Tag Archives: blockchain

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!

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.

Icertis is sponsoring Big Ideas Summit London on March 14th. Sign up now as a digital delegate to follow the day’s action wherever you are in the world.  

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.

Blockchain: Procurement’s Secret Weapon

Procurement will be the single largest instrument in the world to change the world…

“Frankly procurement is at the same level, in my eyes, as auditing, accountancy and that level of excitement. There’s more excitement in the hashtag #Birdsarentreal – because people believe in that more and with more emotion than this.”

Olinga Taeed became the world’s first Professor in Blockchain and Social Enterprise at Birmingham City University in 2018. His research explores how blockchain can be used for social good, focussing on studies into methods to alleviate problems and provide significant intervention into society.

And when it comes to procurement and the future of the profession, he doesn’t mince his words.

“No one grows up saying mummy I’d like to be a CPO,” he explains. “And that’s because we value non-financial value. We grow up wanting to do things that have value in society – things to do with life and sentiment, we want to change the world.”

The Power of Procurement

“Doctors save one life at a time. In procurement, we can save or kill thousands by one decision”

When you say I will knock 3 per cent off my supply chain budget, somewhere in that chain some people will enter into slavery conditions

We now know that 32 people commit suicide manufacturing iPhones in China every year.

800 people might die in a fire making clothes for a retailer.

“In procurement we have the power of life and death and that is a major responsibility.”

Changing the world

Blockchain could enable procurement to change the world by bringing our values back into the workplace.

“In institutional life we often succeed in stripping out any kind of intangible value. But this attitude doesn’t occur in real life, only within institutions.”

In our own lives we use our personal values to procure things “I’d like to have products that are aligned to my values, I’ll use this coffee shop not that one, I’ll eat this ice cream but not one from that place, price is this important to me but slavery is this important. We talk about our feelings”

Blockchain will allow procurement professionals to use our values as a mechanism for procurement, just as we all do in our own lives.

Blockchain can put into a ledger an entire supply chain, which means at the point of sale, just as you would see calories on a food product, you can decide whether to buy it or not to buy it based on the values of the supplier. You are given all of the information and can make a choice based on that.

Olinga explains that AI will help procurement in a similar way “these are my values go and find me products that are aligned to my values – don’t pick companies or suppliers where I know environmentally they aren’t good.”

Organisations used to readily give discounts to NRA (National Rifle Association) members but all of that changed because our values changed, companies stepped back and procurement changed. Using blockchain, procurement professionals can procure against a set of corporate values – “it’s for me to buy products from suppliers that are aligned to those values.”

Olinga Taeed speaking at Big Ideas Zurich

“My honest belief is that procurement will be the single largest instrument in the world to change the world – children will say they want to be a procurement officer because they will want to change the values of the world – what we buy, what we eat, what we sell, the values by which we transact. Blockchain and AI will change our processes dramatically.”

Olinga Taeed speaking at Big Ideas Zurich

Procure with Purpose

Procurious have partnered with SAP Ariba to create a global online group – Procure with Purpose.

Through Procure with Purpose, we’re shining a light on the biggest issues – from Modern Slavery; to Minority Owned Business; and from Social Enterprises; to Environmental Sustainability.

Click here to enroll and gain access to  all future Procure with Purpose events including exclusive content, online events and regular webinars.  

Could Blockchain And AI Help Procurement Change The World?

At last month’s London CPO Roundtable we explored how to enable smarter procurement, using blockchain for social good and anticipating disruptive forces…

What are the obstacles to more informed, strategic decision-making in procurement?

How can procurement pros use blockchain for social good to change the world?

What disruptive forces are heading your way in 2019 that could impact your supply chain?

These are just some of the questions we discussed when we gathered a dozen procurement leaders in London last month for a CPO roundtable sponsored by Ivalua.

Enabling smarter procurement

A new study by Forrester, commissioned by Ivalua, surveyed 433 procurement, supply chain and finance leaders across Europe and North America. The results, which Alex Saric, CMO Ivalua took us through at the roundtable, provide a practical look at how to enable smarter procurement.

