According to Gartner's Hype Cycle, blockchain in the supply chain has just entered the so-called "Peak of Inflated Expectations", and is more than 10 years out from reaching its "Plateau of Productivity" — or in other words, it is still immature and expectations about its business value are very high.
But it sounds much worse than it is, because every major disruptive innovation undergoes a natural cycle of expectations and realization. Gartner calls this chain of events the "hype cycle": after the "Innovation Trigger" comes a bloating of expectations until those swing into a more realistic expectation of what the innovation can and cannot do (the "Peak of Inflated Expectations"), followed by the "Trough of Disillusionment" when reality hits. As a technology or product matures and the real benefits are no longer outshone by wishful thinking, the technology enters the "Slope of Enlightenment" before it reaches mass adoption with the "Plateau of Productivity".
Below is the 2018 Hype Cycle for Blockchain Business. As you can see, blockchain in logistics and transportation is just behind blockchain in the supply chain, but will mature faster. Smart contracts is near the end of its "Innovation Trigger" phase, about to enter "Peak of Inflated Expectations", and is 5-10 years from its "Plateau of Productivity".
[Image Credit: Gartner, 2018]
As with any maturing technology, there are certain challenges that have to be solved in order to take full advantage of the solution. Blockchain in the food supply chain is no different. We have identified the top five challenges that we see in the industry and our customers are encountering. Rather than merely talk about the benefits, we want to tackle this difficult topic today in the hope of raising awareness, starting a discussion, and being part of a solution!
You Cannot Blindly Trust Data On The Blockchain
We believe that using blockchain in the food supply chain (as well as pharma and other industries) can revolutionize how we approach product safety and integrity. It provides us with a level of transparency and traceability we could only wish for until now. But you have to careful. Thinking that you can blindly trust all the data just because it is stored on the blockchain is a dangerous assumption.
Now, you might think, "Hmm, I thought blockchain is supposed to be immutable." And you are correct. While immutability is one of the core tenets of the blockchain technology, making the solution itself fraud- and tamper-proof, you have to put additional safeguards in place to ensure that the entered data is correct.
Data can be entered, accessed, and inspected by all members of a consortium (everyone who participates in a certain blockchain), but it can never be altered or deleted — meaning once the data is copied to all nodes of the blockchain and securely stored, it becomes immutable. The weak point is the data entry which still is susceptible to human error, negligence, fraud, and other malicious intentions.
So far, the only way you can be 100% sure that the data isn't tampered with is to feed it through IoT-enabled smart sensors, like Chainvu's Intelligent Sensors.
Industry Standards Are In Their Infancy Stage
Consensus and collaboration are essential to the success of blockchain — without traceability and transparency they don't happen. But, as with any emerging technology, blockchain in the supply chain context is still in the infant stage of being defined and agreed upon.
Currently, very few framework and communication standards (upon which solutions and applications can be built) are defined. This leads to different companies with varying points of views interpreting what tracking and visibility entails in very different ways. One of the few standards is the open-source and royalty-free standard BiTAS Tracking Data Framework Profile that was released in the end of February 2019 and allows blockchain companies to confidently answer the question "Where is my shipment?"
Early adopters looking to use this emerging technology as a way to build a sustainable competitive advantage need to take this into account.
Customers Have To Bet On One Of Many Different Solution Approaches
As emerging technologies mature, especially in today's fast-paced, agile environment, the market becomes flooded with different solution approaches — some of which will prove successful over time, while others will exit the market due to major flaws. For early adopters, this means there is a certain level of uncertainty when it comes to choosing the right solution approach for you.
There is no difference in the blockchain supply chain solution market. Different vendors approach solving smart logistics problems in various ways, resulting in entirely different solutions. As a customer, you can choose to implement only smart sensors that store the data in the cloud, pure blockchain technology solutions that rely on scanning stickers and do not integrate any sensors (mostly offered by large software manufacturers like IBM or SAP), or holistic solutions that combine blockchain technology with intelligent IoT-enabled sensors and cloud-based business applications, like Chainvu does.
Time will tell which solution will prevail, but early adopters looking to choose a solution now should choose a solution that best meets your needs while being future-proof at the same time.
A Successful Implementation Requires A Mindset Change
One of the biggest roadblocks to successfully adopting blockchain in the supply chain is homemade: our mindset. As a traditionally very competitive and protective industry, food producers, processors, and grocers have been working hard to maintain an edge over their competition. Naturally, they are very careful with data and trade secrets.
But blockchain is all about visibility, transparency, and traceability across the entire supply chain and therefore requires a mindset of cooperation and collaboration. Without this, your initiative will fail!
Implementing For Bragging Rights Or Corporate Mandate
Whether you are a grower, producer, processor, distributor, transporter, wholesaler, or retailer, chances are you have some major Digital Transformation initiative under way in your organization. Often this results in pressure from the board to implement cutting-edge technology — sometimes just to be able to get some press about implementing blockchain, sometimes with a solid business reason behind it.
This is so common that Gartner predicts that 90% of blockchain-based supply chain initiatives will suffer "blockchain fatigue" due to a lack of strong use cases by 2030. To avoid becoming part of this statistic, it is crucial to resist hopping on the blockchain bandwagon because it is "cool" without having a solid business case and supporting business processes in place.
All in all, these challenges are entirely manageable and easily overcome when one is aware and conscious of them. The important part is to be honest with yourself, your stakeholders, and partners about potential challenges you could be facing and propose a tangible solution for overcoming them.
Despite these challenges, this is an extraordinary time to be part of this movement and early adopters can create long-lasting competitive advantages by implementing blockchain in their supply chain.