Tag Archives: blockchain

5 Reasons Why Santa is the Ultimate Procurement Professional

Think you’re at the peak of the procurement and supply chain profession? Think again – Santa is the ultimate procurement professional (festively speaking…).

santa
Photo by Ylanite Koppens from Pexels

We’re fast approaching the end of 2019. It’s a time to reflect on the past year and consider what we have all achieved. We can look at all our successes, the lessons we have learned and everything that we will do in 2020. Perhaps there’s even a plan for how to take the next big step to that coveted leadership role in the profession.

But at this time of year, we all need to remember that our efforts pale in comparison to one individual. As we start thinking about the office party season, holidays and general festivities, this individual is only just revving up into top gear. Their whole year is driving towards this moment, but they are as prepared as they ever are.

And, while displaying all the skills we seek as a top procurement professional, they’ll deliver on all the wishes and promises that have been made. We are, of course, talking about…Santa. Father Christmas. Pére Noël. Svaty Mikolas. Kris Kringle.

Of course, there are other brilliant procurement professionals out there. But, at least in a festive setting, there’s none like Santa Claus for getting the job done. Here are my 5 reasons why:

1. Santa always has the right specification

Working tirelessly with his external (children, parents) and internal (elves, Mrs. Claus) stakeholders, he makes sure the specification is right. It can’t be a coincidence that children get exactly what they ask for, year after year. It all comes down to knowing your customers and then passing on the full specification to your manufacturing department/elves.

2. His Logistics operation is second to none

The global population is currently 7.7 billion people. Of this, an estimated 1.9 billion are children. Let’s assume then that the average household contains 4 people – this means Santa will visit 1.9 billion homes.

If there are 2 presents per child, this is a whopping 3.8 billion presents, delivered at a rate of 158.3 million per hour, 2.6 million present per minute. All of this with a team of 9 reindeer and one sleigh. Without the best logistics division and the latest technology, there’s no way all the presents are delivered to the correct child!

3. Belief, Influence, Leadership

Santa wields influence that most procurement leaders can only dream of. A following of magical, semi-magical and mortal people and creatures all follow him willingly. They work for the entire year to prepare for one day, then start again for the following year almost immediately.

Forming part of this leadership is belief. As we all know well (or at least we should) Santa’s sleigh and reindeer don’t fly without the belief in him and the Christmas spirit. And given he’s not missing deliveries to your house, it’s safe to assume this belief is still going strong!

4. Santa can always get the right price

Short of being some form of crazy, benevolent trillionaire (with superlative investments), Santa needs to be a dynamite negotiator or run the best RFQs. How else could he source all the toys or raw materials without bankrupting himself each year?

And like the best procurement professional, he doesn’t pass any cost increases on to his customers but works out the best deals to keep costs down so his end customers (the parents, of course!) don’t have to foot the bill.

5. He’s got the Nice-Naughty List on blockchain

How else do you create a fully traceable, immutable record of who has been naughty and nice in any given year? Santa needs to be able to trust the information he has on all behaviours, without the possibility that it has been compromised. Plus, it’s also handy for making sure that all the sourcing he does is ethical and sustainable…

So, if you have ambitions for a higher office in 2020, you’d do worse than looking at Santa as a good example to follow. And if all else fails, at least you’ll have a sunnier outlook on life! Ho, ho, ho!

Going Global While Being Ethical? Smart Contract Management Can Help

The risks associated with ethical sourcing have never been higher. How can you go global without compromising your ethics?

ethical sourcing
Photo by Pascal Bernardon on Unsplash

For enterprises with complex, global supply chains, the risks and challenges associated with ethical sourcing have never been higher. Over the past decade, supply disruption has gone from being an exceptional event to at least an annual – if not quarterly or monthly – occurrence. Most organisations are simply not prepared, even though they may have checked the box with fairly narrow supplier risk management assessments. 

One reason for the increased risk? Contract visibility. The ability for companies to instantly locate, retrieve, analyse and track contracts across the enterprise, continues to be suboptimal at many large companies. When these contracts are sitting as unstructured data in a repository that’s difficult to search — or even worse in someone’s desk — bad things happen.

For example, one technology consulting firm missed $1.5 million in revenue recognition when a manually-tracked contract expired, but work was still performed against it. Discounts and rebates are overlooked, and unwanted renewals happen on autopilot. Poor contract management can also lead to reputation and brand damage when companies unknowingly use unethical suppliers.

So what can we do? Gaining visibility into commercial engagements can help.

Blockchain-based contract management is changing the game

As organisations become more and more concerned about supply chain risk, the need for better visibility is more critical than ever before. Enterprise contract management software provides that visibility by tracking what a firm’s worldwide obligations, entitlements and business relationships truly are.

This software gives organisations a firm grasp on their supply chain, key suppliers, the composition of the products they’re purchasing and the locales in which they’re operating.

Technologies like AI, Machine Learning and Blockchain are proving key for enterprises to mitigate risk in the future. This contract management space is a hot sector and continues to experience rapid growth. According to MGI, the market itself is worth $20 billion. This is reflective of large enterprises’ desire to digitally transform their commercial foundation. This helps them save money, reduce risk and improve compliance.

For example, customers like Mercedes-Benz Cars have already taken advantage of this technology. They have done so by utilising smart contracts on the Icertis Blockchain Framework to create an immutable distributed ledger of transactions.

This helps to ensure global sourcing and contracting practices adhere to Mercedes-Benz Cars’ strict requirements for sustainable, ethical and secure sourcing.