The obstacles to more informed, strategic decision-making are quite consistent. The study, entitled “Enabling Smarter Procurement” found three common issues

  1. Firstly, despite efforts at automating processes, too much capacity is still consumed by operational or manual activities. Teams must free capacity to work on new projects, conduct analysis and plan, but are struggling to do so.
  2.  Secondly, leaders struggle to access relevant insights when and where they are needed. The volume of information now available is of little help if not digestible, simply leading to information overload.
  3. Compounding this, respondents also cited poor data quality as a key challenge. Duplicate supplier records, inaccurate data and poor integration between systems all were cited as sources of data quality issues.

A common viewpoint today is that Artificial Intelligence (AI) is the answer, the magical light at the end of a dark tunnel that will improve automation and give us the magical answers we need, when we need them. But what isn’t discussed is ensuring you have a solid data layer that feeds the intelligence layer, where the algorithms lie and all the talk lies.

Organisations must implement AI in conjunction with cleaning up their data, rather than using poor data quality as an excuse for inaction.

Empowering procurement to make more informed, strategic decisions is no longer an option. There is simply no other way to effectively meet the broad set of objectives now expected.

Using blockchain for social good

Olinga Ta’eed, Director, Centre for Citizenship, Enterprise and Governance became the world’s first Professor in Blockchain and Social Enterprise at Birmingham University in 2018. He led a discussion surrounding his research into using blockchain for social good, which focuses on studies into methods to alleviate problems and provide significant intervention into society.

“No one grows up saying mummy I’d like to be a CPO,” he begins. “And that’s because we value non-financial value. We grow up wanting to do things that have value in society – things to do with life and sentiment, we want to change the world.”

“In institutional life we often succeed in stripping that out – any kind of intangible value. But this attitude doesn’t occur in real life, only within institutions.”

In our own lives we use our personal values to procure things “I’d like to have products that are aligned to my values, I’ll use this coffee shop not that one, I’ll eat this ice cream not one from that place, price is this important to me but slavery is this important. We talk about our feelings”

Blockchain could enable procurement to change the world by bringing our values back into the workplace.

“My honest belief is that procurement will be the single largest instrument in the world to change the world – children will say they want to be a procurement officer because they will want to change the values of the world – what we buy, what we eat, what we sell, the values by which we transact. Blockchain and AI will change our processes dramatically.”

Preparing for the disruptive forces heading your way

Given the rate at which technology is evolving and how global events are impacting the world, it is increasingly difficult for companies to keep up without considering risk in real-time.

Intelligence about the world we live in drives business operations and the better informed we are the easier it is to drive progress. Mark Joyce, Head of Analysis, Sibylline revealed the most disruptive forces headed our way in 2019.

The four baseline trends include:

  1. Geopolitical reconfiguration – Chinese growth and assertiveness and a US retreat from global leadership
  2. Deadly conflict on the rise – Total conflict deaths fell enormously from mid-nineties up until the last decade. Since 2012 they’ve sparked to the highest since 1990s. Conflict deaths are concentrated in North Africa, Middle East, Syria Libya and Yemen. Middle Eastern countries have accounted for 70 per cent of battle deaths over the last five years.
  3. Disruptive populism
  4. Weakening of frameworks – including nuclear weapon control

These trends impact procurement in four ways:

  1. Strategic uncertainty – Impacting high-level decision making; blurred lines between politics and business -and criminality
  2. Tactical challenges – Geographical, technological, legal and reputational
  3. Cross-functional working – Procurement, legal, communications, HR and IT are increasingly stakeholders in political and security risk information
  4. Decision advantage – The importance of precise, actionable information and analysis to avoid paralysis and enable business in an uncertain external environment

Adventuring against adversity 

Kris King, Ultra-runner and adventurer extraordinaire specialises in the safe delivery of life-changing challenges and expeditions in the world’s most remote and demanding areas.

