Over the next three years, 80% of supply chain blockchain initiatives will remain at a proof-of-concept or pilot stage, according to a recent report by Gartner. Early blockchain pilots for supply chain pursued technology-oriented models have been successful in other sectors, however, successful use cases for supply chains require a different approach.
“Modern supply chains are very complex and require digital connectivity and agility across participants,” says Andrew Stevens, senior director analyst with the Gartner Supply Chain practice. “Many organizations believed that blockchain could help navigate this complexity and pushed to create robust use cases for the supply chain. However, most of these use cases were inspired by pilots from the banking and insurance sector and didn’t work well in a supply chain environment.”
Initially, adopting a technology-first approach that exclusively targets blockchain infrastructure was the initial idea for use cases in the supply chain. However, the approach didn't work because in contrast to the highly digital-only fintech blockchain use cases, many supply chain use cases will need to capture events and data across physical products, packaging layers and transportation assets. Additionally, supply chain leaders must understand how these events can be digitized for sharing across blockchain-enabled ecosystem of stakeholders.
“Today, supply chain leaders have now started to treat blockchain as part of a longer-term technology roadmap and risk management planning. We see that many leaders are adopting a broader end-to-end view across their supply chains and map all requirements – from sourcing across manufacturing to the final distribution,” Stevens adds. “Having blockchain as part of an overall technology portfolio has created opportunities for internal collaboration across many areas that have a potential interest in blockchain, such as logistics and IT.”
While most blockchain initiatives don't move past the pilot phase, they provide a fresh round of information for supply chain leaders to conduct broader research and reviews.
“Many supply chain leaders that have conducted blockchain initiatives found that they now have a more complete overview of the current health of their supply chain. Their perception on how blockchain can be used in the supply chain also has shifted,” says Stevens. “By going through the process of deploying a blockchain pilot, they discovered what needs to change in their organization before blockchain technology can be leveraged effectively.”
Before starting another initiative, supply chain leaders should identify and establish key criteria and technology options for measuring and capturing metrics and data that can indicate an organization’s readiness to explore blockchain.