The future of ethical globalisation

I recently attended The Big Ideas Summit, a great event for procurement professionals that brings together the top figures in the industry to discuss the current business landscape and bring unique, innovative ideas to the table.

Right now, we’re in the early stages of technologies like blockchain and just starting to see major impacts. Three years from now we’ll have conclusive data on how blockchain has helped increase visibility into, and compliance among, supply chains.

Already, these blockchain and distributed ledger technologies are significantly changing the way organisations do business with vendors, partners, and customers, impacting the way companies approach, execute and enforce business contracts.

Although most organisations associate blockchain technology with the financial services industry, it has potential use within the manufacturing, government, healthcare and education sectors as well. This includes how those industries execute and enforce contracts.

For example,the Icertis Contract Management (ICM) platform is already used to manage 6.5 million contracts at companies like 3M, Airbus, Daimler, Microsoft, Sanofi and Wipro in more than 40 languages across 90 countries. The AI-powered platform allows customers to increase contract velocity and agility, proactively manage entitlements and obligations, as well as surface commercial insights and intelligence.

One day, blockchains that utilise distributed ledger technology may even allow for contracts that are self-verifying, self-executing and autonomous. Companies can exchange terms, events, and information throughout the lifecycle of a contract without relying on brokers or middlemen.

This streamlined approach to supply chain management will help reduce costs and solve the hardest contract management problems on the most easy to use platform, thereby improving the bottom line.

To learn more about Icertis’ contract management software, visit the Icertis website.

Blockchain: Supply Chain’s 21st Century Truthsayer

No-one can predict the future. But we could all use a truthsayer to help us protect ourselves in the here and now…

Photo by Mitya Ivanov on Unsplash

In most supply chains, communication is point-to-point and one direction. There is no single, shared record of events across multiple parties. This is no longer an efficient or effective way to do business and most organisations know this.

And where there is no single point of truth or shared records, trust in supply chains and from consumers can be eroded. What procurement and supply chains need is a solution that can deliver data, but also be unimpeachable.

But how to solve this issue and penetrate the dense forest of new ideas and myriad technologies all offering to be some form of truthsayer?

A Truthsayer in our Midst?

New technology is, however, transforming that linear disconnected approach, and providing momentum to the movement for mature supply chains to operate in a “network of networks”.

By placing a supply chain on the blockchain, it makes the process more traceable, transparent and fully digital. With blockchain, organisations can shine a light on the provenance of their goods, but also earn the trust of consumers by proving the safety and traceability of the goods. And in a fast-paced environment, those organisations who don’t engage with blockchain face the reality of being left behind.

From farm to plate, the food supply chain can now be tracked in an open, transparent, fully traceable and entirely digital way. But what has started out in the food supply chain has all the applicability we need to cover all supply chains. Everywhere.

How then do we get involved? And how also do we sell this concept to a probably sceptical organisation (and budget holder…)?

Join our Webinar

Help is at hand in the form of Procurious and IBM’s latest webinar, ‘Blockchain – Supply Chain’s 21st Century Truthsayer’.

Sign up now to join our panel of experts at 14:30pm (BST) on Tuesday the 15th of October:

  • Tania Seary, Founder, Procurious
  • Shari Diaz, Innovation Strategy and Operations Program Director, IBM Watson Supply Chain
  • Professor Olinga Ta’eed, Director of the Centre for Citizenship, Enterprise and Governance

In the webinar, you’ll hear from a panel of experts on a range of topics including:

  • The importance understanding products’ provenance in your supply chain;
  • The link between successful blockchain adoption and rising consumer confidence;
  • Success stories from across the globe in blockchain implementation; and
  • How to start the conversation in your organisation to get the ball rolling.

FAQs

Is the Blockchain webinar available to anyone?

Absolutely! Anyone & everyone can register for the webinar and it won’t cost you a penny to do so. Simply sign up here.

How do I listen to the Critical Factors webinar?

Simply sign up here and you’ll be able to listen to the on-demand. 

Help – I can’t make it to the live-stream of the webinar!

No problem! If you can’t make the live-stream you can catch up whenever it suits you. We’ll be making it available on Procurious soon after the event (and will be sure to send you a link) so you can listen at your leisure!

Can I ask the speakers a question during the Blockchain: Supply Chain’s 21st Century Truthsayer webinar?

If you’d like to ask one of our speakers a question please submit it via the Discussion Board on Procurious and we’ll do our very best to ensure it gets answered for you.

Don’t Miss Out!

This webinar promises to provide a fascinating insight for all procurement professionals into the wealth of possibilities that Blockchain has to offer procurement.

Make sure you don’t miss out by signing up today!

Blockchain – A New Flavour of Traceability

Why did the chicken cross the road? More importantly, was there traceability of its journey and how many miles did it cover? Maybe blockchain can help us answer this age-old question…

Courtesy of Portlandia

Do you find yourself thinking more and more about the journey your food has taken to get to your plate? It’s not just because you’re a supply chain professional. It’s because, as a community, we are increasingly interested in the origin and safety of the food we consume.

Farm to Plate – Tracked and Traced

Consumers have an increasing interest in and focus on sustainability, food miles and the concept of ‘farm to plate’. The pressure is on the supply chain to maintain quality while providing both transparency and a fully auditable trail.

Production lines can be stopped and deadlines missed. But if fresh produce doesn’t get to where it needs to be on time, there isn’t any end product.

Delayed, incomplete, incorrect or damaged shipments create a monumental volume of administration. Productivity tanks, costs mount and trust erodes as the parties enter into a “we said, they said” situation, with each party trying to avoid being the ones to blame. This has led to a situation that as the food supply chain has grown, the level of trust has diminished.

