Professor Taylor talks about blockchain and supply chain digitalization

https://wpcarey.asu.edu/sites/default/files/supply_chain_digitization_-_final.pdf

Thought Leaders: Professors Todd Taylor (ASU), Christopher Gopal (USC), Tom Kull (ASU), and Antonios Printezis (ASU), Anders Karlborg (ZTE), George Bailey (CGE), Neal Streit (Elementum), Darren Shackelford (Flextronics), Mani Janakirim (Intel), and Mohammad Rahimi (ASU MBA Student)

Author: Garren Donaldson (ASU SCM Student – December 2017)

Introduction: In conjunction with this year’s Gartner Supply Chain Executive Conference, ZTE’s Anders Karlborg along with ASU’s Todd Taylor and USC’s Christopher Gopal initiated a meeting with a group of supply chain thought leaders to debrief on the discussions of the event and extract key learnings. The group met to brainstorm ideas and trends specifically related to the “digitalization” of supply chains and discussed its impacts and applications in the future. It is intended that similar meetings will be held annually in conjunction to the Gartner Supply Chain Executive Conference to continue the evolution and growth of the digital supply chain. This article provides a brief summary of their meeting and includes the ideas and principles they discussed. Main Areas of Discussion The participants already had an understanding of “digitalization” in the supply chain, industry 4.0 and the evolution to flexible, integrated, automated, smart and resilient supply chain ecosystems. From that common ground, the discussion centered on the four areas below.

The first three areas being technologies that are essential to supply chain digitalization and the fourth being an overarching principal that drives success.

1. Blockchain

2. Predictive Analytics

3. Artificial Intelligence

4. Performance Metrics for Supply Chain Digitalization

Blockchain Description:

The blockchain discussion was focused on private, enterprise blockchains and how this new technology is being used today and how it may be used to benefit supply chain ecosystems in the future. Professor Taylor led the discussion and explained, that at its core, private blockchains are distributed ledgers with the following components or characteristics:

• Persistent data stores that track the state of “assets”. These assets could be purchase requests, requests for pricing, orders, notifications and many other kinds of information.

• Chaincode (smart contracts) that provide instructions to automate transactions and information exchange between network partners.

• Enhanced security due to the use of public and private keys, the sequenced and encrypted ledger as well as the fault tolerance of the ecosystem guarding against unwanted intrusion or rogue actions.

• An ability to conduct private transactions with single or groups of partners in the blockchain network. Here he also explained that these transactions could be operated through the use of private channels, keys, chain code and membership and permissions.

• He also explained that validation in private networks does not require the arduous proof of work that public blockchain networks require and that the protocols here were still evolving with the rest of the technology.

Benefits:

Due to the immutability of the transaction history, these networks foster greater degrees of trust, automation, integration and collaboration along with a simplicity that has great potential to move supply chain networks toward the aforementioned goals of digitalization. Instead of exchanging documents or subscribing to proprietary marketplaces, blockchain holds the potential to allow for simple, efficient information flow and transactions across disparate partners.

Obstacles and Challenges:

Professors from the supply chain department, engineering and across ASU created a Blockchain Research Lab which is investigating the benefits of blockchains, the various aspects of the technology itself and helping to identify best practices and address many questions that remain as this technology evolves. Some of those in discussion today include:

• Costs are unclear. Large initial capital investments may be required to bring supply networks onboard.

• How to estimate and plan for costs of implementation, replacement of old systems and changes in software? • How to predict and estimate benefits?

• Is it possible for companies to “leap frog” to a block chain and skip unnecessary steps?

• How to decide on standards given the issue of interoperability whilst not stifling innovation?

• What are the legal ramifications of smart contract code (chaincode) and what will be the response of governments and law makers/enforcers?

• The technology is still in a very nascent state and will take a few years to mature to the point of viable production use. Some niche implementation will occur much sooner, however.

Suggestions:

Even given the challenges, it is becoming clear that this technology is set to have a dramatic impact on supply chains. It was the resolve of the group to help advance the thinking and contribute to the technology development and direction.

 

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