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Why Blockchain Must Be Part Of Supply Chain’s Future

Kirsten Lubritz

Several industries are already embracing the benefits of blockchain. The finance industry uses it to monitor the exchange of stocks and bitcoin. The public sector uses it to eliminate voter fraud and confirm digital identities.

But what is blockchain? And how can supply chain organizations begin using it to their advantage?

Breaking down blockchain

The seeds of blockchain were sown more than 25 years ago – more as a concept than anything else.

Since then, the technology has blossomed and evolved into an actual tool, composed of a chain of data containers used to track and store transactions.

In blockchain, a new transaction creates a new block in a particular chain. Because this information is updated in real time and stored in decentralized databases, participants retain complete access to their transactions on their very own IT premises. Additionally, any changes must be confirmed by all other blockchain members, which makes unauthorized uses practically impossible.

The benefits of this are obvious: Companies and individuals can forge new business relationships without actually knowing one another – as all transactions are clearly visible and easy to monitor.

While many supply chain organizations have remained in the piloting stage of blockchain adoption, the time has come for them to finally begin embracing this transformative technology.

How blockchain could revolutionize supply chain

A recent article on Business Insider suggests that blockchain could revolutionize supply chain, and it’s easy to see why.

For one, blockchain can help supply chain organizations to improve visibility and traceability. In the event of a recall, for instance, products can easily be identified and pulled from store shelves, helping companies to save costs and avoid future liability issues.

Blockchain can also help to build trust among buyers, generating new business and improving customer satisfaction. One pharmaceutical company is leveraging the technology to assure patients and physicians that certain medications are authentic.

Gain – and share – a picture of your whole supply chain

Moving a product from supplier to customer requires people, resources, knowledge, processes, and financial transactions. It’s complicated to display the full picture of a large supply chain system to everyone involved. Information is distributed to various people at various times, and this data is typically stored in multiple locations. Moreover, participants usually have only partial access to the overall information. Blockchains could resolve these transparency and traceability issues.

By using blockchains, any information relevant to that particular supply chain will be captured along the way, and it will be made accessible to all parties involved:

  • Pallets, trailers, and containers can be tracked as they move between supply chain nodes using RFID for asset allocation.
  • Purchase orders, change orders, receipts, shipment notifications, or other trade-related documents can serve as blockchain items to increase fraud protection.
  • Certifications or certain properties of physical products can be stored as blockchain items to ensure the products comply with quality standards.
  • Information about manufacturing processes, including assembly, delivery, and maintenance, can be shared with suppliers and vendors.

5 blockchain benefits your supply chain enterprise simply can’t ignore

As I see it, there are five key benefits that blockchain can provide to your supply chain organization:

  1. Transparency: As documents are separated from the physical flow of the product and taken out of the hands of supply chain parties into a “neutral” zone, the supply chain reveals its true origin and touchpoints. This increases trust and helps eliminate the bias found in today’s supply chains. According to a 2014 Deloitte University Press publication, “supply chain transparency is critical for managing rising levels of risk in an environment where corporate supply chain practices are attracting increasing legal, regulatory, and consumer scrutiny.”
  1. Scalability: Normally, a rising number of supply chain participants would increase the complexity of supply chain management. That’s no longer the case. With blockchain technology, you can add any number of participants and touchpoints, and managing the supply chain will be as simple as ever.
  1. Growth: Companies in supply chain that adopt blockchain at an early stage can generate significant competitive advantages over other players. By gaining greater insight and visibility into your operations, your organization will be better prepared to deal with unforeseen challenges and provide superior consumer experiences.
  1. Security: Using blockchain as a shared ledger with clear rules could potentially eliminate audits required to document adherence to internal and external quality standards. Digitizing your assets with blockchain could also help your organization protect itself from theft.
  1. Innovation: Opportunities abound to create new specialized uses for technology as a result of the decentralized architecture of blockchain. There’s no limit to what your organization can enhance, whether it’s your production processes or delivery capabilities.

Don’t delay: Embrace blockchain today

Blockchain is a revolutionary technology that can transform many existing traditional processes into more secure, transparent, and collaborative systems. With the myriad ways it can benefit your enterprise, it’s high time to begin making blockchain a part of your supply chain organization’s future today.