However, one of the hottest new technologies, blockchain, has proved to be an invaluable tool in helping provide transparency and maintain trust.

Network of Networks

In most supply chains, communication is point-to-point and one direction. There is no single, shared record of events across multiple parties. Damages or changes – malicious or accidental – may surface in the moment, or potentially only when they are raised by consumers.

According to research published by Gartner in 2017, there is a movement for mature supply chains to operate in a “network of networks”. The network of networks acts as a self-fulfilling prophecy, as mature supply chains in these networks achieve higher levels of maturity, including improving ecosystem visibility.

By placing a supply chain on the blockchain, it makes the process more traceable, transparent and fully digital. Each node on the blockchain could represent an entity that has handled the food on the way to the store, making it much easier and faster to identify the source of food safety issues with much greater precision.

The attributes of blockchain technology are ideally suited to networks of partners, big and small. By providing a shared, single version of the truth through a shared, digital ledger, blockchain increases trust and creates efficiencies by eliminating the “we said, they said” problem and creating a shared understanding of all possible disruptions that could impact OTIF delivery.

With blockchain, transaction records are immutable, or tamperproof, and agreed upon by all parties. Immutability creates an audit trail. Privacy is maintained by setting the appropriate levels of data visibility for different parties. And business rules are shared and enforced by the system through smart contracts.

Trust and Traceability

A prime example of the effectiveness of blockchain in the food supply chain is Walmart. The retail giant has been working with IBM on a food safety solution, using IBM’s ‘Food Trust‘ solution, which was specifically designed for this purpose.

Before working with IBM to move some of its food supply chain to blockchain, it typically took Walmart approximately 7 days to trace the source of food. With the blockchain, it’s been reduced to 2.2 seconds. This time may be the difference between a consumer eating unsafe food and it never reaching the shelves in the first place.

IBM has also played a major role in the development of blockchain tracking for another retailer, Carrefour. The organisation uses blockchain ledger technology to track produce including meat, milk and fruit from source to shelf. The technology has enabled tracking on the consumer side too, with shoppers able to scan QR codes on products, allowing them to read product information on provenance and process.

Carrefour has credited the technology with increasing consumer trust in the brand, resulting in an increase in sales. It’s an example that many other retailers may look to follow soon.

Supplier ‘Passports’

IBM very recently announced a new blockchain network, ‘Trust Your Supplier’. The network, not solely limited to the food supply chain, has been designed to improve supplier qualification by creating a form of passport for suppliers. This will help to reduce time and resources for validation, with everything verified by third parties, such as Dun & Bradstreet, to square the circle.

The network, and network of networks, look set to revolutionise how organisations and consumers look at supply chains. The food supply chain is merely the first where the technology is making strides, though the fashion industry has also made moves to implement with significant success.

As consumers buy less fresh produce to reduce food waste, they are willing to spend a bit more to ensure quality. With blockchain, organisations can shine a light on the provenance of their goods, but also earn the trust of consumers by proving the safety and traceability of the goods. And in a fast-paced environment, those organisations who don’t engage with blockchain face the reality of being left behind.

We might never know why the chicken crossed the road. But with blockchain tracking the supply chain, we’ll be able to understand where it came from, how far away and track it’s route all the way to your plate (sorry Colin!).

Blockchain: Supply Chain’s 21st Century Truthsayer

From farm to plate, the food supply chain can now be tracked in an open, transparent, fully traceable and entirely digital way. We may never know the why, but the how and where are within our grasp!

In our latest webinar, Blockchain: Supply Chain’s 21st Century Truthsayer, we’ll be exploring the full applicability of this great technological innovation, understanding how Walmart and Carrefour have turned this to their advantage and revealing why it’s a must have for supply chains of the future! Click here to sign up now.

Progress or Perish: How to Push our Profession to the Next Level

Traditional procurement roles will perish if significant progress isn’t made. But how can the profession progress enough to deliver true value?

By @lindsayhenwood on Unsplash

By Ben Tulloch, Managing Director at Accenture

Ask any business executive in Australia how procurement has made their life easier, and they’re more likely to tell you that it’s been a roadblock.

Despite the profession’s brilliant minds, appetite for improvement, and advanced solutions from AI to blockchain and beyond, only 20 per cent of procurement tech projects down under prove successful. The issue, it seems, is something more deep-seated. The modern Australian enterprise is not geared for rapid evolution.

By the time Aussie companies have dedicated years of effort and distraction to available solutions, the market has advanced beyond recognition. What we really need is the ability to rapidly prototype and test ideas, implement them at scale and do it all again next month.

A lack of agile skills has left Australia lagging behind the EU and US. In fact, we’re probably at a 3/10 in terms of our capabilities and maturity, still using procurement tech and processes that harken to the 1970s. As we’re so late in implementing the basics, how can we even begin to place ourselves ahead of the curve?

Progress: The role of the traditional procurement manager will perish if it doesn’t change

There’s a fearmongered risk that jobs will be lost to advanced technologies. At some level, that’s correct: if a theatre nurse implemented AI to predict, trigger and record stock orders in the blockchain, they wipe out the P2P function of procurement. But this doesn’t spell disaster, it opens up new opportunities for growth.

If we can remove the administrative element of the job, procurement professionals can progress from a traditional role and take a more strategic view, rather than just buying stuff. They can leave a legacy and make a tangible difference – socially, environmentally and economically. For example, readily available blockchain solutions have the ability to eradicate modern slavery by providing ultimate transparency across supply chains.

