How Blockchain Revolutionizes Supply Chain Management

Paul Brody

Part 1 in the 3-part series “Blockchain and the Supply Chain

Nearly all of the world’s leading companies run computerized enterprise resource planning (ERP) and supply chain management software. From connected manufacturing equipment to digital shipping notices and RFID scanning, products are tracked on computerized systems from their earliest origins, often all the way to the recycling bin.

Yet despite this huge investment in digital infrastructure, most companies have only limited visibility and insight into where all their products are at any given moment.

The culprit, in most cases, is the analog gaps that exist between systems within enterprises and across enterprise boundaries. Production may be recorded digitally, but the moment it moves to shipping, a PDF document is created for the shipping label that is little more than a software copy of a printout. The shipment may have its own digital number, but that number tells you where the box is and who signed for it, not what is actually in the box. And so on down the road: oceans of digital data but only islands of useful information.

This is not a new problem, and companies using systems like electronic data interchange (EDI) and XML messaging try to maintain information continuity across system and enterprise boundaries. But point-to-point messaging systems have their own issues, as they are often out of sync and move data only one stop down the supply chain. The result: inventory that seems to be in two places at once.

These systems were created for an era of big, vertically integrated companies with large, but mostly static supply chains. They were very relevant 30 years ago, but not so much today.

The advent of huge, dynamic ecosystems

Two big transformations have swept through global supply chains recently. First, supply chains are no longer traditional networks of OEMs and suppliers. Now they are vast ecosystems, with many product variants moving through multiple parties, all trying to coordinate work together. It’s not uncommon for a single company to have multiple contract manufacturers, all drawing upon a similar supplier network and feeding a range of distribution models, from traditional retail stores to online consignment services.

Secondly, supply chains and operations have become increasingly dynamic. Product lifecycles are shorter, and ramp-up and ramp-down periods are more intense.

Even as supply chains have transformed, companies have not updated the underlying technology for managing them in decades. With blockchain technology, companies can rebuild their approach to supply chain management at the ecosystem level and go from islands of insight to an integrated global view.

Trustworthy truth without trusted intermediaries

Everyone loves to hate middlemen, but it turns out they are really useful. Until the advent of bitcoin and blockchain technology, the only way you could get a large number of entities to agree upon a shared, truthful set of data, such as who has what bank balance, was to appoint an impartial intermediary to process and account for all transactions. Blockchains make it possible for ecosystems of business partners to share and agree upon key pieces of information. But they can do it without having to appoint an intermediary and deal with all the complex negotiations and power plays that come with setting the rules before handing over really critical business information. Instead of having a central intermediary, blockchains synchronize all data and transactions across the network, and each participant verifies the work and calculations of others. This enormous amount of redundancy and crosschecking is why financial solutions like bitcoin are so secure and reliable, even as they synchronize hundreds of thousands of transactions across thousands of network nodes every week.

The core logic of blockchain, applied to the supply chain

Apply that same security and redundancy to something like inventory, and substitute supply chain partners for banking nodes, and you have the foundation for a radically new approach to supply chain management.

The use cases for this new way of working are compelling. At its most basic level, the core logic of blockchains means that no piece of inventory can exist in the same place twice. Move a product from finished goods to in-transit, and that transaction status will be updated for everyone, everywhere, within minutes, with full traceability back to the point of origin.

Do you want to negotiate procurement deals based on total ecosystem volume—not just what you buy from a supplier, but what all your partners do as well? With a blockchain-based solution, you can calculate the exact volume discount based on total purchasing. You can mathematically prove the calculation is correct. And you can do so even while preserving the privacy of each company’s individual volumes.

Promising pilots

The added transparency offers proof about how goods were sourced and how they comply with regulations. The physical, financial, and digital information is brought together in one platform to reveal sources of value leakage—from everyday inefficiencies to fraud and abuse—and helps you hone new strategies to combat them.

Blockchains are still new technology, but the early results EY is seeing in pilots with clients suggest big benefits and the opportunity to recast how we approach these problems, from point-to-point integration to ecosystem-level thinking. We expect to see significant strategic transformations and fairly quick tactical returns as these solutions gain traction. I’ll examine both areas in more detail later in this series.

For more insight on advanced technology’s impact on supply chain management, see How Artificial Intelligence Will Transform Tomorrow’s Digital Supply Chain.

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Paul Brody

About Paul Brody

Paul Brody is global innovation blockchain leader at EY. Paul is responsible for driving EY’s initiatives and investments in blockchain, playing a dual role as global innovation blockchain leader as well the Americas strategy leader for the technology sector. He has extensive experience in the areas of IoT, supply chain, and operations and business strategy.