He inspired our roundtable attendees with his personal story describing how his best friend’s dad was diagnosed with Huntington’s disease and his commitment to raising as much money as he could for medical research.

Kris become the youngest gym owner in the country, started running marathons, which turned into running ultra-marathons, which turned into extreme adventuring across the world, and started to see what a difference he could make.

In his own words “adventuring doesn’t pay well” so he found a way to monetise it – designing extreme adventures for clients, as well as for himself. Whether it’s expeditions in the Arctic Circle and Namibia, driving over a frozen lake with Daniel Craig, catapulting David Hasselhoff or bungee jumping a car of a cliff – nothing seems to be out of reach.

As Kris pointed out “it’s not about skill it’s about how stubborn you are.”

The London CPO roundtable was sponsored by Ivalua. If you’re a CPO and would like to attend one of our roundtables in person please contact Olga Luscombe via [email protected] to request an invitation. 

Procurement Isn’t Lighting Up The World…Yet

“Procurement itself – let’s face it – isn’t going to light the world currently, but I believe it will be the new instrument in 2030 to change the world.” – Olinga Taeed, Visiting Professor in Blockchain at Birmingham City University

As we hurtle towards the new year, you might be starting to look ahead and reflect on your personal and professional development goals.

But why wait until January 1st to put your plans into action?

Next week, we’ll be addressing a huge range of critical areas for procurement and supply chain professionals at Big Ideas Zurich.

And, for the first time ever, we’ll be filming and streaming the entire day’s event via the Digital Delegates group on Procurious.

If there was ever a time to register for one of our summits, it’s now. Featuring presentations and interviews from some of Europe’s top procurement leaders, we’ll be discussing procurement and supply management towards 2030, the future of talent, automation, blockchain, diversity and so much more.

Check out our teaser trailers below for a little sneak peak of what’s to come.

Procurement isn’t lighting up the world

“Procurement itself – let’s face it – isn’t going to light the world currently, but I believe it will be the new instrument in 2030 to change the world.”

Olinga Taeed, the world’s first Professor in Blockchain and Social Enterprise, reveals how blockchain can be used for social good, why procurement isn’t currently lighting up the world and when that’s set to change. 

On December 10th discover…

  • What skills you need to perfect to drive peak performance in your career
  • The latest intel on blockchain 
  • How procurement can close the gender pay gap 
  • The latest updates on game-changing technology 
  • How to develop strategic partnerships 
  • Why supplier diversity is best for business
  • What procurement and supply chain will look like in 2030
  • How to stand on your supplier’s shoulders 
  • How to make your key business stakeholders love you
  • The ways to shift your procurement mindset 
  • The importance of having a digital endgame

Win a Parrot Bebop drone worth £450

We know that everyone loves a prize. And believe us when we say we’ve got prizes falling from the tops of the Swiss Alps.

As a registered digital delegate you’re in with a chance of winning one of eight amazing giveaways including the big-ticket item – a Parrot Bebop drone worth £450.

Plus, we’ve got Patagonia t-shirts, a Fjallraven backpack, stashes of Swiss chocolate and Herschel beanies up for grabs.

We’ll be doing eight prize giveaways throughout today with winners selected every half an hour. To put yourself in the running you simply need to get involved on the digital delegates group – posting your comments, insights and questions.

Sign up as  a digital delegate for Big Ideas Zurich (it’s free) 

Food Allergy Deaths Avoidable With Blockchain

The recent cases of tragic deaths caused by food allergies has opened afresh the debate on fully transparent supply chains.

Many of you will have seen or read news reports in the past couple of weeks regarding the tragic deaths of two women due to severe allergic reactions to eating pre-prepared food. In both cases, the food in question was purchased from the same retailer, though the resulting actions from the cases have been markedly different.

The cases have highlighted industry-wide issues regarding food packaging and labelling relating to allergens, as well as reigniting the debate on where the responsibility lies for food content and allergen checks within the supply chain.