To learn more about blockchain, read the latest Forbes Insights Briefing Report: Transforming Transaction Processing for the Digital Economy or visit us at SAP.com to see how we’re innovating in supply chain.

 

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Kirsten Lubritz

About Kirsten Lubritz

Kirsten Lubritz is a senior supply chain solution specialist at SAP. She focuses on the project management topic within the field of supply chain, specifically around transportation management, warehouse management, and track and trace. She has a MBA in Economics from Universität des Saarlandes and is based in Walldorf, Germany.

Supply Chain Risk Managers Must Be Fuzzy, Or Fail

Susan Galer

I’ve been eager for the chance to inject the fashionable word “fraught” into one of my blogs for a while, and a recent conversation about supply chain risk presented the ideal opportunity.

During an exclusive roundtable at the SAP Ariba Live 2017 event in Las Vegas entitled “Managing Risk in Your Supplier Engagements,” three experts talked about how companies can prevent the worst from happening in a world fraught with stuff that can go wrong.

Their message was that companies can use advanced technologies like machine learning and predictive analytics to neutralize the impact of natural disasters, global currency fluctuations, and labor strikes, more easily ensure compliance with increasing regulations, and even address evils like forced and slave labor in their supply chain ─ but only if all that tech is backed by a corporate commitment to do good.

Cognitive computing changes the game for risk managers

Investigators and risk managers require both data transparency and context, something Padmini Ranganathan, vice president, products & innovation at SAP Ariba, said is foundational to how the SAP Ariba network of buyers and sellers operates. Dan Adamson, CEO of OutsideIQ, an SAP Ariba partner, discussed his company’s cognitive computing platform, which, together with SAP Ariba, changes the game.

Ranganathan noted that advanced technologies can help companies make sure they have the right data at the right time in the right place, and with the right person able to act. “When your supplier is tripping up somewhere, you need to be there to catch it,” he advised. “Technology is a very powerful tool with the ability to machine learn and pattern match to find out what’s going on.”

“Until now, machines have been great at combing through vast amounts of data but not providing context,” he added. “We bring in the right data and apply the first layer of context to make sure it’s a risk you would care about. How you deal with it is another level of context. We’ll see an evolution because some of your suppliers, depending on your industry, might have a heavy regulatory slant, and you need to treat them differently. Our layers of cognitive computing help filter out the noise and bring the relevant events to bear.”

Outside IQ conducts research far beyond simple watch list monitoring. “We go deeper with our cognitive process, replicating what a researcher would do, looking for patterns and links,” Ranganathan continued. “What might be clean today may have a news report tomorrow. Companies need to know before something becomes an explosive issue. The power SAP Ariba brings in is the whole layer of scoring indicators with relationship insights.”

Purpose-driven supply chain

James Edward Johnson, director of supply risk and analytics at Nielsen, said companies have a shared responsibility in managing supply chains for the greater good. The SAP Ariba network helps Nielsen conduct due diligence at scale faster and more cost-efficiently.

“World development has made some people richer and left a lot of people behind,” Johnson noted. “Because we’re so active in the supply chain, we actually touch millions of lives. How do you make sure that’s a force for good, that when you negotiate deals your push for price isn’t merely favoring companies that will cut corners, abuse their workers, enslave people, or rip up the environment by dumping chemicals into lakes?

“SAP Ariba is a great platform because it’s to a degree, data-neutral. A group like Outside IQ will find and read documents from everywhere in the world. If we can find and solve problems in our supply chain, we can make a difference in the world.”

Forget focus, follow the arc to uncover bad behavior

Responding to an audience member question, Johnson cautioned against zeroing in on risks.

“The moment you start focusing, you’re going to fail to capture risk, which is about seeing the unseen,” he said. “Sometimes your peripheral vision is more effective than your central vision. This is the arc of whatever risk you’re looking at. For example, I can guarantee financial indicators are a good leading indicator. The moment a company starts to fail at meeting their numbers, they’ll start taking risks. The question is where those risks materialize. You have look at other things that might provoke bad behavior.”

Every risk manager should be willing to say, “The answer I just gave you is wrong.”

Make data actionable, but accept fuzziness

These experts agreed that people need to factor risk indicators into contract negotiations while recognizing the level of uncertainty inherent to all kinds of data.