AI, Blockchain, And Cloud Fuel Banking’s Evolution

John Bertrand

Artificial intelligence (AI), blockchain, and cloud technologies are increasingly appearing on the horizon. This could be exactly what the banker ordered, given the legal mandates for open banking and General Data Protection Regulation for 2018. These three key technologies can fuel the financial services industry’s evolution into the digital age.

Artificial intelligence

AI is a collection of machine learning, natural language processing, and cognitive computing designed for scale. It is this scalability that is exciting, as it can create exponential growth and deliver today’s required personalized communications. For example, in July 2017 UK payments processed 21 million payments per business day. If 0.5% of the daily volume needed additional review, 105,000 items would need to be checked, often manually and with rules-based, tick-the-box solutions. AI would significantly increase productivity by matching payment behavior and pattern recognition, and simply asking the question, “does this look right?” AI-powered chatbots could help business users and consumers answer inquiries and enhance the customer experience.

Blockchain

Blockchain is also a mix of technologies that enables us to trust someone we do not know and protects us from cybercriminals. The block contains vital information about a party, and the chain is the sequence of third-party, verified events that have taken place over the history of the transaction. Blockchain is fully encrypted and can be permissioned for private and public groups. Given the manual, paper-based state of the supply chain, it is not surprising that we’re seeing many new proofs of concepts and pilots using blockchain.

Cloud

Cloud computing gives improved security, scale, and agility to respond to market demands and can decrease banks’ cost bases. The advances in cloud technologies permit software applications to move seamlessly between legacy, private cloud, and public cloud solutions. One such technology, containers, allows the applications to flow safely across the end-to-end processes regardless of the underlying technologies, much like how shipping containers transformed the inefficient, non-scalable 20th century transportation industry to the one today.

Finance’s digital evolution

These technologies are could be the savior of financial services industry. Financial services are rapidly becoming a technology-driven sector, evidenced by the increasing amount of money being spent in this area.

  • Financial services is now one of the largest buyers of software
  • IDC expects this figure to grow more than five percent over 2016’s spending
  • The forecast of $2.7 trillion in worldwide IT spending by 2020 is led by the financial services industry

Legacy banks and financial services firms can either build the technology themselves or work with fintechs to do so; either way it has to be done. Eminent evolutionary biologist Charles Darwin could have been discussing this new banking environment when he noted:

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. 

Potential impacts of financial services’ digital evolution include:

  • Low-cost centers using AI to increase straight-through processing (STP) to 100%, thus removing cost, increasing customer satisfaction, and reducing liabilities from errors
  • Administration of trade finance through blockchain to reduce costs and increase certainty of ownership at any point in time
  • Spare computer capacity created by using the cloud, enabling banks to meet peak-day requirements and increase cybersecurity

Security is now a bottom-line concern. See The Future of Cybersecurity: Trust as Competitive Advantage.

This article was originally published on Finextra.

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Blockchain As A Miracle Cure For The $78 Billion Opioid Crisis

Susan Galer

Blockchain technology is relentlessly hawked as the cure-all for everything that ails business and society. Pushing the hype aside for just one moment, the super-secure, distributed ledger could well deliver the global supply chain transparency that will help this country address the opioid crisis.

Every day, more than 90 Americans die after overdosing on opioids. The Centers for Disease Control and Prevention country puts a price tag of $78 billion on the opioid crisis, spanning healthcare, lost productivity, addiction treatment, and criminal justice. To be clear, it’s a difficult, multi-faceted problem. Yet some experts argue blockchain’s promise lies in its ability to take on precisely this kind of complex challenge.

Opening the black box

Of all the industry supply chains, pharmaceuticals is among the most strategic, and there’s no further proof of that than the Drug Supply Chain Security Act (DSCSA). Under this mandate, all drugs delivered to patients must have a traceable technology element—it could be a two-dimensional barcode or something electronic. Regulators would then be able to trace the drugs back to the manufacturer.

It’s easy to see blockchain’s potential fit. It’s ideally suited to open industrial-size black boxes like global supply chains. Pharmaceutical production starts with the raw materials and manufacturers, and extends through suppliers, brand manufacturers and contract manufacturers to distributors, wholesalers, physicians, hospitals and pharmacies, all the way to patients.

Here’s why #blockchain is ideally suited to tackle the #opioid crisis

When it comes to tackling over-prescribing, blockchain could leave today’s databases in the dust. Right now, companies and regulators can manage bits and pieces of the opioid crisis puzzle. But the truth is, if a physician is over-prescribing, others are likely aiding and abetting.