Inadequate Labelling and Mis-sold Products

The first incident occurred after a woman ate a pre-prepared baguette that had sesame baked into the product, but had not been listed on the product’s ingredient list on its packaging.

A recent inquest found that the retailer had “inadequately labelled” its products, failing to highlight the presence of sesame in the food. While the organisation agreed with the coroner’s verdict, it has thrown a spotlight on industry packaging requirements, particularly when it comes to listing potential allergens.

The second death was as a result of a severe allergic reaction to the presence of dairy protein in a pre-packaged sandwich. However, unlike in the first case, the retailer has pointed the finger of blame squarely at one of its second-tier suppliers, claiming it was mis-sold a guaranteed dairy-free yoghurt.

The supplier in question, with whom the retailer has since ended its relationship, has rejected the claim that its product was to blame. They had their own supply chain issue in February 2018 when they were forced to recall some of its products due to undeclared milk, resulting in it ending a relationship with a third-party supplier. The supplier has denied that the recalled product is the same product as caused the allergic reaction, though the retailer and two independent authorities have conducted tests showing that the yoghurt in question had levels of contamination.

Where the fault lies for the contamination will be established in due course. And though this ultimately pales in comparison to the tragic loss of life, it does raise a couple of serious questions: Where does responsibility lie for ensuring product quality in the supply chain? And what can organisations AND suppliers do to ensure full supply chain transparency?

Introducing Blockchain to the Food Industry

The debate on the first question will continue to rumble on. In reality, the responsibility lies with every party, irrespective of which tier they are in the supply chain. That said, the buck ultimately stops with the end user, retailer or seller to ensure products are fully labelled and they are satisfied they are selling a quality (and safe) product.

The answer to the second question may be closer than you think, however. Blockchain has been discussed at length on Procurious and its applications in the supply chain are well documented.

Plus it helps that the world’s largest retailer, Walmart, has just unveiled its new food industry blockchain ambitions in China. The retailer plans to use the existing, proven, technology to ‘overlay’ the supply chains in the notoriously complex industry.

And with major producers such as Dole, Nestle and Unilever on board, as well as IBM as a technology development partner, this does have the signs of being the first step on a (long) road to success.

Success that could usher in new processes for how food information is obtained, stored and shared, allowing all parties to track the provenance of food from farm to table. This will give all levels of the supply chain the transparency required to know products are both safe and of the highest quality.

With what has been in the new recently, with impacts that none of us can predict and that potentially extend further than any of us know, this may also represent the first step to ensuring the similar tragedies don’t happen again.

Read more on Walmart’s food industry blockchain ambitions here.

The Key Procurement And Technology Trends for 2019

The times, they are a-changing, and so are the markets and environments that procurement operates in. What then are the key trends in procurement and technology you need to watch for in 2019?

View Apart/ Shutterstock

As I am reliably informed by my Christmas-mad colleague, there are only 125 sleeps (as I write) left until Christmas. That means there’s a little over 18 weeks until the year ends, so it’s time to start looking forward to what’s coming in the next 12 months.

2019 is set to be a seismic year around the world. Major changes, such as further geo-political upheaval, the looming spectre of global trade wars and tariffs aplenty, have the potential to disrupt supply chains and set metaphorical trip wires for procurement professionals everywhere. And, as we’ve already heard, it’s rarely been more important to get a solid grips on the key factors in the market and external environment.

So gather round as we gaze into the opaque mists of the future and make some educated insights into the key procurement and technology trends waiting around the corner.

  1. Supplier Management

Let’s start with an oldie, but a goodie. Wait, I hear you cry, supplier management isn’t a new trend! We’ve been talking about this for years. Well, if we’ve talking about it for years, why aren’t we any better at it? And why is it that it’s one of the key areas a large number of procurement teams fall down on?

Like it or not, your suppliers hold the key to all your wildest procurement dreams. Innovation, top and bottom line cost reduction, avoidance and savings, stress-free supply of services and goods and free cake for all! (Ok, maybe not that last one!)

