have learned how difficult it can be, and the machinations suggest what could happen in 2019.

  • Progress will happen, but it will be chaotic

  • In 2018 two blockchain initiatives were born in the maritime shipping sector. The Maersk and IBM TradeLens joint venture was the only one to get stuck for most of 2018, but in November, nine sea carriers and terminal operators joined forces to create the Global Shipping Business Network (GSBN).

    TradeLens announced last year that it would be operational by the end of 2019, but also Marvin Erdly, head of TradeLens at IBM blockchain, told Coindesk that signing couriers is essential and that what he did was not enough. GSBN on the other hand, even if just started (as far as we know), already had a handful of couriers.

    "The interesting thing is that there are a lot of companies, organizations and individuals who think that blockchain technology can be useful," said Scott Mall, communications director for Blockchain in Transport Alliance (BiTA).

    "We will have to wait and see what happened when it is actually there and if everyone will participate, whether they will participate fully or whether they will participate partly because there are trade secrets or intellectual property problems." Mall told Supply Chain Dive.

    Alex Pradhan, a senior analyst research analyst at Gartner, said via email to Supply Chain Dive that the situation is not unique to maritime transport – or blockchain, for that matter. In some technology segments, rivalries may mean that cooperation simply is not in the cards.

    "It might be possible that Maersk's competitors prefer not to use the same system because they feel they are providing additional revenue to an archaic rival."

    Alex Pradhan

    Principal investigator principal analyst, Gartner

    "One must not win at the expense of the other, and some parties will refuse to do business with each other if the party offering the blockchain solution is a competitor, for example, it may be possible that Maersk's competitors prefer not to use the same system because they believe they are providing additional revenue to an archival rival, we see it in cloud platforms where some retailers prefer not to use running applications on AWS because they believe this is only giving more money to rival Amazon, "she said.

    It is for this reason that Reed believes that neither effort can throw in the towel at any moment.

    "Having such large and opposing forces on both sides means that neither will easily surrender," Reed said, adding that the commercialization of these efforts and the progress made behind the scenes are not necessarily up to date.

    Mall said that competition can be good in such situations, leading to better products from both groups.

    Maritime transport is just one example, quite visible, of an industry that tries to organize itself behind a technology in a new way. Dealers, 3PL and other modes of transport, not to mention a succession of startups, join the associations and also lead pilots.

    What is clear now is that a future in which industries and supply chains are serenely organized on a single blockchain is not likely. Forming and joining associations could be an indication of progress, but it is not a sure proof of this. "Getting organized does not necessarily mean we are close to the big bang," said Reed.

  • The food supply chains will be the first

  • One of the most praised advantages of ledger technology distributed in the supply chain is the traceability it can provide. Diamonds, turkeys, wheat, parcels: practically anything that changes hands several times before its end user loses its origin or travel data somewhere along the chain.

    In no field is this more necessary than in fresh products. The calls have plagued the food world for years, but last year there were three outbreaks of E. Coli in Roman lettuce in the United States – the origin of which was not traced until December, when the romaine crops were well finished.

    The months of suspicion and uncertainty surrounding the romaine, preceded by years of various security recalls in the same category, have led Walmart to make an announcement. The company is piloting a lettuce traceability program with blockchain, whose participation will become mandatory for growers in 2019.

    As the largest retail and grocery retailer in the world, Walmart has been credited with almost singehandly scale trends in the past (the company is often praised for the integration of the organic farming movement) and now, it could do the same for blockchain.

    More [blockchain] it becomes trivial, the more likely the supply chains will benefit, the more it will be assessed for its impact and less for its excitement factor.

    Reed of Laguna Consulting said the program is more likely to succeed than other efforts, since Walmart exerts immense power as a customer.

    "In the end they will push it because their sellers have a few words to reject, no matter if it's a good idea or not. Any food traceability would have ample support, but someone like a Walmart can make people move much faster," he said. called Reed.

    Smart money is on Walmart as a result of this effort, but at least initially, this type of blockchain tracking platform is a bit simpler than those looking to trace more complex supply chains. The test will be if Walmart configures it in such a way that it can be quickly expanded to other categories.

    "Suppose it happens, how do you take this from lettuce to oranges to peppers?" We hope that what they are doing will be transferable to other raw materials, "Reed said. The rest of the food production chain will closely follow the lettuce plantation in the California Salinas Valley, where most of the American lettuce is grown from this month.

  • Blockchain will be boring

  • Perhaps the most important trend regarding the blockchain in 2019 is that the blockchain will become boring, at least according to MIT.

    MIT Technology Review, citing Walmart and others on Wall Street, said in a recent article that blockchain will normalize beyond the hype and in the business of every day of the year.

    One of these applications will take the form of smart contracts. These are particularly relevant to the supply chain because they can, in theory, add efficiency and remove red tape for any transaction. The blockchain infrastructure allows you to keep payment "in escrow" until the terms of the agreement have been met and agreed, and then to release it immediately.

    For smart contracts to be useful on a large scale in all sectors, real-time data is needed, otherwise the bureaucracy remains. As more industries are digitized and more data becomes available in real time, opportunities for smart contracts are becoming reality.

    Blockchain is a captivating technology, but the more it becomes trivial, the more likely supply chains will benefit and the more it will be assessed for its impact and less for its excitement factor.

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