As early as March 2020, Christopher G. Caine, the President of the Center for Global Enterprise (CGE), the NGO behind the Digital Supply Chain Institute (DSCI), noted “the COVID-19 crisis has ignited has ignited a race for advantage and survival”. Digital Asset Live Editor-in-Chief talked to Nish Kotecha, Finboot Co-Founder and CEO, who has recently authored an article “The critical role for blockchain in the post-COVID-19 supply chain” together with Shawn Muma, the Technology Research Leader for DSCI Center for Global Enterprise.
Q1: The COVID-19 pandemic has exposed weak spots and problem areas in the global supply chain. What are they?
A1: Lead times are too long, severely affecting the ability to respond to changes in demand. This is principally because of poor tracking and visibility throughout the supply chain, which uses basic digital tools that require manual assistance such as spreadsheets being sent by email.
This makes it a real challenge to a track assets and have visibility within a company’s supply chain and even more challenging when dealing across multiple companies’ supply chains. The failure of PPE and ventilator supply chains to respond to overnight demand are good examples where better connected platforms could have provided visibility on stock levels and lead times. This is despite the fact that many manufacturers already invested in enterprise ERP systems.
Enterprise automation is urgently required that can connect across all supply chain participants regardless their level of digital maturity, from those with complex ERP systems to suppliers who just have a laptop or smartphone connected to the internet. We write about this in detail in our Front-side Flip white paper.
Q2: Obviously, the pandemic has changed us. How exactly, in your view?
A2: The pandemic has accelerated a journey that had already started: digitalisation in all industries. Technology adoption can enable the flexibility we all require to operate in the “New Normal.” Working remotely is the new reality (something IBM learned 15 years ago) yet we need our economy to recover and grow if we are ever going to be able to resume our previous living standards.
Shorter, more resilient and more flexible supply chains (which can be operated from home and work seamlessly) will be a priority, along with responsiveness to change in demand.
Q3: How do you think blockchain may help?
A3:Blockchain enables digitalisation across enterprises and through a network or multiple interconnecting networks – potentially even competitive networks. It can manage workflow across a network, handle changes in demand, provide interchange of data in a secure and transparent way, and automate processes such as traceability, manufacturing, shipping and payments. Blockchain can help!
Digitalisation is a journey and it is best to take an agile approach, especially with blockchain. We recommend that firms start with one implementation, prove the business value and then expand functionality across to other business processes. This has the benefit of ensuring that you take your stakeholders, including employees and clients, with you on the digitalisation journey. It is important to set clear business objectives and measure those success factors in quantitative, as well as qualitative, ways across the entire ecosystem. Focus on establishing the business case ROI with a Proof of Value (PoV) rather than a Proof of Concept (PoC) which generally tests the technology. DSCI’s Blockchain Fitness Index (BFI) and Blockchain Return Framework can assist with your use-case selection and proof-of-value.
Q4: To people outside logistics, can you please describe the recent discussion on onshore vs offshore, and also nearshore?
A4: The discussion is about being close enough to the customer that you can respond to shifts in demand and other market shocks and still maintain your competitive position. Long supply chains have proved to be inflexible.
A supply chain leader from one of DSCI members gave an example of when he started his career in the UK, they could reprioritise manufacturing daily. If a customer in London needed an item, it could be manufactured and delivered the same day. Now his goods spend three months on the water. It’s all about finding the right balance between flexibility and competitiveness.
An additional challenge to note is that the last 25 years have seen an acceleration of globalisation, with many countries focusing on their core strength and choosing to import goods and services where they lack a competitive advantage. Therefore, the onshoring option is not practical for many countries.
Q5: Outside food tracking, what other areas will enjoy blockchain adoptions first, in the post-pandemic world?
A5: Healthcare, without a doubt. The pandemic has proved that the healthcare supply chain is inefficient at best. A healthcare blockchain ecosystem can identify and provide visibility into manufacturers, inventories and locations for critical assets, materials and supplies.
Also, we believe that there will be a growing focus on sustainability, which needs to be measured, monitored and tracked. Blockchain is well suited to this application and many other cross-enterprise supply chain challenges.
Q6: What other technologies will be used in conjunction with blockchain, and how?
A6: There is a lot of excitement around the application of artificial intelligence (AI) and Machine Learning (ML) within industrial applications but these are hampered by the volume and quality of the data. Blockchain is an enabler as it is able to securely deliver trusted data sets to power AI and Machine Learning implementations. Arguably, the combination of blockchain with AI, ML, IoT and robotics will make industry 4.0 a reality.
Q7: Please describe an ideal supply chain in the post-pandemic world?
A7: One that connects demand with supply, is digitalised and automated, while also being visible and transparent throughout the chain. The automation of sharing key information, workflows and business processes amongst suppliers, customers and, where required, regulators, is crucial. The automated supply chain should not only collect and process data related to the production of the product but also its sustainability characteristics. Blockchain is the enabler in the future supply chain.
Q8: How to get to this ideal? What policy changes are needed?
A8: The biggest barrier is the resistance to sharing information with customers and, potentially, competitors. We often hear that a supplier does not want his customers to know his factory utilisation because of the fear that will impact price negotiations. Determining what one is willing to share and with whom is very challenging. However, in a blockchain network, some applications allow you to choose what data is transparent and what is kept confidential. Also, a digital network requires governance – who can be a member of the network, what data can be shared with whom and under what conditions are complex questions. We just completed work on a toolkit with the World Economic Forum that addresses some of these considerations and have also developed a data trading framework to assist with these decisions.
Q9: Will you describe the skills that will be in demand in the supply chain of the future?
A9: We recently published DSCI’s Talent and Organizational Planning Guide, in which we identify key skills required for managing digital supply chains. These skills include:
- Supply chain management skills: these are still considered paramount (so there is not a shift to simply technical skills)
- Analytical problem-solving skills: this means data analysis skills sets
- Data science (not the same as analyst skills)
- Data engineering (distinct from data science)
- Data stewardship (which is more of a behavior than a skill)
Note: Blockchain applications such as Finboot’s MARCO are tailored so that they can be used by business users without any technical or IT capability to create and implement a blockchain network.