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The Benefits of Blockchain to
Supply Chain Networks
THE BENEFITS OF BLOCKCHAIN TO
SUPPLY CHAIN NETWORKS
Blockchain technologies are rapidly being adopted in the
financial services industries, and analysts project supply chain
operations to be the next fertile ground for this fast-evolving
technology.
Blockchain is a distributed, or shared, ledger that holds
records of digital transactions in such a way that makes them
accessible and visible to multiple participants in a network,
while keeping them secure.
The digital shared ledger is updated and validated with each
transaction, resulting in a secure, permanently recorded
exchange. The result is faster, permissioned and auditable
B2B interactions between parties such as buyers, sellers and
logistics providers.
As shown below, blockchain can augment established B2B
integration technologies such as EDI, XML and API-based
B2B with a new shared visibility overlay for transaction and
information flows.
Analysts and tech leaders believe blockchain will do for
transactions what the Internet did for information.
Buyer
A key benefit of blockchain for supply chain networks is that
it establishes a shared, secure record of information flows; a
‘shared version of events’ across networks for supply chain
transactions, processes and partners.
“One of the key benefits of blockchain
technologies is in the immutability of the
data in the chain. If the genesis block
was created with trustworthy data, and
each additional transaction is validated
by network consensus, then in theory the
current state of the chain can be trusted….
establishing a high level of data integrity,
thereby making data trusted, available,
secure, and compliant for everyone
connected to the blockchain network.”
– “Blockchain -- A Data Management,
Integration, and Integrity Disrupter,”
Stewart Bond, IDC, March 2017
Supplier
Carrier
Business network information flows are typically one-way
point-to-point communications
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Shared Visibility Ledger
Watson Customer Engagement
The Benefits of Blockchain to Supply Chain Networks
Shared Visibility Ledger
Buyer
Supplier
Carrier
Shared digital ledgers augment point-to-point communications with a
new multi-party visibility overlay for information and event flows
This ‘shared version of events’ enables improved supply chain
efficiencies, better multi-party collaboration, and streamlined
resolution processes when exceptions or disputes occur.
Although shared visibility solutions exist, they are generally
proprietary and therefore not interoperable. By contrast,
blockchain is evolving through open standards initiatives,
such as the Hyperledger project run by the Linux Foundation.
As such, it portends to be the linchpin for delivering a true
‘network of networks’ for supply chains, enabling organizations
to establish and seamlessly integrate information flows across
the entire set of supply chain disciplines and processes.
Leveraging blockchain is not about replacing well-established
forms of supply chain interactions, such as EDI, which today
deliver proven business value and are integrated into enterprise
applications systems such as ERP. Rather, as organizations
implement new supply chain technologies, for example Internet
of Things (IoT) technologies for improved logistics processes
monitoring, blockchain will be used provide a synthesized
record of information flows. This level of shared visibility will
offer organizations an opportunity to optimize multi-party
supply chain processes.
Finally, as blockchain evolves and organizations increasingly
adopt the technology, blockchain-based smart contract
technology will be deployed to further streamline exception
handling and introduce new forms of supply chain
process automation.
Page 3
Watson Customer Engagement
The Benefits of Blockchain to Supply Chain Networks
Take Action with IBM Blockchain and
IBM Watson Supply Chain
To help IBM customers jumpstart their blockchain initiatives,
IBM intends to add support for IBM Blockchain to the marketleading IBM Supply Chain Business Network as well as IBM B2B
Integrator gateway software.
IBM Watson Supply Chain customers will have one seamless
environment for well-established forms of B2B integration
combined with newer blockchain engagement models. Having
a coalesced view of supply chain processes will allow Watson
Supply Chain the ability to offer solutions that give advance
warning of potential supply chain execution issues, identify
supplier trends requiring improvement and more. Further, it
will provide interoperability with other Blockchain applications,
allowing customers to participate and leverage a variety of
Blockchain solutions.
Learn more
For further information, visit the IBM Watson Supply Chain
and IBM Blockchain web pages.
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March 2017
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