But the skills needed to run a digital control tower or AI stock predictor are different. We’re going to need system integrators, program managers, design thinkers, full-stack engineers, mathematicians and AI experts. How do you rapidly shift engrained national mindsets – quickly and cheaply? A culture of co-design, ecosystem partners and using the success of tangible use cases to build trust are key.

‘Design Thinking’ is the Next Step

One of Accenture’s government clients had small armies of people trying (and failing) to keep up with updating pricing lists. Place an order, and it was most likely attached to the wrong stock number. As a result, buyers lost trust in suppliers and vice versa.

Now imagine if those master pricing lists were housed on the blockchain – transparent, secure and updated in real time? That technology exists, it’s cheap and takes only weeks to implement. But this isn’t a tech problem, it’s a change problem.

In the startup ecosystem, design thinking is in their DNA. Even three months is considered a long time, and products evolve continuously to keep up with market changes. These newer generations of Australian innovators would laugh our outdated tech and processes out the room, instead turning to a slick new app or platform that can be pushed to market within weeks.

But if procurement brought a startup solution to the CMO of a large Australian enterprise, it would likely be met with, “they’re not on our preferred supplier list.”

The Business Case for Innovation

The return on investment for agile solutions is not only profound, it’s immediate. We’ve been working with a major airline in Australia on using AI to predict, prioritise and elevate invoices for large suppliers, and manage changes in very complex supply chain relationships. In doing so, they’ve removed all paper processes, increased transparency, and seen a significant ROI in only three months.

Another major telco client has been tackling customer service with an omnichannel conversational platform that can replicate complex human conversation, comprehend voice, text and multiple trains of thoughts – not just spit out an answer to a direct question. Within months, the bot has compressed contract changes from 3.5 days to 8 minutes. This relatively inexpensive solution has potential solutions for the entire procurement profession.

The best part is that the platform was in live testing by week three. That’s on a live contract with live scaling and live data, three weeks after the idea was suggested. That’s design thinking in action.

The Art of the Impossible

Showcasing the impossible is powerful. If I utter the word ‘blockchain’ to an old-school Australian organisation, they’re likely to palm it off as a futuristic dream. But show them a functional, cheap and efficient blockchain contract in action and they’ll get it. Demystify advanced technology for your workforce, and take the objection off the table.

Collaborate with industry partners to forge a path forward that benefits everyone – not just your company. Start with the problem, and isolate solutions. Sure, there are technical and personal risks involved in evolution. But there are risks with everything in business. Not every idea has to be rolled out permanently across your entire enterprise. But not taking steps towards the future is the biggest risk of all.

At this month’s Big Ideas Summit, procurement professionals will be coming together to understand, challenge and solve the profession’s biggest problems. I’ll be speaking to the power of design thinking in facing the future of procurement, and how an “Industry X.0” mindset can pave the way forward.

The bottom line is that if you do nothing, people will find their way around you. The best way forward is to recognise that you’re not alone – Australia lags behind with you – and then get on the front foot and be ready to progress.

Is Blockchain The Next Big Thing For Supply Chain?

What does blockchain mean for your supply chain?

By Oleksandr Nagaiets/ Shutterstock

Few people working in supply chain roles have a clear understanding of how this fledgeling solution called blockchain is, or could be, applied in their organisations. There is much hype and misinformation in the marketplace and much of it is due to the unproven nature in practice and unknown long-term costs of blockchain applications.

So what is blockchain?

Without getting too technical, the underlying principle of blockchain is to provide a secure environment where encrypted business transactions between buyer and seller can happen without the need for third parties such as banks and clearing agents to intervene. According to McKinsey,

blockchain is an internet-based technology that is prized for its ability to publicly validate, record, and distribute transactions in immutable, encrypted ledgers”.

Immutable, in this case, means that each link in the blockchain is completely secure and unbreakable. Blockchain’s format guarantees the data has not been counterfeited and that information can be read by any authorized party.

There are two main types of blockchain applications, one private and the other public. In the commercial environment, the networks are mostly private, this type of operation is sometimes referred to as “permissioned”.    Read more detail about how Blockchain works here.   

The world before blockchain

This diagram below is typical of a traditional sales transaction with many intermediaries.  Currently, these intermediaries process, verify and reconcile transactions before the ownership of the goods or services can pass from seller to buyer. How many people does it take to move a container of avocados from a Kenyan seller to a UK buyer?  At least thirty, but more importantly, there are over 200 individual transaction events and communications involved. 

What traditional buyer-to-seller transactions look like today  

What supply chains could look like tomorrow  

The world after blockchain

In a private blockchain network,  the procure-to-pay process is streamlined so that documents are matched triggering payment and creating a verifiable audit trail.   Nestlé is breaking new ground in supply chain transparency through a collaboration with OpenSC – an innovative blockchain platform that allows consumers to track their food right back to the farm.  The initial pilot program will trace milk from farms and producers in New Zealand to Nestlé factories and warehouses in the Middle East.

What does blockchain mean for your supply chain?

How can this fledgeling technology be beneficial? According to McKinsey, there are three main areas where blockchain can add value:

  1. Replacing slow, manual paper-based processes.
  2. Strengthening traceability which reduces quality and recall problems
  3. Potentially reducing supply-chain IT transaction costs  (maybe?).

The answer seems to lie in its potential to speed up administrative processes and to take costs out of the system while still guaranteeing the security of transactions.  Blockchain has the potential to disrupt or create competitive advantage, but the biggest barrier to its adoption is that so few have a good grasp on how it can be of use in their operations.

