Blockchain has exited the “tourism phase” of adoption. That means that businesses have stopped implementing blockchain technology just because it is the new shiny thing on the market. Instead, they are looking at real ways it can improve their operations and make an impact on their business.

The supply chain has emerged as one of the best examples of how this technology can improve business operations through its unique ability to share information across multiple parties that can be inherently trusted. But as supply chain teams and companies look to add this technology to their operations arsenal, they need an accurate understanding of what blockchain is and what it can do.

An enterprise blockchain is a tamper-evident, shared digital ledger that records transactions in a peer-to-peer network. The decentralized peer-to-peer blockchain network prevents any single participant or group of participants from controlling the underlying infrastructure or undermining the entire system. Participants in the network are all equal, adhering to the same set of rules. They can be individuals, organizations or a combination of all these types of participants. Each participant on the blockchain platform maintains complete control and ownership of their data and must grant permission for any other member to access or view their data.

This allows the data to be applied to several different use cases across the supply chain industry including:

• Provenance: verifying the origin of a product moving along the supply chain. Everyone in the supply chain can trace the final product back to the raw materials used as long as the blockchain record stretches.
• Shared Visibility: making real-time updates about the movement of goods or resources available to everyone on the supply chain. No party is left in the dark as to the status of a shipment or transaction.
• Dispute Resolution: acting as a single source of truth about every transaction. Since everyone has the same information and is using the same tamper-resistant records there will be less reason for different parties to have conflicts.
• Identity Management: creating a permanent record of everyone involved in a transaction. Each buyer has many suppliers and vice versa, but each transaction has different requirements so a permanent credential backed by the blockchain can make sure that organizations know exactly who they are doing business with.

With so many benefits to using blockchain, it is tempting to jump right into building a blockchain-based platform to support supply chain operations. But there are still a few myths to clear up in order to reach peak success.

Myth 1: Blockchain is a Standalone Panacea to Operational Issues

The truth is that blockchain won’t suddenly make a company a master of the supply chain on its own. Blockchain is just one part of the digital transformation journey.

The digital ledger technology is meant to work congruently alongside other technologies to create a transformed supply chain and unlock its full potential. A hybrid-cloud approach to information technology allows teams to move quickly by implementing projects in months instead of years. Artificial intelligence helps to make sense of the data they are collecting in order to make better and faster decisions. Robotic automation frees up workers to focus on higher-order tasks.

When combined with other high-tech solutions blockchain is a powerful tool for transformation allowing supply chain operations to increase speed and operate more agile.

Myth 2: Blockchain Will Replace Existing Software Systems

Many companies use e-procurement software to help them track and manage the section of the supply chain they are responsible for. After investing time and resources to build or install this infrastructure, some companies are wary to add blockchain because they are afraid it will render their software obsolete.

Blockchain technology can integrate with a company’s existing software, so there is no need to remove it benefit from a blockchain network. Companies can integrate the software they are already using with blockchain platforms by creating APIs that upload and download the data other parties need to see using their existing supply chain management systems. That way no company needs to change the software they use while everyone benefits from the interoperability of the common blockchain network.

This is especially useful for blockchain networks that span several stages of the supply chain.

For example, in the ocean cargo industry, most shipping companies use a specific software platform to track the status of their shipments, but the port terminal operators use a system provided by a completely different vendor. This situation created a need for a blockchain network like TradeLens o help the ocean cargo industry share information. Through blockchain technology, those two software systems do not need to be interoperable on their own and can share information between all parties seamlessly.

Myth 3: Convening the Network is Easy Compared to Building the Platform

Once a company has decided to use blockchain, it may be tempted to go out and start building the platform itself. However, it is important to remember that building the network of users is just as hard, if not harder, as setting up the technology.

A blockchain network only works if it has buy-in across the supply chain and it is at its most powerful when the whole industry, including competitors at all levels, participates in the same network. Every blockchain needs a justification or value proposition that is compelling to every party involved. If there is a gap in the network because one group does not see the value in adopting the blockchain network, then there is a break in the chain of information that reduces its effectiveness.

For example, a grocery chain may have all of its suppliers using a blockchain that tracks food all the way to the farm. But they will not be able to claim complete visibility into their supply chain if the truckers that deliver food from the distributor to the store opt out of the network.

It is also important to remember that as supply chain executives look for solutions to the visibility issues that blockchain can solve, other companies are not sitting around waiting for someone else to provide a solution. Even if they see the value in the network that is being proposed, they are already actively working on their own solutions or using their development resources for other pressing projects.

Blockchain has the potential to be one of the most transformative technologies for the supply chain and it can complement existing supply chain technologies and solutions. It is no wonder that many supply chain operators are already adopting the technology for their own businesses and others plan to add it soon. However, before they jump into building this new technology into their operations, they need to fully understand what it is capable of and how to maximize its power and support the move toward intelligent supply chains.

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Stephen J. Rogers
Steve joined IBM in 1981 as an engineer after receiving a BSIE degree from Georgia Tech. In 1986 he joined finance after receiving an MBA from Wake Forest. He was the Division Controller for the PC business and later became the Manufacturing Controller for Server Group. He then became VP of Finance and Operations for IBM’s System X Server division. In 2002 Steve joined the Integrated Supply Chain organization with responsibility at times for the Supply Chain for Retail Store Solutions, System X Intel Servers, Storage, Software, Solutions, Demand/Supply and Inventory Planning for all hardware, and supply chain acquisitions and divestitures. In 2013 he became VP of Supply Chain Transformation and in 1Q 2017 became the VP of Blockchain Initiatives for Supply Chain in the IBM Industry Platforms organization.