In their Vision 2020 publications, pwc state that the top 25 per cent of procurement functions will have gone beyond incremental improvements and be implementing fundamental change to process and policy alike. This includes how they interact with suppliers and shifting focus from cost and value to Return on Investment (ROI).

These outcomes all hang on better supplier relationship management in order to tease out further innovation from suppliers (who are seen as partners, rather than sponges to wring cash out of) and closer collaboration to source solutions to problems we don’t even know we have yet.

At the heart of this is great communication. Select the right suppliers and talk to them more. You never know, you might just learn something!

  1. Blockchain and Digital Adoption

Unless you’ve been living in a cave on a remote hillside (or perhaps a Faraday cage in your basement), you should have heard by now about blockchain.

From blog articles to webinars, it’s one of the hottest topics in procurement right now, and is likely to still be throughout 2019. Blockchain is and will continue to be a key tool in shaping the transparency of a supply chain. Information is shared and transmitted easily and safely, while the technology allows an “immutable signed and time stamped record of identity, ownership of assets, transactions or contractual commitments”.

This transparency will have the added benefits, and some drawbacks, of making procurement and CPOs more visible in the public environment, say EY. Procurement will wield greater power and have greater opportunity to interact with external stakeholders. But, at the same time, organisational processes and procurement will play out in a public setting like never before.

In line with blockchain’s increasing influence, there is a predicted rise in digital adoption and use of the Cloud. An estimated $1 trillion of IT spend will be moved to the Cloud by 2020, according to Gartner, as organisations look to make their IT services more agile.

  1. Social Value

There is a prevailing opinion amongst the procurement professionals I speak to that 2019 will be the year for social value and sustainability to really take hold. Organisations have begun to realise that cost and quality are only a part of the overall package and not only do they need to be seen to be doing more in the community, but they need to follow through on it.

That goes for the wider supply chain too. Using work practices and value-adding benefits for communities into tenders will become the norm and procurement will no longer be able to award contracts on cost without taking the wider impact into consideration.

  1. Next-Gen Workforce and Automation

Disregard what you’ve heard very recently regarding automation, machine learning and AI as scaremongering. Yes AI will take on tasks and people may have to move to new roles, but it’s not a future that we should be burying our head in the sand about. It’s a natural human reaction to fear change, but procurement needs to muscle up and be brave in order to evolve and survive.

Infosys estimates that AI and procurement automation will eliminate human intervention in 15 per cent of digital spending by 2019. If that’s the case, then procurement needs to embrace the change and develop, train and retain its Next-Generation workforce to meet the demands of new roles where human interaction and input is still key.

  1. Risk

From Brexit to trade wars, risk is going to be possibly the biggest trends for businesses as a whole in 2019. The organisations who will thrive in this unstable environment will be the ones who are best prepared to deal with the unexpected.

Deloitte believe that procurement will become the forecasters of risk in an organisation, raising the profile of the function as it factors total cost of risk and risk mitigation in supply chains into contracts and tenders.

Risk runs throughout the other trends that have been suggested above. Brexit, protectionism and trade wars make supplier and supply chain management all the more important. The increasing need for cyber security as technology advances is something that cannot be ignored.

Procurement is ideally placed to deal with all of these risks, but it needs to put its hand up and be at the front of the queue, or face being left behind and marginalised at a time when the function has a crucial role to play.

Blockchain Will Not Save The World (At Least Not This Year…)

Blockchain hype has spread like wildfire… But it’s time for a reality check…

Don’t—

Don’t—

Don’t—

Don’t—

Don’t believe the hype

Don’t Believe the Hype” is a song by Public Enemy that dates back to 1988 and (if loosely interpreted) carries an important message that can be applied to blockchain technology. Blockchain is almost everywhere, and—let’s face it—it’s getting a lot of hype.

