Insights from the Penn State Supply Chain Leader’s Forum

The Penn State Center for Supply Chain Research recently focused a Supply Chain Leader’s Forum on employing enabling technologies.  The agenda included discussions of most of the current hot technology topics.  One of the liveliest discussions focused on blockchain.

An informal survey of the group composed of supply chain executives from multiple industries revealed that a large majority expected blockchain technology to directly affect their supply chain 4 to 8 years from now.  This expectation aligns with the Blockchain in Transport Alliance (BiTA) communication [1] that estimates “education and early adoption” from now through 2020 with a blockchain “growth phase” to kick in from 2021 to 2025.

A small number thought blockchain would have an effect in 2 years or less.  Some people in the audience were from organizations that are “testing the waters” with blockchain technology today, whether by exposure to the IBM/Maersk TradeLens collaborative or much smaller, focused pilots in the food or pharmaceutical industries.

For the most part, almost everyone saw blockchain as a technology that will lead to nearly inevitable large-scale effects on the way processes occur in the supply chain, cutting out middlemen, increasing trust in transactions and dramatically reducing bad/missing information.  The consensus:  It’s not a matter of “if” but a matter of “when” blockchain plays an integral supply chain role.

The RFID effect

A lot of comparisons are being made to RFID when it was predicted to dramatically alter the way supply chains worked.  Most would say that RFID did not live up to its hype as a game changer in fundamentally shifting supply chain paradigms.  As a result, some supply chain leaders express more of a “wait and see” perspective regarding blockchain.  Three topics that correlate with the RFID situation several years ago are highlighted below.

Privacy concerns

Privacy concerns regarding RFID technologies centered around individual consumers.  The ability to track movements or collect personal information via the RFID tags remains a concern today.  With blockchain, highly “trusted” does not mean highly “private”.  In fact, the distributed and transparent nature of blockchain is, by design, very public.  As a result, blockchain transactions involving intellectual property or other trade secrets become challenging.  There are often technical solutions to these issues. [2]

Network effect

Similar to the RFID scenario, the value of the technology increases exponentially as more supply chain users leverage it.  This paradox makes the response to blockchain particularly notable.  If everyone is on the sidelines “waiting to get in”, how long will it take for the value to swell.  In addition, when the lightbulb does go on regarding blockchain value, what will be the extent of the gold rush?  Preparing for block chain might be like a fire drill – practice in a contrived setting so that processes and technologies become familiar.  Then your organization will be able to ramp quickly when the time comes.

Scale:  Large industry market mover

There is no doubt that a few big players in an industry could move the needle regarding blockchain adoption relatively quickly.  Paradoxically, a large “centrally” managed network “controlled” by one large player contradicts the philosophy of a publicly trusted, distributed and transparent network.  In addition, edicts made regarding RFID adoption were met with a fair amount of resistance.  Some of this resistance was pragmatic and a lot of it was emotional.  Some of the early large and centrally managed blockchain initiatives are being met with similar initial resistance, emotional, pragmatic or otherwise.

Next steps for organizations

So, what should organizations do about blockchain today? Tomorrow? Next week?  Next year?  Do you proactively jump heavily into blockchain activities now or gauge industry momentum to become an early adopter?  Or do you take a more reactive approach, engaging in blockchain activities with the majority.

A typical response has to do with where you or your organization sits on the “technology adoption” curve:  innovator, early adopter, early majority, late majority or laggard.  Another response has to do with the realities of “organizational learning”.

If the consensus is that blockchain technology will have a dramatic effect across the supply chain 4 to 8 years from now, perhaps today, tomorrow or next week is the time to start preparing your supply chain organization for that imminent change.  McKinsey studies show that 70% of change initiatives fail to achieve their goals, largely due to lack of management support and employee resistance.  But blockchain is not necessarily a corporate initiative, it’s a new way of transacting business, kind of like the change from faxes to e-mail on steroids.  With the well documented shortage of supply chain talent, it’s not like we’ll just replace less savvy technical people with new ones, there aren’t and won’t be enough new ones to do that.

So what do we do?  We can at least start by engaging groups of employees in blockchain discussions.  Find ways to periodically describe blockchain basics to them, engage people in conversations about how blockchain might affect your organization in the future.  Support those that have the intellectual curiosity to learn more.  Be open about the “management position” that your organization not only has blockchain on the radar but is looking for ways to prepare the organization for it and searching for relevant pilots to gain experience with blockchain concepts.   Look for ways to create your own blockchain fire drills so that your organization is ready for the fire when it comes.




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