Barcelona, October 7, 2020.-
Author: Ayman Shoukry is the Chief Technology Officer (CTO) of Specright, the first purpose-built platform for Specification Data Management.
This analysis has been published in Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives
In the course of my 20 years of experience in information technology, I’ve seen many tech trends come and go: big data, the cloud, mobile, VR — the list goes on. In the past few years, blockchain technology has made a tremendous splash, promising new ways of working and doing business.
But why is it that some technologies succeed while others simply move through the hype cycle?. It comes down to invention versus innovation. Invention is simply the creation of a new thing, while innovation involves applying that new thing to a real-world problem or a novel approach. When it comes to blockchain, recent real-world applications beyond finance are helping accelerate its transition from an emerging to innovative technology.
Blockchain is more than just cryptocurrencies like Bitcoin. Blockchain technology is based on the concept of a distributed ledger. Instead of a centralized authority, power is distributed across participants on a network.
Blockchain first became popular as a way to transform finance, but the underlying principles of traceability and decentralization go hand in hand with supply chain management.
So how are blockchain and supply chain connected? Before we dive into the technology side, take a look at the products around you: in the grocery store, in your medicine cabinet and through e-commerce brands.
If you compare today’s landscape to 10 or even 20 years ago, these products have drastically changed. Consumers are demanding more variety, different packaging and personalization, which has led to an explosion of products.
These products are also more global in nature and are sourced from different parts of the world. While we all benefit from this as consumers, this has created massive challenges when it comes to bringing these products to market.
For brands to support this level of product development, they have to work with more suppliers and partners than ever. And with consumers and companies connected by the internet, supply chain networks have also become more interconnected and global than before.
Imagine working at a leading brand and trying to juggle multiple products and suppliers across geographies. It becomes difficult to pinpoint where something goes wrong or even understand where bottlenecks are occurring. And that’s where blockchain comes in.
How Blockchain Creates Supply Chain Traceability
By digitizing specifications — products, packaging, formulas and so forth — companies can create a digital thread through their supply chain. This digital thread creates transparency and traceability between brands and their suppliers. Traceability is also an outcome of improved supply chain collaboration.
For example, if a packaging company is making an update to a box that’s used by multiple brands, everyone needs to be on the same page. If not, brands can end up with a box that no longer meets their needs. Today, most of these approvals occur via email — and I think we can all agree that we shouldn’t rely on our inboxes to validate important changes.
In my experience, customers don’t usually ask for blockchain. For example, our customers were asking for new and better ways to collaborate with one another. In fact, many were already doing business together on our platform. This insight led us to develop our own blockchain network as part of our existing platform. Herein lies the insight for how IT leads should think about approaching blockchain for their organization.
How IT Leaders Should Approach Blockchain
So, how can IT leaders work with supply chain teams to successfully deploy blockchain?
They should start by examining their supply chain. Where are the most external partners involved? What are the current methods of communicating and exchanging information? These connection points are ripe for the application of blockchain.
But companies don’t need to immediately revolutionize their ways of working — in fact, it can sometimes be counterproductive. Instead, these companies should focus on “evolutionizing” rather than “revolutionizing” their approach. For many companies, digitizing and mapping specifications is a critical first step that can instantly create more traceability than before. Then over time, as more suppliers and partners begin working in a common platform, companies can deploy blockchain as an underlying technology.
What does this mean for blockchain? Well, you probably won’t hear IT leaders talking about deploying “blockchain” for their supply chains, but rather another application leveraging the technology.
And when this starts to happen, blockchain will officially have moved from invention to innovation.