“Everyone in risk management should be willing to say ‘the answer I just gave you is wrong’ – the question is by how much and in what direction,” said Johnson. “Too often people are called on to give specific answers they can hang their hat on. That might teach people to manipulate the data or give people who are politically capable an advantage over people who are technically capable, so you might end up promoting people who are better at talking.”

Machine learning promises to strip out biases like recency and sample selection to give decision makers greater objectivity in understanding actual and potential risks and how to address them. “We should have science-based answers, we should have the data, and we should be able to know how well we know what we say we know,” said Johnson.

For more supply chain risk management strategies, see Managing Third-Party Risk Through Verified Trust.

Follow me: @smgaler

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How The World Is Changing, And How IoT Can Change The World

Richard Howells

In 2016, the world population surpassed 7.3 billion, meaning the number of people on Earth has doubled in the past 45 years.

Furthermore, there’s no end insight to this rapid growth. In fact, it has been calculated that the population is increasing by more than 140 people every minute.

This exploding population creates challenges from the perspectives of sustainability and urbanization:

  • The world’s population is outgrowing the available natural resources. If, as predicted, the global population reaches 9.6 billion by 2050, we would, per United Nations figures, require the equivalent of almost three planets to provide the natural resources needed to sustain current lifestyles.
  • Global population is migrating to urban areas, creating a strain on infrastructure. The United Nations predicts that by 2030, 60% of the world population will live in urban areas. In 2000, this number was only 47%. Nearly 180,000 people are added to the urban population each day.

These two facts alone suggest we must innovate to leverage our natural resources in a more sustainable way, and in many cases, do more with less.

IoT revolutionizes farming

In a recent blog post, SAP and Stara: IoT’s New Constellation of Stars, author Judith Magyar explains how tractors can now leverage sensors to capture real-time data and optimize farm management and operations.

By leveraging data analytic capabilities, farmers can:

  • Gain better insights to make more sound decisions
  • Produce more high-quality crops per acre
  • Support sustainable agricultural practices that respect the environment

This is just one example of how the Internet of Things (IoT) can help balance supply and demand for the world’s natural resources to help maximize production, reduce environmental impact, and remediate problems faster.

Check out this video to learn more about how IoT is revolutionizing the farming industry.

Argentina modernizes its capital city with IoT

In another recent article, 3 Ways Buenos Aires Is Leading Smart City Technology, author Christine Donato explains how the Argentinian capital is leveraging IoT solutions to mitigate some of the challenges of a growing urban area.

This includes:

  • Managing and responding to the 30,000 complaints the city receives each month by leveraging real-time data and social media insight
  • Reducing consumption and keeping the city illuminated and safe by converting 91,000 public street lights to modern LED technology, and using real-time insights to quickly address power outages, broken lights, and vandalism
  • Automating maintenance on 1,400 kilometers of drainage pipes to execute cleaning and maintenance at maximum capacity and predict potential flooding

Check out this video to learn more about how Buenos Aires is illuminating the city in a more sustainable way.

These are just two examples of how organizations are leveraging IoT to change the world. For more on these stories and many others, attend the SAP Leonardo Live – IoT for Business event on July 11 and 12 in Frankfurt, Germany. Visit this website for additional details.

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Richard Howells

About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.

The Future of Cybersecurity: Trust as Competitive Advantage

Justin Somaini and Dan Wellers

 

The cost of data breaches will reach US$2.1 trillion globally by 2019—nearly four times the cost in 2015.

Cyberattacks could cost up to $90 trillion in net global economic benefits by 2030 if cybersecurity doesn’t keep pace with growing threat levels.

Cyber insurance premiums could increase tenfold to $20 billion annually by 2025.

Cyberattacks are one of the top 10 global risks of highest concern for the next decade.


Companies are collaborating with a wider network of partners, embracing distributed systems, and meeting new demands for 24/7 operations.

But the bad guys are sharing intelligence, harnessing emerging technologies, and working round the clock as well—and companies are giving them plenty of weaknesses to exploit.

  • 33% of companies today are prepared to prevent a worst-case attack.
  • 25% treat cyber risk as a significant corporate risk.
  • 80% fail to assess their customers and suppliers for cyber risk.

The ROI of Zero Trust

Perimeter security will not be enough. As interconnectivity increases so will the adoption of zero-trust networks, which place controls around data assets and increases visibility into how they are used across the digital ecosystem.


