Supply Chain

Blockchain: One Truth Across Networks for the Supply Chain

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Ah, blockchain – it’s certainly having a moment, isn’t it? As the backbone of bitcoin, the enigmatic technology first seemed relevant to finance alone. But these days, the possibilities for blockchain are widespread. Healthcare records, music rights, public data – blockchain articles parade all over my Twitter feed. Slowly, but surely, blockchain is clanging its way into the mainstream. And, once blockchain takes hold, it’ll be here forever.

Blockchain: A chain of events imprinted in perpetuity

Evoking anything but diaphanous or ephemeral connotations, the word blockchain itself suggests substance and continuity. And the inference is apt. In fact, IBM CEO Ginni Rometty describes blockchain as “the underlying technology that allows you to have trust and efficiency in the exchange of anything.”*

“Trust and efficiency in the exchange of anything”?! That’s a bold statement, but the potential is clear. Let’s start with trust.

Blockchain is record-keeping for today’s digital era. It provides a shared history of events that is secure, unalterable, and permanent. Many entities can participate in a blockchain, as permissioned. And each participant can record a new transaction or activity (known as a block) into the community ledger. Once the block is added, no one can ever modify it. In this sense, blockchain is the 21st century equivalent to something being written in stone.

Watch this quick primer on how blockchain works:

In a blockchain, actions are transparent, and participants are accountable for their actions. With transparency and accountability come trust.

Drive greater efficiency into your supply chain with blockchain

For supply chains, this democratized database is proving transformative. (See Walmart’s story in this video featuring IBM fellow John Cohn and Frank Yiannas, VP of food safety at Walmart. Yiannas describes Walmart’s vision for a fully transparent, 21st century digitized food system and the two blockchain programs they’re piloting today.)

A couple weeks ago, at InterConnect, Shari Diaz, ecosystem and innovation leader for Watson Supply Chain, walked us through blockchain’s significance for supply chain – and how it can propel efficiencies and reduce costs across the business ecosystem via four core components:

  • Shared ledger: Append-only distributed system of record across the business network
  • Privacy: Appropriate visibility; transactions are secure, authenticated, and verifiable
  • Smart contract: Business rules and terms implied by the contract are embedded in the blockchain and executed with transactions
  • Consensus: All parties agree to network verified transaction

In many B2B environments, communication is one-way and point-to-point. Each organization has their own records, in various forms – emails, phone logs, text messages, etc. Reconciling these documents can be messy and time-consuming.

“Blockchain ledgers establish a shared, secure record of supply chain information flows – a single version of the truth across networks for supply chain transactions, processes, and partners,” asserts Diaz.

This single version of the truth smoothes possible friction among trading partners and brings parties to faster resolution when exceptions or disputes occur.

One Truth Across Networks for the Supply Chain

Shari Diaz illuminates the value of blockchain

Blockchain works with your existing (and eventual) systems

After explaining the value of blockchain, Diaz underscored its beauty: It complements what you already have in place today. Whether you’re using EDI, XML, or API-based B2B, blockchain augments your current B2B integration systems with a shared visibility overlay (see diagram below).

Blockchain for Supply Chain

Moreover, as businesses bring in newer technologies like wearables, connected devices, and cognitive computing, they can continue to rely on blockchain for a synthesized record of information and transaction flows.

Want to learn more about IBM’s point of view on blockchain? Check out: The Benefits of Blockchain to Supply Chain Networks

We’re still in the early days of blockchain adoption, but the opportunity for supply chain is colossal. In our top trends report, Diaz highlights a few use cases:

  • Recording the quantity and transfer of assets (e.g., pallets, trailers, containers) as they move between supply chain nodes
  • Tracking POs, change orders, receipts, shipment notifications, etc.
  • Linking physical goods to serial numbers, bar codes, and digital tags (e.g., RFID)
  • Sharing information about manufacturing, assembly, delivery, and maintenance with suppliers and vendors

How will you connect to the blockchain?




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