The potential benefits

  • faster and more accurate tracking of products and distribution assets, e.g. trucks, containers, as they move through the supply chain  
  • reduction of errors on orders, goods receipts, invoices and other trade-related documents due to less need for manual reconciliation 
  • a permanent audit trail of every product movement or financial transaction from its source to its ultimate destination.
  • trust is created between users through using a transparent ledger where transactions are immutable, secure and  auditable

What are the obstacles?

1.The cost

Implementing a blockchain solution may require expensive amendments and upgrades to existing systems which is both costly and time-consuming. Who pays and what is the return on investment?

2. Change management

There will be a need to convince all involved parties to join a particular blockchain and collaborate for mutual benefit. More openness will be needed, the old ways of protecting information won’t work. There is likely to be some mistrust initially especially around market share and sales data.

3. Rules and regulations

Legal advice is essential to understand what regulatory frameworks must be complied with. There are no accepted global standards for Blockchain that align with maritime law, international customs regulations and the various commercial codes such as Incoterms that govern the commercial transfer of ownership.  

4. Security

Is Blockchain really unbreakable?  Hackers would not only need to infiltrate a specific block to alter existing information but would have to access all of the preceding blocks going back through the entire history of that blockchain, across every ledger in the network, simultaneously. Even with encryption, cyber-attacks are a concern and cybersecurity costs money.

Transacting using “smart” contracts

Blockchain can be used to create “smart” contracts that execute the terms of any agreement when specified conditions are met. The “smart” part is a piece of computer code that predefines a set of rules under which the parties to that smart contract agree to interact with each other. Not recommended for beginners.

What industries will benefit most? 

Industries with the greatest potential are those that deal with extensive paperwork such as freight forwarding, marine shipping, and transport logistics. 

Tracking ofautomotive parts as they move between manufacturing facilities and countries is an attractive application as interfaces between motor manufacturers and their 3PL transport partners are complex and often not well-integrated. Toyota is venturing into developing blockchain solutions for its core parts supply chain operations.

Vulnerable and highly regulated supply chains such as food and healthcare

can benefit due to their need for transparency. Real estate has great potential due to the mass of records and documents involved such as transfers of land titles, property deeds, liens etc.  

Avoiding the hype

Gartner says that although blockchain holds great promise, often the technology is offered as a solution in search of a problem. They advise that “to ensure a successful blockchain project, make sure you actually need to use blockchain technology. Additionally, much of what is on the market as an enterprise “blockchain” solution lacks at least two of the five core components: Encryption, immutability, distribution, decentralization and tokenization.”  Gartner’s long term view is that blockchain will only move through its Trough of Disillusionment by 2022. 

Will it work in your supply chain?

The jury is still out on whether blockchain will really create a competitive advantage. Also, the cost of running a blockchain in time and resources is the unknown factor. For companies thought to have efficient supply chain operations with trusted partners and reliable databases, such a complex solution may not be needed. A supplier portal that is housed in the cloud may be more than adequate when coupled with an established ERP system.   

But wait, the blockchain action doesn’t stop here! Join us on October 15 with blockchain experts Shari Diaz, Innovation Strategy and Operations Program Director, IBM Watson Supply Chain and Professor Olinga Ta’eed, Director of the Centre for Citizenship, Enterprise and Governance in this webinar brought to you by IBM and Procurious. Click here to register for Blockchain: Supply Chain’s 21st Century Truthsayer.

Still Trying To Understand Blockchain? Here’s The One Thing You Really Need To Know

Blockchain is so much more then cryptocurrency, and despite the scepticism, it is here to stay.

By Dean Drobot/ Shutterstock

I’ve had a blog on blockchain on my mind for a while. As far as business buzzwords and hype, it has to be right up there with the best of them. Everyone is talking about it, or asking about it. Questions can be quite generic ranging from what exactly is it, what does it do and do I need to care about? And then then are the questions of scepticism and challenge including; is it even real, and does it even do anything? Amongst all of that, is the one we have all heard, or perhaps been the one we have actually asked; that’s got something to do with bitcoin, doesn’t it?

Ah, bitcoin.  We’ve all heard about it now and many who have followed the heady rise have had the dream of making millions from the cryptocurrency. Hitting dizzying heights of USD$19,000+ in 2017, we were all wondering why we had not invested in 2016 when it was hovering around the USD$600 mark. Thankfully, we were able to quickly congratulate ourselves for not being susceptible to the whims of the market when it fell to USD$3,000 earlier this year. And if you’ve been watching it over the last few months? Well it’s back at USD$10,000+, so you may be either celebrating or experiencing another round of FOMO.

So, what has all this got to do with blockchain? For many, the two are essentially the same, or the mention of one prompts an association with the other. If you only feel like you need to know one thing about blockchain, it should be that it is not bitcoin. Is it connected to bitcoin?  Yes, in so far that the technology that underpins bitcoin is what we call blockchain. But blockchain is so much more then cryptocurrency, and despite the scepticism, it is here to stay. Here are a few other considerations that may be helpful once you make the disassociation from bitcoin:

Understand the maturity level

The demand and potential for blockchain application saw Venture Capital firms invest more then $1 billion in blockchain start ups as early as 2017. McKinsey classifies blockchain as being in the Pioneering stage of technology development. While there are a plethora of use cases that have been identified by organisations and also by governments, many are at ideation stage. Others have progressed to proof of concept stage. As with anything that is new, there has not been enough time to implement at scale and observe the impact across a whole industry or organisation. That is a question of time and opportunity more than likelihood or value, and there is no doubt that as the technology matures and more experimentation takes place, the more we will learn. The prediction from many industry leaders is that it will become as ubiquitous as the internet. Until then, it is important to manage expectations around what it can and will do. 

