Supply Chain

No Longer in the Dark: How Blockchain Is Illuminating the Supply Chain Like Never Before

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In my previous blog, “The Blockchain Impact: How It Will Change Your B2B Network,” I examined the potential for distributed ledger technologies to elevate B2B networks and provide greater shared visibility across supply chains. Click here to learn more about blockchain’s impact on your B2B network.

As mentioned, by using blockchain within a B2B network, events representing the exchange of documents could be recorded on a shared ledger – along with new kinds of supplemental events, including those produced by third-party IoT and smart devices. This can and likely will be accomplished by building upon, rather than replacing, technologies and systems that are used today. We envision blockchain, that is, providing a shared visibility overlay.

This “blockchain for B2B networks” can be enabled by a B2B network solution provider – in Gartner’s terminology a B2B integration brokerage – who decides to deploy a blockchain technology stack, such as the open-source Hyperledger, as a new component of the solution provider’s platform, and enabling an integration interface between existing B2B information flows with the blockchain ledger. Let’s revisit the example from my previous blog to see how this can work.

We introduced the hypothetical example of a simple three-party B2B network involving a buyer, seller, and third-party logistics provider. We noted these participants are currently exchanging point-to-point EDI messages, but that not all messages are shared across all parties. This can give rise to discrepancies in the “shared state” of a given supply chain process. For example, suppose the logistics provider is exchanging frequent shipment status messages with the seller, but not the buyer. Suppose the buyer wishes to start seeing these messages because they believe it will help with predicting shipment delays or help diagnose the root cause of a supplier’s below average on-time shipment KPI. Suppose also that the parties agree this increased information sharing should occur.

Since the existing B2B network is already exchanging detailed shipment status messages among the two parties (seller and shipper), using blockchain, it becomes easy to extend this visibility to the third party, the buyer. It doesn’t require an organization to deploy any new software or integrate with back-end data sources. It can simply be “turned on” when a set of supply chain participants wants to improve information sharing. (This use case is being termed “a private permissioned blockchain” and it can be effective in initially small measures, even as small as three to five participants.)

The result is the three parties now have a level of true “shared state” with respect to shipment status messaging – without changing anything they are currently doing. The expected business benefits can include faster problem resolution when a problem does occur because less time is wasted discussing the “facts.” It can also result in better early detection/warning of a supply chain issue, such as a potential late shipment. From a deployment perspective, the participants can continue to share EDI messages using existing methods, without impacting back-end systems that rely on and process those messages. Initially, a blockchain “portal” allows parties to view the enhanced set of shared messages provided by the blockchain. Then, for more advanced but optional use, blockchain APIs can be used to integrate blockchain data with back-end systems – or to send new kinds of events, such as IoT sensor events, to a blockchain.

With this approach, over time, blockchain can eventually have a true transformative impact as a “grand synthesizer” of shared B2B and supply chain information flows. Blockchain can evolve as an open standard for a “network of networks” that, for the first time, could establish seamless integrated information flows across the entire set of supply chain disciplines of planning, procurement, manufacturing, fulfillment and after-sale service and asset management. That’s a longer-term vision, of course, but the best way to get there is to progress on smaller developments and investments that deliver repeatable meaningful but incremental improvements.

Blockchain is just one of the areas where IBM is investing in innovative technologies to help companies improve visibility and optimize their supply chain. Read about how IBM is applying its Watson cognitive technology to supply chain visibility.

Senior Product Management, Watson Supply Chain

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