Are Your Supply Chain Peers Already Implementing Blockchain?

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Last summer, our sister site Trade Financing Matters’ David Gustin wrote: “I guess someone must have told ‘American Banker’ and many other publications [that] you put blockchain in the title and people will at least open the article.”

We admit to having no shortage of enthusiasm for writing about blockchain technology and its exciting implications for supply chains here on Spend Matters. As we wrote back in 2015, “Certainly you’ve heard of bitcoin. But do you know about blockchain, the technology behind bitcoin? If not, you should. We believe it has the potential to be one of the top technologies in the supply chain.”

The Word is Out

Today, many of your supply chain peers and competitors have at least some awareness of blockchain. Chain Business Insights recently released a benchmark survey of 42 supply chain professionals from companies of various sizes and revenues, and more than a third of the respondents indicated that they’re piloting or using blockchain in their organizations. (A “1” in the chart below signifies no knowledge of blockchain, whereas a “5” signifies that the organization is already implementing the technology.)

Source: Chain Business Insights

As the above pie chart shows, roughly half stated that they have some familiarity with blockchain, and only 16.7% said they have never heard of blockchain or have minimal familiarity with it. It’s a small sample size, but the respondents’ degree of familiarity with blockchain is similar to what IBM found when it surveyed nearly 2,965 executives from 20 industries and 80 countries. On average, 33% of the organizations are using or considering blockchain.

It’s All About Traceability...

Blockchain is lauded for its potential for bringing supply chain transparency to a new level, and so it’s no surprise that 80% of the Chain Business Insights survey respondents said that they’re likely to use blockchain for tracking product movement through the supply chain. Other potential applications for blockchain included sharing information with suppliers, tracking payment information such as payment orders, and verifying and monitoring suppliers.

In terms of the business advantages that blockchain can provide, 46% of respondents cited improved supply chain transparency as the most important. That comes as no surprise: more interesting is that for 33% of the respondents, the second most important advantage of blockchain is that it enhances trust between supply chain partners.

… And Competition...

Perhaps it’s more telling to look at who is already piloting or implementing blockchain. The IBM survey termed this group the “Explorers” and found that “no matter what the industry, the Explorers are remarkably alike. They share similar plans and attitudes, including a confidence in technology.”

Compared to so-called “Passives,” or organizations not considering blockchain, the Explorers are 76% more likely to have a formal business strategy for responding to disruption. They’re also 119% more likely to be ready to respond to emerging business trends and 117% more likely to have high revenue growth and profitability.

The Explorers are also more likely to see themselves as disruptors than defenders. One in five of them told IBM that they intend to “disrupt a new market or industry by completely changing the rules of the game, compared to just 5% of those who aren’t yet considering blockchains.” There is a stronger sense of urgency propelling the Explorers forward. Nearly two-thirds of them said that “they can’t afford to wait” to reinvent their organizations with the newest technology.

… And Company Mentality

One can argue that an organization’s approach toward blockchain (and any other truly disruptive technology) is reflective of the overall company culture. Eighty percent of the Explorers said that they’re investing in blockchain in response to opportunities of new business models or changing industry profit pools. In other words, they are “committed to wholesale reinvention.” Two-thirds of the Explorers are experimenting with platform business models, compared with just 11% of organizations not considering blockchain.

City of Antwerp CIO Peter Crombecq summed the Explorer mentality well to IBM: “[Organizations must be] agile enough to anticipate digital disruption, even without knowing what that disruption may be in the future.”

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