It is very surprising that  such a new and relatively obscure technology like blockchain has received so much  exposure so fast, even in mainstream media. Blockchain hype has spread like wildfire, and this is largely because blockchain is the underlying technology behind Bitcoin, a digital currency (a.k.a. as cryptocurrency) that received a lot of coverage in the media.  In the wake of the cryptocurrency craze, blockchain has continued to attract more and more attention.

Time for a reality check

The response to blockchain exemplifies many of the issues that are commonly  associated with introducing new technologies. Firstly, the market’s inflated expectations do not match the reality of blockchain’s current applications and actual capabilities (see for example: “187 Things the Blockchain Is Supposed to Fix”). Secondly, many consider blockchain as an end in itself when it is actually just a tool that serves an objective or purpose. These are probably the two factors that are doing the most damage to the credibility and future of this technology, despite the very promising applications of blockchain.

At its core, blockchain is a form of digital trust, which has a number of potential uses and applications in business because trust is one key component in such a context. However, some of the characteristics of this technology that make it so valuable are also limiting the scope and possibilities of blockchain’s real-world applications beyond trials and prototypes. As with many other things, it is a matter of trade-offs. There is not a single, universal, and magical solution to every problem. So, before blindly jumping on the blockchain bandwagon, it is crucial for Procurement and Supply Chain professionals to know what blockchain is, understand its value proposition, and to be aware of what challenges and issues may be associated with using it.

Limitations and challenges of first-generation blockchains

You can trust data contained in a blockchain because of the way records (blocks) are added and managed. Unlike other methods of data management, blockchain is a decentralized (peer-to-peer) network composed of nodes. There isn’t a single “party” managing and owning the data, but rather a network of independent nodes that operate the network. This removes the risk and temptation of manipulating data. Even if someone was tempted to tamper with the data ,  they would need to find a way to  change it at all “n” nodes of the network simultaneously, which is more or less impossible, or, at the very least, extremely difficult.

A second aspect of blockchain that makes it such a secure data management option is its unique form of record keeping. “Miners” verify every new record and they must reach a consensus to allow a new record to be added to the chain. On top of this, each new record (“block”) contains a link to the previous block, meaning that it is impossible to change or remove a record without editing the entire chain. This is why data in the blockchain is immutable, which is one of the key value proposition of blockchain (although immutability and the new GDPR do not really work well together…).

Looking at the process above, it is easy to imagine that adding a new record in a system like blockchain takes more time than it would in centralized databases. This is because many actors (nodes) are involved and they have to perform tasks (mining) to verify the transactions (and that also serve as prevention against hacking and attacks). So, in its current form, blockchain is a somewhat slow technology when compared to what already exists. For example, Visa processes and verifies transactions more than 7,000 times faster than what happens on the bitcoin network.

Another issue is that, all the nodes of the network store all the data contained in the blockchain. This drastically increases the size of the blockchain, making it slower as it grows and more and more difficult to manage. In short, a blockchain network would explode and become  unmanageable very quickly in a number of real-life scenarios, such as, for example, if blockchain was used to track the origin of materials and parts across all tiers in a company’s supply chain.

There are also other potential threats related to security. Blockchain technology  relies heavily on cryptography and peer-to-peer networks that make it very robust and resilient. However, history has shown that almost nothing is unhackable. The blockchain may be incredibly difficult to hack but someone with the right motivation, tools, and probably a lot of time could, one day, hack it. And, as the blockchain’s popularity grows, so does the potential pay-off for successful hackers! Also, even if we were to assume that the blockchain is  totally unhackable, the systems around it are not. Systems and programs connected to the blockchain may be vulnerable to attacks and/or to bugs.

All in all, the blockchain technology is not a magic solution for every problem. Like any other technology, some trade-offs make it a more or less viable solution. For the blockchain, the trade-off is between three properties: scalability, decentralisation, and security. Today, you cannot get all three!

New and future  generations of blockchain could make it a viable option

A lack of scalability is probably the most serious limitation of blockchain, and it will probably determine the life or death of the technology. The first generations of the blockchain network, like Bitcoin, do not scale at all and are even incredibly dangerous if you look at sustainability issues and energy consumption. Newer generations are addressing this issue by introducing new designs and concepts.

