Collaborating over Trusted Supply Chain Data using Blockchain
THE NEED FOR DIGITAL ECOSYSTEMS
In a way, today’s supply chains reflect our modern society. They are becoming increasingly complex and sophisticated, subject to high demands and standards, globally oriented and enhanced by technological advancements.
What’s driving this shift of increasingly complex supply chains? Let’s consider a couple of relevant factors:
- Globalization makes for increasingly fierce competitiveness in markets
- Shifts in sudden demand cause ripple effects along the supply chain (also known as The Bullwhip Effect)
- Supply chains are evolving from OEM to supplier relationships into cross-country value networks with many stakeholders
- Recent high-visibility food scandals creating demands for radical transparency
- Increased urgency of sustainable practice
- Relevant technological advancements (all the way from the birth of the ERP system to IoT solutions)
Managing these complex supply chains require radical cross-organizational integration of processes and systems. They require trustless digital ecosystems to rely on.
Challenges: Supply chain risk and reduced margins
The increasing complexity of supply chains are putting a strain on margins and drastically increasing supply chain risks. Globally oriented organizations have gone as far as making supply chain risk management a strategic theme.
Note, however, that the aforementioned changes are not solely threatening margins and increasing risks, but are also posing huge opportunities. Consider the amount of value being created and captured by enterprises that are leveraging new types of business models, such as omnichannel, B2B platforms, same-day delivery or Product-as-a-Service.
Whether your organization is seeking to mitigate supply chain risks or engage with these new types of business models, there is a need for radical cross-organizational and cross-country collaboration with supply chain partners. This exceeds the trusted and coherent environment of any organizational system landscape. How do we prevent conflicts between ERP systems? How do we get multiple business partners to reach consensus over shared supply chain data? And even more complex; how do we collaborate in a process with complex shared business logic? How do we create digital clarity on the actual flow of physical goods?
How blockchain can help: Trustless cross-company collaboration
Experience has shown that in such scenarios — in which multiple actors need to collaborate over shared data, processes and business logic — blockchain technology stands to be a game-changer. Unique digital tokens enable secure value transfers and smart contracts enable shared, self-enforcing business logic, all in a trustless manner.
By “glueing together” individual systems, blockchain could bridge the gap between siloed datasets and system landscapes, enabling a degree of collaboration that hasn’t been technically feasible before.
In a typical supply chain, what would be the result? Imagine it being literally impossible to issue a purchase order that does not match with the signed volume purchase agreement.
Through our work with clients such as BASF, FedEx and KLM, we have gained insight on how blockchain technology stands to benefit the domain of supply chain management:
- Significant efficiency gains: The use of a blockchain in a supply chain prevents conflicting actions from taking place. In doing so, it decreases the amount of conflict resolution loops taking place which are very costly in terms of time and resources. An optimized supply chain obviously benefits all stakeholders involved.
- Increased flexibility: By enabling shared datasets and business logic in a supply chain, the number of delays caused by conflicts is reduced and the overall responsiveness is increased, empowering businesses to respond to demand changes faster.
- End-to-end visibility: Blockchain enables radical visibility and traceability in supply chains, allowing for advanced analytics, provenance solutions, low-effort auditing, and early-warning signals. Note, however, that visibility and transparency in a blockchain network results from design choices. Contrary to popular belief, this does not mean that privacy or confidentiality is technically impossible in blockchain networks.
- Decreased risk of fraud: By design, the data in a blockchain is stored in a distributed manner and new entries to the database are coordinated by a consensus algorithm. This secures the network and makes it nearly impossible to add fraudulent transactions to the shared database.
- Inferred trust: A blockchain network allows for trustless collaboration between stakeholders, without the need for costly or strategically risky intermediaries.
What Kryha can do for you // From concepts to digital ecosystems
Kryha offers end-to-end services that guide you through the adoption cycle of blockchain technology. We help you develop initial concepts to powerful digital ecosystems.
Through working with our clients such as BASF, Shell, KLM, Daimler, and Bosch, we have gained extensive experience in:
- Concept and service design.
- Business model design.
- Ecosystem development.
- Iterative software development.
Some examples of Kryha’s experience in the domain of supply chain management:
- We have conducted a pilot on trustless state-tracking of cargo through the use of IoT sensors and smart contracts.
- We have built a Proof-of-Concept on food safety certification.
- We are conducting research on the topic of inter-ledger consensus and interoperability within the context of enterprise.
- We are co-developing a decentralized B2B platform that seeks to bridge siloed ERP systems.
Kryha helps those that are responsible for changing their business. Are you changing yours? Let’s talk!
Get in touch via alexander@kryha.io