“Once you start tagging drugs with an immutable audit trail, you can do what was impossible before,” said Josh Greenbaum, principal of Enterprise Applications Consulting (EAC). “It’s fairly easy to game a national database of prescriptions, providers, and patients. But making the drugs traceable provides a much more comprehensive view of what each party is doing with the opioids. Blockchain adds the full distribution picture, and could be tremendously valuable in exposing leaks.”

Note to pharma: get a DNA transplant

Of course, there are numerous challenges, notably the dearth of experts who understand the technology, not to mention security.

“Blockchain is very nascent and pharma distribution is old school,” said Greenbaum. “There has to be almost a DNA transplant to make it work well. And, even though blockchain is meant to be secure, it doesn’t mean it’s infallible. You need to make sure it’s truly secure, including at the points of integration between systems. Openness is meant to be the gold standard for commerce in the global economy, but pharma has a tremendous amount of personal identifiable information.”

Blockchain’s immaturity—glaringly obvious in the profusion of disparate, disconnected, non-standardized fabrics and consortia—is another major hurdle. Green sees blockchain in pharma functioning in a more private network. “There won’t be a single blockchain across the industry. You’ll have to reconcile multiple chains so suppliers or contract manufacturers aren’t buried under the technical complexity of monitoring and participating in multiple blockchains.”

Collaborative transparency

Blockchain by itself won’t deter people from misusing drugs. As an auditable, traceable service underlying the pharmaceutical supply chain, blockchain might just provide a trail for investigators to thwart more counterfeiters, and help manufacturers make sure what’s coming out of the factory ends up at the right point of sale to the right patients. There is no single solution to the opioid crisis, but we do have to find some answers. People’s lives depend on it.

This blog was originally posted on SAP Business Trends.

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

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Diving Deep Into Digital Experiences

Kai Goerlich

 

Google Cardboard VR goggles cost US$8
By 2019, immersive solutions
will be adopted in 20% of enterprise businesses
By 2025, the market for immersive hardware and software technology could be $182 billion
In 2017, Lowe’s launched
Holoroom How To VR DIY clinics

From Dipping a Toe to Fully Immersed

The first wave of virtual reality (VR) and augmented reality (AR) is here,

using smartphones, glasses, and goggles to place us in the middle of 360-degree digital environments or overlay digital artifacts on the physical world. Prototypes, pilot projects, and first movers have already emerged:

  • Guiding warehouse pickers, cargo loaders, and truck drivers with AR
  • Overlaying constantly updated blueprints, measurements, and other construction data on building sites in real time with AR
  • Building 3D machine prototypes in VR for virtual testing and maintenance planning
  • Exhibiting new appliances and fixtures in a VR mockup of the customer’s home
  • Teaching medicine with AR tools that overlay diagnostics and instructions on patients’ bodies

A Vast Sea of Possibilities

Immersive technologies leapt forward in spring 2017 with the introduction of three new products:

  • Nvidia’s Project Holodeck, which generates shared photorealistic VR environments
  • A cloud-based platform for industrial AR from Lenovo New Vision AR and Wikitude
  • A workspace and headset from Meta that lets users use their hands to interact with AR artifacts

The Truly Digital Workplace

New immersive experiences won’t simply be new tools for existing tasks. They promise to create entirely new ways of working.

VR avatars that look and sound like their owners will soon be able to meet in realistic virtual meeting spaces without requiring users to leave their desks or even their homes. With enough computing power and a smart-enough AI, we could soon let VR avatars act as our proxies while we’re doing other things—and (theoretically) do it well enough that no one can tell the difference.

We’ll need a way to signal when an avatar is being human driven in real time, when it’s on autopilot, and when it’s owned by a bot.


What Is Immersion?

A completely immersive experience that’s indistinguishable from real life is impossible given the current constraints on power, throughput, and battery life.

To make current digital experiences more convincing, we’ll need interactive sensors in objects and materials, more powerful infrastructure to create realistic images, and smarter interfaces to interpret and interact with data.

When everything around us is intelligent and interactive, every environment could have an AR overlay or VR presence, with use cases ranging from gaming to firefighting.

We could see a backlash touting the superiority of the unmediated physical world—but multisensory immersive experiences that we can navigate in 360-degree space will change what we consider “real.”


Download the executive brief Diving Deep Into Digital Experiences.


Read the full article Swimming in the Immersive Digital Experience.

