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Blockchain offers the supply chain a radical upgrade to the old standby of the spreadsheet
The logistics industry is notoriously lethargic, meaning it’s generally a late adopter of technology. That’s why spreadsheets and faxes remain prevalent in the supply chain.
But in this day and age, any company involved in the supply chain must remove the shackles of spreadsheets and faxes and move toward blockchain technology. If they don’t, they risk being crushed by their more advanced rivals.
So, let this serve as a wake-up call: Failure to embrace blockchain technology could block your company from thriving — let alone surviving — in the supply chain sector.
Supply Chains are Still Stuck in the Past
In 2016, ComputerWeekly.com reported that nearly half of large global companies still communicate with their suppliers via email, phone or fax when ordering stock and processing invoices. As smaller companies tend to be more nimble, one hopes fewer of them are depending so much on the same means of communication.Nearly half of large global companies still communicate with their suppliers via email, phone or fax when ordering stock and processing invoices. They are at risk of being tossed on the supply chain trash heap. - @JakeRheude Click To Tweet
While companies of all sizes are pledging to ramp up their digital transformation in supply chain operations — including adoption of blockchain technology — it’s a near certainty that some of these same companies will stubbornly cling to outdated supply chain tools such as spreadsheets and faxes. Any company that lets that happen risks being tossed onto the supply-chain trash heap.
How Blockchain Works
Of course, a world free of spreadsheets and faxes would be a boon to business. But just how does blockchain enable this to happen?
First off, it’s best to take a look at what blockchain is. Here is a succinct explanation from Harvard Business Review:
The technology at the heart of bitcoin and other virtual currencies, blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.
That sounds intriguing, both how does this help supply chain organizations ditch the spreadsheets and faxes?
Well, according to James West’s Midas Letter, blockchain is “nothing more than a next-generation spreadsheet program with advanced features… And like a spreadsheet, you can track absolutely anything on it.”
Blockchain: The New Spreadsheet for Supply Chains?
Based on that insight, blockchain is effectively a modern-day substitute for the tried-and-true spreadsheet.
So, what’s the big deal?
According to New America, the beauty of blockchain compared with traditional spreadsheets lies in the enhanced security:
Every time a new transaction is added to the record, it is also cryptographically linked to every previous transaction dating back to the inception of the network. Therefore, the (blockchain) spreadsheet cannot be altered once it is verified and impossible to fake. Since the record is both transparent and uncorrupted, a trail of digital breadcrumbs allows for thorough monitoring and auditing of all the data within the network.
Blockchain locks down information so that it becomes extremely difficult for someone to commit fraud via spreadsheet.
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Imagine how useful that would be in the supply chain, considering that nearly one-third of supply-chain professionals polled in 2017 reported at least once instance of fraud, waste or abuse in the previous year. As noted by IBM, supply chains are especially prone to fraud because of their global reach and complex nature.
Aside from the ability to combat fraud, IBM says blockchain in the supply chain:
- Improves inventory management.
- Reduces paperwork-related delays.
- Minimizes courier costs.
- Boosts trust between customers and supply-chain organizations.
- Enables quicker identification of problems.
Blockchain Gives Faxes the Boot
Another way blockchain can disrupt the supply chain is by doing away with highly inefficient faxes.
Nordic bank SEB and automaker Daimler already are embracing blockchain in an attempt to do away with their reliance on fax machines, according to Quartz.com. A number of healthcare providers also are exploring blockchain as a means of eliminating the need to send patient records by fax and thereby guarding patients’ identities.
But how can blockchain create a fax-free environment for supply chain organizations?
Actually, a supply chain would be no different than a bank, an automaker or a healthcare provider in the ability to introduce blockchain as a replacement for the old-school fax. Rather than a supply chain organization transmitting a document (such as a purchase order) by fax, it would be able to securely share the document by blockchain.
Blockchain Starts Delivering Results in the Supply Chain
Undoubtedly, some supply chain organizations will be late in coming around to blockchain as an alternative to spreadsheets and faxes. But savvy organizations will recognize that now is the time to at least investigate how blockchain can benefit the supply chain.
Whereas 2017 was the year of blockchain speculation, announcements, partnerships and pilot projects in the supply chain business, expect 2018 to be the year of experiments demonstrating success or failure “as companies learn how to best implement this technology and make it accessible,” according to the OpenText Business Network blog.
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In supply chains, as in the rest of the business world, stagnation does not give rise to innovation. So, if a supply chain organization is eager to innovate — and not get beaten by its smarter competitors — it should start exploring blockchain technology now, or partner with blockchain technology providers who can offer guidance or initiate pilot programs to demonstrate value. Blockchain offers logistics and supply chain organizations an opportunity to escape the shackles of 20th century inventions like spreadsheets and faxes, and to radically improve and secure logistics and supply chain processes across the supply chain.
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Recommended Reading on Blockchain and Supply Chain
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- Blockchain: The Super Spreadsheet for Supply Chains - March 25, 2018