One of the common threads between plans to improve the supply chain is the influence of new technology. The goals of procurement and sourcing functions have stayed relatively constant over the past few decades, with businesses hoping to achieve an ideal mix of efficiency, cost reduction and risk avoidance in their strategies. The means to achieve those objectives have changed, allowing departments to revamp their processes every few years.
It's important for procurement leaders to pay close attention to the latest IT advances, as failing to get on board with certain trends may lead to missed opportunities to boost efficiency and keep pace with competitors. One of the most recent areas of interest for supply chains is the blockchain, a tech area that received early publicity as the basis for cryptocurrencies such as Bitcoin.
Imagining the blockchain future
In a piece for Supply Chain Digital, Withers & Rogers' Andrew Thompson and Philip Horler laid out their case for what blockchain tech can do beyond financial transaction tracking. They pointed out that with supply chains becoming so complicated and geographically dispersed, blockchain architecture makes it possible for information to be kept available to all relevant parties. Furthermore, the built-in security of keeping data in such a format has its own value, with every advance in digitization bringing greater cybersecurity risk.
Thompson and Horler pointed out that the standards for blockchain use in supply chain communications haven't been fully standardized and codified yet. This means there is the potential for further change and evolution over the next few years. For now, the focus is on granular data storage and communication. This can allow supply chain partners to track down which materials or finished products were shipped in particular batches, which would be a serious advantage in situations such as recalls.
Financial advantages emerge
Another thinker in the IT space, the Sweetbridge Blockchain Alliance's Harry Goodnight, wrote for Supply Chain Dive that when companies synchronize their data storage with blockchain frameworks, they cut out processes designed to keep them on the same page. Doing this cuts down on the cost of goods sold and returns capital to their coffers. Goodnight visualized a decentralized supply chain model based on every company involved having more control over the way it shares information, as opposed to a model where one organization creates the system and imposes it on the rest.
As for the monetary advantages of blockchain data exchange, a quicker journey from invoicing to receiving cash could be hugely valuable. Goodnight put the amount of capital tied up in transactions at $4.2 trillion worldwide. Efficient blockchain communication could get that cash from invoicing to actual payment more quickly, allowing companies to spend it on better overall operations.
The next steps in mainstream technology adoption are never 100 percent clear in the supply chain. Keeping an eye on likely new contenders is a valuable way for procurement leaders to ensure that they're riding the next wave, rather than hit by it. Blockchain is one of the advancements to monitor on its way from untested idea to very real IT framework.