Blockchain expansion set to transform global supply chains: report
Originally posted by Peter Dinham @ itwire.com
Blockchain could become ubiquitous by 2025, entering mainstream business and underpinning supply chains worldwide, according to a newly published report.
According to the Capgemini Research Institute, the distributed ledger technology will dominate manufacturing as well as consumer products and retail industries through investment and partnerships, ushering in a new era of transparency and trust.
The report — “Does blockchain hold the key to a new age of supply chain transparency and trust?” — provides a comprehensive overview into the businesses and geographies that are ramping up their blockchain readiness, and predicts that blockchain will enter mainstream use in supply chains by 2025.
According to the report, currently, just 3% of organisations that are deploying blockchain do so at scale and 10% have a pilot in place, with 87% of respondents reporting to be in the early stages of experimentation with blockchain.
The UK (22%) and France (17%) currently lead the way with at-scale and pilot implementation of blockchain in Europe, while the US (18%) is a front-runner in terms of funding blockchain initiatives," the report notes.
“These 'pacesetters' are optimistic that blockchain will deliver on its potential, with over 60% believing that blockchain is already transforming the way they collaborate with their partners.”
The study also found that cost saving (89%), enhanced traceability (81%) and enhanced transparency (79%) are the top three drivers behind current investments in blockchain.
And, furthermore, blockchain enables information to be delivered securely, faster and more transparently.
The report notes that the technology can be applied to critical supply chain functions, from tracking production to monitoring food-chains and ensuring regulatory compliance – and, enthused by the results, the pacesetters identified in the study are set to grow their blockchain investment by 30% in the next three years.
But despite the optimism surrounding blockchain deployments, concerns remain around establishing a clear return-on-investment, and interoperability between partners in a supply chain, the report says.
The majority (92%) of pacesetters point to establishing return on investment as the greatest challenge to adoption, and 80% cite interoperability with legacy systems as a major operational challenge. Additionally, 82% point to the security of transactions as inhibiting partner adoption of their blockchain applications, undermining blockchain’s status as a secure technology.
Sudhir Pai, chief technology officer for Financial Services at Capgemini, said, “There are some really exciting use cases in the marketplace that are showing the benefits of blockchain for improving the supply chain, but blockchain is not a silver bullet solution for an organisation’s supply chain challenges.
"Blockchain’s ROI has not yet been quantified, and business models and processes will need to be redesigned for its adoption. Effective partnerships are needed across the supply chain to build an ecosystem-based blockchain strategy, integrated with broader technology deployments, to ensure that it can realise its potential.”
In a previous report earlier this year, produced with Swinburne University of Technology in Melbourne, Capgemini found that experimentation in blockchain will peak in 2020 as organisations explore proofs of concept and branch out from Fintechs. According to the report, blockchain transformation will mature in 2025 as organisations undertake enterprise transformation and integration, establishing policies for privacy and data management.
Professor Aleks Subic, deputy vice-chancellor (Research and Development) of Swinburne University of Technology, said, “Organisations trust blockchain technology to solve key issues and create new business opportunities, and it lends credibility to the digital ecosystem across the supply chain. We believe that blockchain technology will play an integral role in the digital transformation of supply chain channels for a wide range of industries in the near future.”