Deloitte: Blockchain adoption growing fast in the supply chain industry

While blockchain technology has only just begun to gain a foothold in the supply chain management industry it will surge dramatically over the next decade, according to a new survey by logistics and supply chain association MHI and consulting firm Deloitte.

While only 10% of the 1,000 respondents the 2019 MHI Annual Industry Report, “Elevating Supply Chain Digital Consciousness,” say they are using blockchain technology today, 62% expect to do so over the next five years. More than three quarters (77%) expect it to “have a substantial impact on their supply chains over the next 10 years,” the report said, while 41% expect it to either create a competitive advantage or disrupt the supply chain industry.

Released on April 10, the survey showed that supply chain innovation is something companies in the supply chain management industry cannot afford to ignore, said George Prest, CEO of MHI, in the report. The report is available free from MHI.

“As the pace of supply chain innovation escalates, so does the price of inaction,” said Prest. “Leading manufacturing and supply chain executives agree that technology is the key to future success. With supply chain complexity showing no signs of slowing, the risk of inaction is only growing. Leaders will outpace their competitors faster than ever.”

The report calls blockchain one of the four core technologies needed for the implementation of digital technologies in the supply chain industry, along with the Internet of things (IoT) cloud computing and storage, and sensors and automatic identification technologies.

This puts blockchain at the base of a four-layer pyramid of the Stages of Digital Adoption outlined in the report, with digital connectivity at the base, followed in ascending order by automation, advanced analytics, and the final goal, artificial intelligence (AI).

“Before implementing AI, firms need to get their data house in order,” said Prest. “Without this foundation, AI will not be successful.

Calling digital adoption “an evolutionary process,” the report said that by implementing digital technologies and capabilities from the ground up, companies can build a “foundation of data that can be analyzed and leveraged to drive business decisions.”

The second level on the pyramid, automation, includes robotics and automation, wearable and mobile technology, autonomous vehicles and drones, and 3d printing. Above that in the advanced analytics layer are inventory and network optimization, and predictive analytics, followed at the top of the pyramid by AI.

Across this spectrum, the report says, supply chain executives see hiring qualified technology workers as the top challenge to implementing digital adoption, with two thirds (67%) calling it very or extremely challenging and fully 91% saying it is at least somewhat challenging.

Fifty seven percent of manufacturing and supply chain companies expect to invest at least $1 million on these technologies over the next two years, with 22% planning to invest more than $10 million, the report said.

Looking at the top five supply chain industry challenges based on customer demand, it found that about 35% of the respondents say customer demand for more supply chain transparency is either very or extremely challenging.

Transparency is something blockchain technology is very adept at providing. The French supermarket chain Carrefour recently adopted blockchain technology to allow customers to verify the provenance of its Carrefour Quality Line Auvergne free-range chickens by letting them trace each package back along the supply chain to the farm that chicken was raised on by simply scanning a QR code with their mobile phone.

As Modern Consensus reported in December, Carrefour customers will be able to use IBM Blockchain’s IBM Food Trust cloud network “to find out where and how each animal was reared, the name of the farmer, what feed was used (whether or not they were fed on French cereals and soya beans, on GMO-free products, etc.), what treatments were used (antibiotic-free, etc.), any quality labels, where they were slaughtered, etc.” The technology has been expanded to the retailer’s Carrefour Quality Line of herbicide-free tomatoes, and the company says it plans to expand the program to include eggs, cheese, oranges, salmon, and ground beef, among other foodstuffs.

Other uses include Walmart’s plans to begin requiring all suppliers of spinach and lettuce to use IBM Food Trust technology by September 2019, and plans by the world’s two largest diamond producers, De Beers and Russia’s Alrosa, to use Tracr blockchain-based supply chain technology to keep blood diamonds off the market.

Respondents to the survey held positions in manufacturing and supply chain firms, with 59 percent reporting annual sales in excess of $100 million, and 10% reporting annual sales of $10 billion or more.