Sunday, December 26, 2021

Digital Supply Chain – If The Answer Isn’t Blockchain What Is?

John Straw highlights some long and short-term solutions to successful digital supply chains

As Knut Alicke pointed out in his insightful piece on the role of Blockchain in the digital supply chain (DSC)- it’s something of a solution looking for a problem – I think the answers that provide the foundation for a highly efficient DSC at some point do reference Blockchain-like tech but also take into account some very near term implementable tech than can move the sector forward.

Before I move into the new upsides, let me add some more reality to Knut’s article;

– Blockchain does not support high-speed transactional processing at this time – I’m hearing that transaction latency (i.e., the amount of time taken between the instigation of a verification process and the end) can be around 4 hours at the moment – not exactly ideal for a high volume supply chain environment

– 60% of the world’s Bitcoin miners (who do the verification task for each transaction) are in China due to subsidized energy – Bitcoin mining is super energy intensive and currently consumes a whopping 0.12% of the world’s energy generation. If you build Blockchain into your everyday supply chain operations, you then become beholden to a change in policy from a foreign government (although private blockchains can reduce energy consumption and latency whilst protecting from political influence).

So that’s the end of the bad news. . .

The upside is alternative, more performant networks

digital supply chain exponential john straw

Ethereum, for example, is starting to look commercially viable in the next few years. . . and that leads to something very interesting. . .

As Knut pointed out – simply connecting end to end in the supply chain provides little benefit in itself – however – there is a really interesting upside coming out of Ethereum called the Smart Contract.

Think for a moment how many contracts you have in your supply chain, and then think how clauses in those contracts trigger some form of action on your or the supplier’s behalf – classically, that might be a payment when a certain action is performed and verified.

At the moment, that process can be manual and inefficient and sometimes open to abuse. . . but think of an IT-based DSC that adds action-derived sensors from the Internet of Things (IoT) to the security and confidence layer (Ethereum) to automatically contract execution (Smart Contract), and you give birth to the truly efficient organization – the newly created acronym of DAO – the Decentralised Autonomous Organisation.

Someone in your space will have it in the plan right now

digital supply chain exponential john straw

It’s going to happen – combining the 3 elements of IoT, a secure transactional environment, and the smart contract is highly compelling – so, a long-term upside – but what can you do to bring life to the short-term upside of the DSC?

The answer may lie in Robotic Process Automation (RPA).

Referring back to Knut’s article – many processes in the supply chain are the manual joining together from different and disparate computer systems that can’t talk to each other, requiring manual data entry from a “data processing operator” (going back to my 1980’s computing roots). . . RPA can replace the human operator with a clever and easy-to-use facility that automates keystrokes and replays them – see this video from IBM:

The Digital Supply Chain exponential John Straw has near-term and medium-term potential for exponential increases in efficiency and flexibility – are you ready to grasp the opportunity?

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