For example, they are moving away from the consensus/mining mechanism that older generations use, which is based on the “Proof of work” concept (miners must perform more and more complex calculations and need more and more computing power and energy to complete them). “Proof of Stake” (PoS) is a newer and much more energy conscious algorithm that will address the “cost” of blockchain and make it a viable option.

Another example of how blockchain technology is being updated can be seen in the radical changes being made to the blockchain’s design. In new conceptualizations of blockchain, the design is moving away from linear models, where one block is only linked to the block before and after it (like links in a chain), and are instead moving towards networks of blocks, where one  block is connected to n other blocks. The benefit of this model is that operations on records can occur simultaneously on several branches of the network.

Too bad to be true?

It is true that there are essential trade-offs (scalability, decentralization, and security) to be aware of and to consider before adopting blockchain technology and moving towards a form of digital trust (which means trusting the software more than other parties). However, in many situations, the benefits offset the challenges and make blockchain the best alternative. A recent real-world example of this is the use of blockchain in a refugee camp as a means to address identity challenges and issues. As Houman Haddad, the UN executive behind the introduction of blockchain technology in a refugee camp in Jordan explains:

“Of course we could do all of what we’re doing today without using blockchain,” he says. But, he adds, “my personal view is that the eventual end goal is digital ID, and beneficiaries must own and control their data.” From “Inside the Jordan refugee camp that runs on blockchain” published in the MIT technology Review in April 2018

Another way to look at the trade-offs/dilemma is to consider what can be achieved with blockchain that was previously impossible. An interesting example in the Procurement / Supply Chain sphere is Productivist a service provider that wants to address the “manufacturing surplus” by connecting, , manufacturing companies and their customers via the blockchain.

Some say I’m negative,

but they’re not positive

But what I got to give,

(The media says this?)

So,  don’t believe the hype…

Instead, proceed cautiously and be aware of what blockchain can and can’t do. Blockchain is undoubtedly a powerful and exciting technology, but it is not yet fully mature and has several limitations, which explains why it still is far from being widely adopted, despite all the hype surrounding it. However, the newest (and future) generations of blockchain (that will probably part ways with “blocks” and “chains”) will make blockchain a more viable application than what is readily available now. These new generations, just like the older ones, will not save the world, but they represent a real and unique opportunity to create a platform/protocol which (new) businesses can build on, and which can help them grow.

Blockchain: The Technology, the Myth, the… Legend?

We’re told Blockchain is a huge game changer, that it’s the biggest innovation since the internet. But we’re also told it’s overhyped, it’s no big deal and that it has some serious limitations. So…what’s the truth? “Depending on who you ask, blockchains are either the most important technological innovation since the internet or a solution looking for a problem.” These are the opening words to a recent Wired article, entitled: The Guide to Blockchain.

And they certainly resonate with procurement professionals across the globe.

We’re told Blockchain is a huge game changer, that it’s the biggest innovation since the internet; it’s unhackable, it’s pervasive, it’s unparalleled and ultimately…it’s coming to the mainstream imminently.

But on the other hand, we’re told that Blockchain is overhyped, it’s no big deal, it has some serious limitations and, whilst it might be a pretty cool piece of technology, it’s certainly not the procurement disruptor that it’s hailed to be…

It’s no surprise that when it comes to Blockchain procurement pros don’t know who to believe when to expect its takeover or how to prepare.

So we’ve enlisted the help of some blockchain experts to give you the truth, the whole truth and nothing but the truth.

On 7th August,  Procurious presents: Blockchain: The Technology, the Myth, the… Legend?

Blockchain: The Technology, the Myth, the… Legend?

We’ll be discussing: 

  • How will Blockchain impact procurement?
  • What are some of the most common misconceptions about Blockchain?
  • How is Blockchain commonly being used in businesses today?
  • How can blockchain help procurement pros to manage their organisation’s contingent labour force?
  • What are the flaws at the heart of blockchain? Is it over-hyped?