Know what to use it for

As with many emerging technologies, the temptation to pioneer and innovate has led many organisations to force a solution of blockchain into a problem or opportunity that it may not be right for. We need blockchain or blockchain will solve this is a refrain that has been heard in many a meeting across industries and geographies. And it could be exactly right. But the important thing to remember is that the principle of value and outcome applies to all new technology, even one as cool as blockchain. Work out what problem you are trying to solve; if it involves many parties, transparency, and trust, it may be exactly what you need. The financial sector has been leading the way with blockchain in KYC (Know Your Customer) initiatives to improve detection of fraud and integrity of financial transactions. In addition to the commercial benefits of mitigating monetary losses, banks and other financial institutions are also expecting to realise efficiencies from process savings. With savings of between 20-30 per cent estimated, it is an experiment worth undertaking.

It will change industries and practices

Blockchain provides a level of transparency, validation and security that has been needed, but has not been able to be achieved previously. Why are these important?  Questions of origin and ownership have become increasingly important as we become more digital savvy. In some processes, it has always been a critical dependency with onerous and time consuming operational activity to execute it. Property is a great example of this. Do you have a right to sell this property, will I be the legal owner if I proceed with the transaction?  In other cases, it may be a factor in a decision making process. As a consumer, how do I really know where this food item has come from? Is it really organic, or is it simply a marketing strategy? Luxury brands like Louis Vuitton and Dior are leveraging blockchain as part of an offensive strategy to deal with counterfeit goods. Initially applying to new items, the eventual intent is to be able to authenticate the item through the resale process and therefore manage it throughout its lifetime.

So, is blockchain more then bitcoin? Absolutely. And while it is still in its very early stages, keep watching. As a technology, there is no doubt that it in its infancy but this should only temper expectations and not prevent experimentation.

But wait, the blockchain action doesn’t stop here! Join us on October 15 with blockchain experts Shari Diaz, Innovation Strategy and Operations Program Director, IBM Watson Supply Chain and Professor Olinga Ta’eed, Director of the Centre for Citizenship, Enterprise and Governance in this webinar brought to you by IBM and Procurious. Click here to register for Blockchain: Supply Chain’s 21st Century Truthsayer.

Transparency In Supply Chains And Blockchain: What Is The Most Common Trap?

Becoming aware of blockchain’s weak spots is an important first step towards taking full advantage of what the technology really has to offer.


By Billion Photos / Shutterstock

Is Blockchain coming of age in 2019?

Judging by the first half of 2019, it seems that the blockchain hype is finally deflating and there is an overall consensus that it will not save the world (at least not this year…). The growing trend towards pragmatism, which is now beginning to temper people’s expectations, is the best thing that could happen to blockchain. . .  A more down-to-earth approach is welcome because, like any technology, blockchain is not perfect, nor the solution to all problems. It is important to be realistic about its potential and limitations.

In particular, blockchain has limitations that threaten to jeopardise many recent high-profile initiatives to increase traceability and visibility in the supply chain. Despite seeming like the ideal technology to address growing concerns about these aspects, most (if not all) blockchain implementations have an Achilles’ heel: the initial digitisation of data to bridge between the physical and the digital world.

Becoming aware of these weak spots is an important first step towards taking full advantage of what blockchain really has to offer. Blockchain’s real value proposition

There are many potential and valuable use cases for blockchain, especially in Procurement and Supply Chain Mgmt.  

“If you talk to supply chain experts, their three primary areas of pain are visibility, process optimisation, and demand management. Blockchain provides a system of trusted records that addresses all three.” Brigid McDermott, vice president, Blockchain Business Development & Ecosystem, at IBM (source Blockchain and Supply Chain Finance: the missing link!, Finextra)

The most valuable characteristic of blockchain is that it serves as a backbone for “convergence”:

  • For better insights and actionable intelligence: Blockchain is the missing link in Big Data initiatives and the convergence of the Internet of Things (IoT), Artificial Intelligence (AI), and blockchain represents a breakthrough.
  • From an integration perspective: Blockchain-based supply chains allow three different supply chains (physical/informational/financial) to converge into a single digital one.

Blockchain has the potential to converge the two main ecosystems involved in trade finance — the financial ecosystem, which includes banks and suppliers, and the supply chain ecosystem. At the same time, the technology can provide a unified platform for multiple stakeholders, potentially avoiding difficulties that slow down operations” Béatrice Collot, Head of Global Trade and Receivable Finance at HSBC quoted in Blockchain’s Main Strengths Are Transparency and Instantaneity on Cointelegraph

While these features will certainly contribute to improved supply chain transparency, there is still a critical challenge that needs to be addressed: the digitisation of data at the beginning of the process. This crucial step constitutes a fundamental weakness of many current digital supply chains.

Blockchain’s Achilles’ Heel: Mind the Gap!

Traceability and transparency along the supply chain, from raw materials to final products, is a growing concern for organisations. New regulations from governments & institutions, customer expectations, and company’s self-interest in issues like sustainability, incident management, and efficiency, have created the need for an infrastructure to track, trace, and store data in the supply chain.

At first glance, blockchain may seems like the ideal solution. It creates a permanent record of all transactions at all levels of the supply chain, guaranteeing full traceability and establishing trust. So, many companies started to provide blockchain-based means of collecting information in their supply chain with the goal of making it accessible to customers as irrefutable proof about the origin of products and components.