A Layered Approach

Companies that embrace trust as a competitive advantage will build robust security on three core tenets:

  • Prevention: Evolving defensive strategies from security policies and educational approaches to access controls
  • Detection: Deploying effective systems for the timely detection and notification of intrusions
  • Reaction: Implementing incident response plans similar to those for other disaster recovery scenarios

They’ll build security into their digital ecosystems at three levels:

  1. Secure products. Security in all applications to protect data and transactions
  2. Secure operations. Hardened systems, patch management, security monitoring, end-to-end incident handling, and a comprehensive cloud-operations security framework
  3. Secure companies. A security-aware workforce, end-to-end physical security, and a thorough business continuity framework

Against Digital Armageddon

Experts warn that the worst-case scenario is a state of perpetual cybercrime and cyber warfare, vulnerable critical infrastructure, and trillions of dollars in losses. A collaborative approach will be critical to combatting this persistent global threat with implications not just for corporate and personal data but also strategy, supply chains, products, and physical operations.


Download the executive brief The Future of Cybersecurity: Trust as Competitive Advantage.


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To Get Past Blockchain Hype, We Must Think Differently

Susan Galer

Blockchain hype is reaching fever pitch, making it the perfect time to separate market noise from valid signals. As part of my ongoing conversations about blockchain, I reached out to several experts to find out where companies should consider going from here. Raimund Gross, Solution Architect and Futurist at SAP, acknowledged the challenges of understanding and applying such a complex leading-edge technology as blockchain.

“The people who really get it today are those able to put the hype in perspective with what’s realistically doable in the near future, and what’s unlikely to become a reality any time soon, if ever,” Gross said. “You need to commit the resources and find the right partners to lay the groundwork for success.”

Gross told me one of the biggest problems with blockchain – besides the unproven technology itself – was the mindset shift it demands. “Many people aren’t thinking about decentralized architectures with peer-to-peer networks and mash-ups, which is what blockchain is all about. People struggle because often discussions end up with a centralized approach based on past constructs. It will take training and experience to think decentrally.”

Here are several more perspectives on blockchain beyond the screaming headlines.

How blockchain disrupts insurance, banking

Blockchain has the potential to dramatically disrupt industries because the distributed ledger embeds automatic trust across processes. This changes the role of longstanding intermediaries like insurance companies and banks, essentially restructuring business models for entire industries.

“With the distributed ledger, all of the trusted intelligence related to insuring the risk resides in the cloud, providing everyone with access to the same information,” said Nadine Hoffmann, global solution manager for Innovation at SAP Financial Services. “Payment is automatically triggered when the agreed-upon risk scenario occurs. There are limitations given regulations, but blockchain can open up new services opportunities for established insurers, fintech startups, and even consumer-to-consumer offerings.”

Banks face a similar digitalized transformation. Long built on layers of steps to mitigate risk, blockchain offers the banking industry a network of built-in trust to improve efficiencies along with the customer experience in areas such as cross-border payments, trade settlements for assets, and other contractual and payment processes. What used to take days or even months could be completed in hours.

Finance departments evolve

Another group keenly watching blockchain developments are CFOs. Just as Uber and Airbnb have disrupted transportation and hospitality, blockchain has the potential to change not only the finance department — everything from audits and customs documentation to letters of credit and trade finance – but also the entire company.

“The distributed ledger’s capabilities can automate processes in shared service centers, allowing accountants and other employees in finance to speed up record keeping including proof of payment supporting investigations,” said Georg Koester, senior developer, LoB Finance at the Innovation Center Potsdam. “This lowers costs for the company and improves the customer experience.”

Koester said that embedding blockchain capabilities in software company-wide will also have a tremendous impact on product development, lean supply chain management, and other critical areas of the company.

While financial services dominate blockchain conversations right now, Gross named utilities, healthcare, public sector, real estate, and pretty much any industry as prime candidates for blockchain disruption. “Blockchain is specific to certain business scenarios in any industry,” said Gross. “Every organization can benefit from trust and transparency that mitigates risk and optimizes processes.”

Get started today! Run Live with SAP for Banking. Blast past the hype by attending the SAP Next-Gen Boot Camp on Blockchain in Financial Services and Public Sector event being held April 26-27 in Regensdorf, Switzerland.

Follow me on Twitter, SCN Business Trends, or Facebook. Read all of my Forbes articles here.

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