Enterprise services company IBM announced a blockchain-based supply chain verification network, aptly named “Trust Your Supplier” (TYS). In its press release, IBM said that TYS is “designed to eliminate manual time-consuming processes and help reduce the risk of fraud and errors, ultimately creating frictionless connectivity across supply chains.”
IBM will collaborate with blockchain services company Chainyard to bring TYS to a prominent list of clients, including Anheuser-Busch InBev, Cisco, GlaxoSmithKline, and Vodafone. TYS is set for a commercial release in Q3 2019.
The TYS network gives us another glimpse of how blockchain could disrupt traditional supply chain networks. According to data from Gartner cited by IBM, blockchain will track the movement of an estimated $2 trillion worth of goods and services by 2023. Here are a few ways we foresee blockchain impacting supply chains:
- Increased granularity of data. In conjunction with IoT devices, blockchain can increase the frequency and specificity of communication throughout the supply chain. For example, in the food service industry, a sensor could be attached to deliveries to track temperature, humidity, and light exposure as products travel through the supply chain. Blockchain would allow such measurements to be documented through a distributed ledger that makes the data accessible, reliable, and responsive. The granularity of this data will be determined by the extent to which IoT devices proliferate.
- Reduced administration costs. Blockchain could reduce the need to manually input information about goods and services as they travel through supply chains. The technology would automate and digitize the tracking process, often with the aid of IoT devices. This would help solve an accuracy issue that plagues the supply chain: an estimated 10% of all freight invoices containinaccurate data which can lead to disputes.
The blockchain adoption gap: While the potential savings enabled by blockchain are significant, investing in the technology still does not make sense for many companies.
A 2018 survey by Gartner found that only 1% of CIOs have invested in and deployed blockchain solutions. Adding on to that, adopting the technology requires subject-area expertise that is in high demand, making labor expensive and difficult to find. In the same Gartner survey, 23% of CIOs said blockchain skills were the “most difficult to find.”
Finally, many of the benefits of blockchain will be enabled through the network effect, whereby companies reap benefits because blockchain platforms connect them to other companies using the technology. The catalyst for mass adoption may be industry-specific, as major players utilize their leverage to force blockchain adoption — Walmart, for instance, required direct suppliers to use its blockchain-enabled tracking platform starting in January 2019.
Credit: Business Insider