A typical story goes like this: “Thanks to our application, you can take a picture of the QR-code on your product and view the entire supply chain of all components/elements that contributed to the final product you have in your hands.”  

This sounds great in theory, but there is an important caveat:

 “At the interface between the offline world and its digital representation, the usefulness of the technology still critically depends on trusted intermediaries to effectively bridge the “last mile” between a digital record and a physical individual, business, device, or event. […] And if humans […] manipulate the data when it is entered, in a system where records are believed ex-post as having integrity, this can have serious negative consequences.” What Blockchain Can’t Do, Harvard Business Review

The use of blockchain technology gives people a false sense of security because it relies on cryptography and various mechanisms to ensure that information stored on it can be trusted (identity, immutable record, etc.). But, as illustrated above, the digitization step when the information is recorded (a block added) is not protected by this same “guarantee.”. So, it is not because blockchain technology supports and enables a better transparency that it should be blindly trusted by customers or by procurement or supply chain pros.

The solution?

It is undeniable that blockchain is a form of digital trust. Much of the hype surrounding it has been driven by a broader trend in society: the erosion of trust in people and institutions. Blockchain is playing a major role in shifting that trust to technology and software. This explains, in part, why compliance and transparency are the use cases that are priorities for procurement and supply chain pros.

However, it is important to remember that blockchain’s reputation as “trustworthy” can be misleading, especially in the case of supply chain transparency. Manual operations are still part of the initial process of digitizing the data. Therefore, trusting data stored in the blockchain also means trusting that initial step that relies on human activities.

For this reason, building trust in business partners will continue to be a vital part of the procurement function’s role in the future. Introducing digital initiatives will not entirely remove the human element of the job, and Procurement practitioners will need to continue working on establishing trust and nurturing it with suppliers and stakeholders.

Also, from a technology perspective, there are already initiatives to close the gap between physical and digital as much as possible. Interestingly, they focus on physical objects (crypto-hardware) and not just on software. These objects are the child of RFID, connected devices, and blockchain, with the intent to create a convergence between the Internet of Things and the Internet of Value (blockchain) to create the Value Internet of Things (VIoT).

In addition to the human and technological answers that will both contribute to creating a truly integrated supply chain (physical + informational + financial), a third component will remain essential: critical thinking.

Trust and verify!

But wait, the blockchain action doesn’t stop here! Join us on October 15 with blockchain experts Shari Diaz, Innovation Strategy and Operations Program Director, IBM Watson Supply Chain and Professor Olinga Ta’eed, Director of the Centre for Citizenship, Enterprise and Governance in this webinar brought to you by IBM and Procurious. Click here to register for Blockchain: Supply Chain’s 21st Century Truthsayer.

Taking Control Of Your Supply Chain With Blockchain

Organisations are increasingly striving to develop a supply chain that adheres to their brand’s sustainability and ethical standards. Here’s how blockchain can enable this…

By Demkat / Shutterstock

As our global supply chains become more and more complex, ensuring that contractual commitments around sustainability and ethical practices are met at each stage of the supply chain has become extremely challenging.

Along with this increased complexity, the economic and reputational cost of a lapse in compliance is increasing as well. Organisations want to be part of the solution, not generating bad headlines and being seen as part of the problem.

As such, organisations are increasingly striving to develop a supply chain that adheres to their brand’s sustainability and ethical standards. Starbucks, to name one example, has set a 2020 goal of ensuring all tea and cocoa is ethically sourced. Johnson & Johnson has publicly stated its commitment to determining the use, country of origin and source of 3TG minerals (Tin, Tungsten, Tantalum and Gold) used in its global product portfolio. Such commitments require extreme and committed due diligence in supply chain management.

One way that forward-looking businesses are achieving such diligence is with enterprise contract management. For the first time in the history of commerce, contracts are being completely digitised. This enables procurement organisations to identify, assess and automatically mitigate risk through advanced capabilities like automated supplier checks and region-based regulatory compliance. And emerging technologies like blockchain and artificial intelligence (AI) are poised to dramatically increase the benefits of an enterprise contract management platform.

Today, we at Icertis are working with customers on solutions that will allow them to utilise smart contracts that use a consortium blockchain to create an immutable ledger of transactions. Under such a system, a customer and its suppliers will place their contracts on the blockchain, thus ensuring that the required terms are present in all the related contracts. Once on the blockchain, AI will verify that all necessary contractual obligations are present in the documents. This will ensure the tracking of commitments across a consortium of suppliers, enabling a new level of commercial collaboration, visibility and accountability.  And to ensure sensitive information is not exposed, visibility of contracts in the chain will be restricted based on privileges that allow only contracting parties to see their contract, preserving the sanctity of the supply chain.

This technology turns contracts into living business assets to achieve once-divergent goals.

Manufacturers can ensure their suppliers comply to standards and contractual commitments around privacy, sustainability and labour laws. Suppliers, meanwhile, can prove that they comply, while not exposing the details of their subcontracts within the supply chain.

And it’s not just about tea, cocoa or conflict minerals. This technology can also enforce compliance requirements like data privacy (including GDPR), information security, ITAR (International Trade in Arms Regulation) and other regulations.

We are entering a new era of commerce, when contracts stop being static documents forgotten about after execution and actively start reducing risk and creating value for enterprises throughout their lifecycle. Smart contracts powered by AI and blockchain can protect and optimize businesses in ways never before possible, including in their supply chain.

