Yesterday, June 19th, I found myself attending The World Supply Chain Federation’s 1st Global Supply Chain Summit in New York City listening to various experts across fashion, logistics, and maritime about the cost savings and environmental gains new technologies are enabling in those industries. To no one’s surprise, blockchain reared its head with a full two-hour session dedicated to its potential to revolutionize supply chains. It was an informative event organized by The New York Supply Chain Meetup.
My intention was to learn more about the approach supply chain managers are taking to keep their businesses modern and in touch with new technologies. Yet, as the event went on, an all too familiar issue kept taking center stage:
Executives are convinced they understand the implications of blockchain. Meanwhile, when pushed for specifics, it becomes clear they cannot identify relevant shortcomings and cannot explain how the technology actually works. They need capacity building but won’t admit it.
The first moment this trend presented itself was in the second session. When prompted by the moderator to identify their top three priorities, all three executives on the trucking and logistics panel identified better transparency, better data integrity, and system interoperability.
The moderator followed up with a direct question — pushing the panelists to give their thoughts on blockchain technologies and what priority level they have put on it.
Excellent. I felt like I knew where this was going. Looking around the room, I saw numerous other individuals having similar reactions. These executives are going to launch in to discussing how the blockchain can function as a baseline trusted ledger that has immutable data written to it, that is stored across multiple untrusted partners’ computers, which can be accessed in a transparent manner. Say goodbye to a bunch of disparate internal spreadsheets — and hello to the baseline infrastructure for integrated ledgers. Boom. A solution is on the way.
But not quite.
Two out of the three said they felt blockchain was not a priority — instead calling it “a technology looking for a use case.” One executive went even further, stating the energy demands of validating transactions on a blockchain are so wasteful that he can hardly dream of a way his multi-billion dollar company would ever engage in such activities.
Whoa. The cognitive dissonance I experienced while listening to these incredibly successful executives confidently speak with complete ignorance about this new technology was all-too-familiar. I had hoped this wouldn’t be the case.
To be fair, these executives run successful businesses because they focus on their specific industries. They are not technologists or computer scientists. They are business people. They take tools that work, and then build out a business plan using those tools. It makes sense that companies would be hesitant to invest in building out an advanced blockchain supply chain system, only to realize that the platform they built on isn’t able to interconnect with companies who build their systems on a different blockchain in the future.
Alarm Bells for Your Competitors
Unfortunately though, that is not the intelligent conversation that was happening. These executives were not saying, “let my competitors spend the money on R&D and I will just adopt the winning technology in the future.” They were saying they had spent the time to understand the technology and were not impressed. They said it has no real use case. They even found it environmentally damaging to the point of being unconscionable.
The problem is that such statements, particularly those around energy waste, are a literal alarm bell to your business competitors and veterans of the blockchain industry that you have no idea how this stuff works. There have been blockchain protocols around since 2013 that use almost no electricity at all and run on microcomputers that are powered by a small 10W solar panel.
Therefore, sitting on a panel as an executive in supply chain, which has been identified by most major consulting firms as the most likely area to be disrupted by blockchain, and prioritizing 3 problems that can be solved with blockchain, and then proceeding to say you do not view blockchain as a priority at all is like waving a white flag of surrender in the air.
Rest assured — your competitors heard you and they are coming for your lunch.
Setting the Record Straight
Fortunately, an audience member proudly thrust their hand in the air to correct the panelist — immediately sharing truths about green consensus mechanisms for validating transactions with the other attendees.
“Yes!” I thought, “Now mention the different energy demands of various smart contract frameworks.”
But, alas, as I have come to expect in the industry, this audience member stopped after explaining green consensus mechanisms. The conversation around green smart contracts is new and practically nonexistent since stateful and stateless contract execution are frameworks that have only recently been defined. Hopefully that conversation will enter the mainstream sooner than later, but that’s a topic for a separate article.
Just Because You Build Software, Doesn’t Mean You Know Where to Use It
The final session of the day was a panel on blockchain in supply chains. At last. We could get to a real, in depth discussion on how this technology can be applied to all types of supply chains. Given that I have come into contact with a number of business people, usually bankers, working with R3’s Corda blockchain, I was excited to hear from one of R3’s executives. However, her comments set off a fire storm of confusion around the room.
Here we all were, talking about how timestamping digital documents and ensuring we can verify their authenticity on the blockchain is a process that can add value in a whole host of ways. It was all making sense. But then someone brought up a question around whether blockchain is really useful for something like tracking agricultural goods.
To paraphrase the R3 representative’s response, she said, “Does anyone really see value in putting an apple on a supply chain? I don’t think anyone sees value in that. No one cares. People will scan a bar code for a free recipe, but they don’t care where their food came from. They might care about tracing luxury goods, but not common items.”
Uhh. Hold on. What?
Walmart has shown they can use blockchain to trace food-related illness outbreaks such as salmonella and e-coli straight back to their actual fields of origin in seconds. A process that used to take weeks. This can save lives and a lot of money.
Carrefour, the French supermarket chain, tracked 20 different products in their store on the blockchain and offered customers the equivalent fruits with the ability to trace where they came from, and without the ability to trace where they came from, sales on items that could be traced were higher than those that could not be. This has led to their decision to bring another 100 products onto the blockchain by 2020.
There are issues to be worked out with these systems, such as getting farmers to share all of the information on their practices and actually verifying those practices on the ground — but there are existing ways of designing supply chains to mitigate many of these issues.
Aside from the corporate cases, what about individuals? Do they really not care?
Even around the room, there was surprise. The moderator herself expressed that she is allergic to spinach from the grocery store, but can eat it when grown in her home garden. This implies the use of a pesticide or fertilizer that is causing this potentially fatal reaction. If she could scan each brand of spinach at the store and know which ones used which types of pesticides during the plant life cycle, then she might actually be able to purchase this product from the store, saving her the time and effort of growing it at home.
It seems even representatives of R3, a company developing baseline blockchain software, is pushing their Corda product without fully understanding the applicability of blockchain to different verticals.
Closing Thought — Stay Humble
All this is to say that we are still in the early days of exploring distributed ledger technologies (DLT) and blockchain. The baseline blockchain software itself is evolving constantly, enabling use cases today that might not have been possible yesterday. Privacy concerns one day may not exist the next thanks to new features. A tangible example is the ability to permission certain actions on a public ledger may not have existed three years ago, but it is totally possible today.
We all must remain humble in this industry and constantly seek to learn from those around us. Our experiences are varied and given the cross-sectoral implications of blockchain, and the siloed nature of each different blockchain protocol, it will take breaking down these barriers and sharing our collective knowledge to do this complicated technology right. As the founder and lead capacity building consultant at Demetrius Consulting, and through my work with Jelurida, I’m always open to sharing and growing my blockchain expertise by collaborating with others.