Thought Leadership

Is Blockchain the Next Big Thing in Omnichannel Technology?

Share this post:

Blockchain is getting a lot of attention as a technology poised to disrupt the Financial Services industry. But its potential is far reaching, and has implications for many industries including retail, and may be the thing that makes Omnichannel a reality.

What is Blockchain?

Blockchain is the technology at the core of digital currencies such as Bitcoin. It’s a digital ledger of transactions distributed among a network of computers.  Each node in the network can securely change the ledger without the need for a central authority or clearinghouse.  This is how Bitcoin is able to operate without banks or other middlemen.

What is Omnichannel?

Omnichannel is matching customers with their purchases with the least friction. For customers, frictionless means buying through the channel of their choice (web, mobile, phone, store, etc.) and receiving their purchases as they please (via shipment, in store/store pickup, locker, etc.). For shipped orders, frictionless means shipping from the most ideal distribution point (distribution center, store, or drop-ship partner) to reduce shipping cost and delivery time.

Keeping track of orders and inventory across these distribution points is the responsibility of the Order Management System. Inventory is visible across the entire network of distribution points and business logic helps fulfil orders intelligently, balancing shipping costs against delivery time.

Challenges with Current Order Management Systems

Current Order Management systems are capable, but complex to implement and maintain—so much so that few companies have been able to fully realize their potential.  They rely on a central clearinghouse to keep track of the activity across the network.  As a result, these systems can become sluggish during periods of high activity and require elaborate caching strategies.

An Analogy

This problem seems similar to financial trading systems which bring together buyers and sellers, a problem Blockchain appears well suited to solve. Current trading systems typically use a central clearinghouse to verify trades. Transactions can take a comparatively long time to settle and the clearinghouse charges a fee for its services.

Using Blockchain technology, each bank in the network maintains a copy of the complete ledger. All of the copies are kept in sync using an agreed upon consensus mechanism—a set of rules which govern how updates to the ledgers are made and distributed. Trades made using this system clear in seconds or minutes and no fee is paid to a middleman.

How can Blockchain help Omnichannel?

Imagine an Order Management Systems based on Blockchain technology:

  • It is a “private” or “permissioned” Blockchain since the network only contains known participants. Trust has already been established and proof of work mining is not required.
  • It is distributed, without a central clearinghouse, and composed of Blockchain nodes, each with a complete copy of the ledger of inventory and orders.
  • It is fault tolerant. If one node goes down, others can step in since they each have a complete copy of the data.
  • It is scalable. The number of nodes can be changed to meet demand.  For example, during Black Friday or Cyber Monday additional nodes can be spread across the network to limit latency and improve performance.
  • It is smart. The nodes can process business logic around how best to fulfil orders through Smart Contracts.
  • It is synchronized. The nodes keep each other synchronized using a consensus mechanism.
  • It is fast since proof or work mining is not required.

Benefits

The benefits of Blockchain-based Order Management systems include scalability, fault tolerance, and the ability to easily add supply chain partners if they also leverage Blockchain. The speed of theses systems remains an unknown and needs to be tested.

More work needs to be done to validate this approach and Blockchain-based Order Management systems are (probably) not just around the corner, but the potential impact of this novel technology on Omnichannel commerce is great.

Blockchain’s potential impact on retail is not limited to order management and includes customer loyalty programs, fraud management, and supply chain.

To learn more about what IBM is doing with Blockchain visit our website.

Related to Omnichannel, IBM and SAP are hosting a webinar titled Customer Engagement in the Digital Economy: The CMO Perspective.

SAP hybris Sales & Delivery for Distribution Sector

Add Comment
No Comments

Leave a Reply

Your email address will not be published.Required fields are marked *

More Thought Leadership stories

Five tips for successful and speedy SAP S/4HANA implementation

In 2017, new trends emerged around how to approach SAP S/4HANA transformations successfully. More implementations were launched than many people had predicted, the technology is now proven, client attitudes shifted, and companies have started to realize real benefits with new solutions. What makes it even more interesting and exciting as we look forward is that […]

Continue reading

Three things I learned from clients in 2017 about digital transformation

I started 2018 thinking about resolutions and goals, and reflecting on the prior year; the things I want to accomplish in the New Year, both personally and professionally, and what I learned in 2017. It was only six months ago that I stepped into my role leading the IBM Global Next Gen Enterprise Cloud Applications […]

Continue reading

Debunking the myth of modernization

As adoption of cloud, analytics and AI accelerate, new business strategies are emerging, new processes are being implemented, and new methods of engagement are being introduced. Yes, it’s a time of monumental transformation. Leaders are reshaping their organizations to appeal to rapidly evolving customer needs and expectations and to create competitive advantage. But is this […]

Continue reading