But wait, the blockchain action doesn’t stop here! Join us on October 15 with blockchain experts Shari Diaz, Innovation Strategy and Operations Program Director, IBM Watson Supply Chain and Professor Olinga Ta’eed, Director of the Centre for Citizenship, Enterprise and Governance in this webinar brought to you by IBM and Procurious. Click here to register for Blockchain: Supply Chain’s 21st Century Truthsayer.

Are Smart Contracts A Game Changer for Procurement?

Are smart contracts, enabled by blockchain, the next big thing or just a temporary hype?

What is a contract? Put simply, a contract is any agreement that is built on the logic “if…[ABC] – then…[XYZ]”. And we make these kind of arrangements very day both in business and our private lives.

  • If I’m working on the development of the Procurement department at a particular company from 8am to 5pm Monday to Friday – then I’m paid £5000 on the 25th day of every month and I earn the right to have 25 vacation days per year
  • If I pay £45 on the first day of the month – then I get an unlimited internet package for the entire month delivered to my IP address from this internet provider

This is the basic logic behind all kind of contracts.

What is the no.1 problem with contracts today?

Nobody can guarantee the implementation of a contract’s conditions on both sides.

The employee might come into the office every day, but half of their working time is spent watching YouTube in the coffee area.

Maybe you pay each month for your internet service, but the traffic is too slow and connection gets lost at the most important moments…

In business these potential problems are solved by official contracts where a breach of contract could result in legal action.

But why should I trust my lawyers, my banks and the courts more than I trust my own business partners? Ultimately we are mutually dependent on each other so my business partner should be interested in maintaining that mutual trust. Moreover, why should I pay all these middlemen to implement and monitor contracts, why should I spend my time and money on court cases if the contract conditions have clearly been violated by the other party?

Blockchain is already addressing these issues with some success. And these “if… – then…” algorithms created with Blockchain technology are called smart contracts.

Example of Smart contract logic: Purchase of manufacturing equipment

Imagine a manufacturing company, MANCOM, needs to double its packaging line capacity. They are planning to get the new packaging equipment according to their technical specification, with production output of 10,000 pieces per shift, up and running at full capacity until 1st of June 2019.

After running their request for quotation (RFQ) – they have selected a company, YOURPACK, and prepare their Smart contract.

These Smart contract can include the following conditions in the protocol:

In the best case YOURPACK delivers the equipment to MANCOM before the 1st of March 2019, and gets 50 per cent payment automatically. Then before the 1st of June equipment runs with the planned capacity, and gets another 50 per cent automatically from MANCOM’s account.

If there are delays with delivery or installation – payment is reduced accordingly. So YOURPACK’s interest is to do everything in their power to make things in time.

If MANCOM delays the payment – the equipment blocks itself and cannot be used. So it is in MANCOM’s interest is to pay in-time and in full.

Once again, the main principle of the Smart contract is to use “if…then…” logic. And to decide upon the precise triggers that will lead to specific consequences. An important aspect of Smart contracts is automation – that is avoiding the human factor after the agreement is validated from both sides.

Invest time and efforts in writing down the causes and effects, which should be clear and transparent and which cannot be misinterpreted.

After you have agreed on the principles and the “if… then…” algorithms – give the assignment to programmers who will create their codes and protocols based on Blockchain.

Blockchain: the enabler of Smart contracts

At the heart of Blockchain we need the following core ingredients:

  • asymmetric cryptography – which gives the ability to create the records and protect them
  • distributed systems – which gives the ability to transfer value by making updates to the records

And the beauty of blockchain is that is allows us to digitally sign transactions. And what is even more important – you can prove it. After the record is created and distributed to the network, no one can modify or change it without others being aware of it. The levels of security and traceability are incomparable to traditional contracts and transactions.

Today we create huge contracts with numerous clauses and appendices. We hire expensive lawyers to create these contracts and then we hire yet more expensive lawyers to protect our rights, and prove in court what we meant by all those numerous clauses when the contract was first written.

Comparison table: Smart and Traditional contracts

Smart contractsTraditional contracts
Program or protocol, which uses Blockchain technology Paper documents composed using corporate and legal standards
Based on code, written in computer language Based on legislation and written by lawyers
You need assistance with defining terms of contract and with coding You need legal assistance to compose and register contract
Contract conditions are unchangeable once approved by all parties. They are transparent and automatically checked. If contract terms are violated – certain penalty, punishment or sanction occurs automatically Can be amended or interpreted differently by different lawyers. Conditions may be partly fulfilled or poorly fulfilled. If contract terms are violated – you resolve conflicts by negotiations or in the courts
The security of the transaction is guaranteed No guarantee, most laws can be bypassed
All transactions carried out without third parties and intermediaries Transactions are made with a number of other involved parties: lawyers, banks, courts or public services…
Transactions may happen using Crypto-currencies Transactions are made using traditional currencies through banks
When the terms of the contract are fulfilled, the exchange of values takes place instantly Exchange of values occurs with delays
The contract can be concluded with a person from anywhere in the world without personal presence The contract is signed only with the personal meeting of the two parties
Protection from corruption or fraud High risk of fraud, corruption or bribery

The next big thing or just a temporary hype?

Smart contracts are facing many challenges on the way to mass application in Procurement.

I don’t know how fast it will become a common practice, or the full possibilities behind blockchain technology for Procurement and Supply Chain Management, because we are only at the beginning.

In today’s world new technology can challenge and change the status quo within a matter of years. And I advise you to be at the forefront of these changes.