Webinar Speakers

Vishnu P Tadepalli, Global Program Manager – Procurement Blockchain Lead – IBM Procurement Services
Vishnu is a highly motivated design thinker and is a digital procurement / supply chain enthusiast. In his current role Vishnu Tadepalli is the Global Program Manager / Lead for procurement blockchain solutions at IBM Procurement Services (IPS) , program managing the blockchain procurement transformation for both IBM global procurement and its procurement services clients. In his earlier role at IBM , Vishnu product managed Procurement Cognitive solutions and earlier worked as a sourcing consultant for multiple Fortune 200 companies. In addition to IBM, Vishnu worked with Unilever , AGCO and Suzuki Motor corporation in supply chain transformation and category manager roles.  His experience spans end to end global supply chain, including both direct and indirect procurement.
Vishnu has an MBA in Strategy & Supply chain from Uni of Wisconsin, Madison and is currently pursuing second Master’s in  Artificial Intelligence. He is a member of Government Blockchain Association(GBA) and Council of Supply Chain Management Professionals (CSCMP).  An active Linkedlner, Vishnu likes to spend his free time social volunteering and mentoring.
Linkedln : linkedin.com/in/vishnutadepalli
Twitter Handle : @vishnu65886588 

Paul Sidhu, Blockchain Practice Lead – IBM

Paul is a senior leader with over 25 years experience delivering business transformation in large and complex business environments. A natural strategy and innovation practitioner, Paul works with business leaders to articulate the benefits of process optimisation, digital transformation and new operating models that impact upon their business and to present them with options and strategic recommendations in a way they both understand and feel passionately about.

Paul leads the IBM Global Business Services Blockchain Practice in Australia. His cross-industry background and working with clients in multi-discipline business functions enables a deep understanding for the needs of diverse stakeholders and the ability to solve business challenges by incorporating new solution offerings built with Blockchain.

Jack Shaw,  Co-Founder and Executive Director of the American Blockchain Council

Jack  is a leading expert on the strategic business implications of Blockchain technology who has spoken and consulted on Blockchain around the world.

He is a world renowned Keynote Speaker. He was recently voted one of the World’s Top 25 Professional Speakers by over 27,000 meetings planners, executives and conference attendees – the only Technology speaker to be accorded this recognition.

Jack has been a Technology Futurist for over 30 years – helping others to understand the impact of emerging technologies. In addition to Blockchain, he is widely recognised for his expertise in such breakthrough business technologies as:

  •   Artificial Intelligence,
  •   Internet of Things, and
  •   3D PrintingHe has advised such Fortune 500 Companies GE, Coca Cola, Johnson & Johnson, IBM, Oracle, and SAP as well as hundreds of small to mid-sized businesses.A charismatic speaker, he’s delivered more than 1000 keynote speeches and executive presentations in 23 countries and every U.S. state. Jack graduated from Yale with a degree in Business Administration and has an MBA from Kellogg in Finance and Marketing.

AmericanBlockchainCouncil.org 

How do I register for the webinar?

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Click here to enter your details and confirm your attendance. We’ll send you a confirmation email with a link to the webinar platform and a handy reminder one hour before we go live!

I’m already a member of Procurious, do I still need to register?

Yes! If you are already a member of Procurious you must still register to access the webinar via this platform. We’ll send you a confirmation email with a link to the webinar platform and a handy reminder one hour before we go live!

When is it taking place?

The webinar will take place at 9am EDT/ 2PM BST on 7th August 2018

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

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 a question?

If you’re listening live, our speakers would love to hear your questions and we’d love for you to pick their brains . Questions can be submitted throughout the live stream via the webinar platform.

If you think of a brilliant question after the event, feel free to submit your question via the Discussion Board on Procurious and we’ll do our very best to ensure it gets answered for you.

Blockchain: The Technology, the Myth, the… Legend? goes live on 7th August at 9am EDT/ 2pm BST. Sign up here.