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Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation. Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

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Jenny Dearborn: Soft Skills Will Be Essential for Future Careers

Jenny Dearborn

The Japanese culture has always shown a special reverence for its elderly. That’s why, in 1963, the government began a tradition of giving a silver dish, called a sakazuki, to each citizen who reached the age of 100 by Keiro no Hi (Respect for the Elders Day), which is celebrated on the third Monday of each September.

That first year, there were 153 recipients, according to The Japan Times. By 2016, the number had swelled to more than 65,000, and the dishes cost the already cash-strapped government more than US$2 million, Business Insider reports. Despite the country’s continued devotion to its seniors, the article continues, the government felt obliged to downgrade the finish of the dishes to silver plating to save money.

What tends to get lost in discussions about automation taking over jobs and Millennials taking over the workplace is the impact of increased longevity. In the future, people will need to be in the workforce much longer than they are today. Half of the people born in Japan today, for example, are predicted to live to 107, making their ancestors seem fragile, according to Lynda Gratton and Andrew Scott, professors at the London Business School and authors of The 100-Year Life: Living and Working in an Age of Longevity.

The End of the Three-Stage Career

Assuming that advances in healthcare continue, future generations in wealthier societies could be looking at careers lasting 65 or more years, rather than at the roughly 40 years for today’s 70-year-olds, write Gratton and Scott. The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

It will be replaced by a new model in which people continually learn new skills and shed old ones. Consider that today’s most in-demand occupations and specialties did not exist 10 years ago, according to The Future of Jobs, a report from the World Economic Forum.

And the pace of change is only going to accelerate. Sixty-five percent of children entering primary school today will ultimately end up working in jobs that don’t yet exist, the report notes.

Our current educational systems are not equipped to cope with this degree of change. For example, roughly half of the subject knowledge acquired during the first year of a four-year technical degree, such as computer science, is outdated by the time students graduate, the report continues.

Skills That Transcend the Job Market

Instead of treating post-secondary education as a jumping-off point for a specific career path, we may see a switch to a shorter school career that focuses more on skills that transcend a constantly shifting job market. Today, some of these skills, such as complex problem solving and critical thinking, are taught mostly in the context of broader disciplines, such as math or the humanities.

Other competencies that will become critically important in the future are currently treated as if they come naturally or over time with maturity or experience. We receive little, if any, formal training, for example, in creativity and innovation, empathy, emotional intelligence, cross-cultural awareness, persuasion, active listening, and acceptance of change. (No wonder the self-help marketplace continues to thrive!)

The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

These skills, which today are heaped together under the dismissive “soft” rubric, are going to harden up to become indispensable. They will become more important, thanks to artificial intelligence and machine learning, which will usher in an era of infinite information, rendering the concept of an expert in most of today’s job disciplines a quaint relic. As our ability to know more than those around us decreases, our need to be able to collaborate well (with both humans and machines) will help define our success in the future.

Individuals and organizations alike will have to learn how to become more flexible and ready to give up set-in-stone ideas about how businesses and careers are supposed to operate. Given the rapid advances in knowledge and attendant skills that the future will bring, we must be willing to say, repeatedly, that whatever we’ve learned to that point doesn’t apply anymore.

Careers will become more like life itself: a series of unpredictable, fluid experiences rather than a tightly scripted narrative. We need to think about the way forward and be more willing to accept change at the individual and organizational levels.

Rethink Employee Training

One way that organizations can help employees manage this shift is by rethinking training. Today, overworked and overwhelmed employees devote just 1% of their workweek to learning, according to a study by consultancy Bersin by Deloitte. Meanwhile, top business leaders such as Bill Gates and Nike founder Phil Knight spend about five hours a week reading, thinking, and experimenting, according to an article in Inc. magazine.

If organizations are to avoid high turnover costs in a world where the need for new skills is shifting constantly, they must give employees more time for learning and make training courses more relevant to the future needs of organizations and individuals, not just to their current needs.

The amount of learning required will vary by role. That’s why at SAP we’re creating learning personas for specific roles in the company and determining how many hours will be required for each. We’re also dividing up training hours into distinct topics:

  • Law: 10%. This is training required by law, such as training to prevent sexual harassment in the workplace.

  • Company: 20%. Company training includes internal policies and systems.

  • Business: 30%. Employees learn skills required for their current roles in their business units.

  • Future: 40%. This is internal, external, and employee-driven training to close critical skill gaps for jobs of the future.

In the future, we will always need to learn, grow, read, seek out knowledge and truth, and better ourselves with new skills. With the support of employers and educators, we will transform our hardwired fear of change into excitement for change.

We must be able to say to ourselves, “I’m excited to learn something new that I never thought I could do or that never seemed possible before.” D!

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