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Blockchain will Eventually Take Off in Supply Chain, MIT Academic Says

Questions to Ask before Launching a Blockchain Initiative

Oct. 23, 2019
SCDigest Editorial Staff

Blockchain, its' fair to say, has been slow to live up to overhyped expectations.

In its supply chain predictions for 2019, the analysts at Gartner, for example, had many cautions relative to Blockchain adoptions.

Supply Chain Digest Says...

In the end, the end, the key questions will be the extent to which companies will truly collaborate – a great unknown right now.

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"Success in the early years of supply chain Blockchain projects is very limited, with initiatives failing to match the initial market exuberance that will lead to disillusionment and buyer fatigue,” Gartner wrote.

There is interest in Blockchain for sure. For example, over the last two years, Blockchain has been the No. 1 trending topic on

However, Gartner said, "Supply chain leaders across all industries are struggling to find suitable use cases for Blockchain." In fact, The Gartner Supply Chain Technology User Wants and Needs Survey found that only about 19% of respondents saw Blockchain as a very important technology and only about 9% have already invested in Blockchain or have budgeted to do so in 2018.

This is largely because companies struggle to identify how Blockchain will be a better offering and provide higher value over conventional technology.

Gartner added that "Many companies at this point in time are pursuing blockchain projects due to intense pressure to be seen as having Blockchain competency or due to pressure from the C-suite, rather than investing for specific purposes where Blockchain is proven the best technology. This deepens the misalignment between need versus desire for a technology for the sake of a technology."

However, Irving Wladawsky-Berger, a visiting lecturer at the MIT Sloan School of Management, is more bullish.

At MIT's recent 2019 Business of Blockchain conference.Wladawsky-Berger commented that while some applications of the technology are complex, he can explain a supply chain application in the time it takes to deliver an elevator pitch.

"If you are going to develop something complicated, being able to describe it simply is very important," he said, as reported on MIT's Sloan School web site, adding that "I think that's a major part of why supply chain is the killer app of Blockchain."

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As a shared digital ledger that creates an immutable record of transactions, Blockchain is ideal for tracking the movement and transfer of goods. It enables trustworthy shared information among suppliers that may not trust each other, Wladawsky-Berger said.

Blockchain, he added, enables a group of independent entities, with their own interests and data to protect, to share a common platform that holds information of common interest.

There are some emerging proof points. For example, as we've reported several times, Walmart has been running a pilot project with IBM's Food Trust Solution, a Blockchain-enabled repository of food system data that tracks lettuce from its suppliers to Walmart shelves.

The takeway: Blockchain may someday add a lot of value, but the progress for now is slow.

Strategic and Tactical Questions to Ask

MIT Sloan professor Blockchain expert Gary Gensler says that regardless of application, start with two key strategic questions for evaluating Blockchain potential:

• What's the value proposition? What problem will this solve, and how will Blockchain be better than other solutions?

• More specifically, Blockchain is by design immutable - meaning once it's been added, data in the Blockchain cannot be altered. Does your application need that?

After addressing those questions come a series of more tactical issues:

• What data will be written to the ledger?

• Who (within a company) will be allowed to write to the ledger?

• Who (within a company) will be allowed to see the ledger?

• How will the parties preserve confidentiality of data and comply with privacy laws?

But in the end, the end, the key questions will be the extent to which companies will truly collaborate – a great unknown right now.

Will Blockchain finally takeoff in supply chain soon? Let us know your thoughts at the Feedback section (email) or button below.




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