Blockchain Will Be the Killer App for Supply Chain Management in 2018

by Steve Murphy 0

As we again embark on a new year and the various prognostications, we came along this referenced piece and thought to provide a brief summary. ‘Killer App’ is sort of a legacy term from the good old days of first internet bubble, circa year 2000, which seems more than a millennium ago given the pace of change since Y2k. Whether you think of blockchain as a form of distributed ledger, or somewhat different techs, we would not refer to either as apps.  Otherwise we generally agree that that the ‘app’licability to supply chain management is quite an appropriate set of use cases, potentially streamlining the timeframes between procure and pay, more securely and easily. We have been tracking these technologies in the corporate banking space for a couple of years now.  A recent 2017 Viewpoint on the subject is posted for our members, giving them a view into where we see things currently as it relates to blockchain in corporate banking. So the evolution has been condensed, but now appears to be in the ‘let’s do it’ mode.

“…the blockchain market over the past 18 months has been going through an “explain this to me” phase (PowerPoint) into the “prove it to me” phase (working conference room pilots). “Now we’re in the ‘Okay, build it for me’ phase,” Brody said via email. “We see this in our business: clients are moving projects towards production and…we have similar conversations with others in the industry.”

The piece goes on to describe differences between non-permissioned blockchain (the Bitcoin supporting model) and permissioned, where the tech provides certain similar benefits, but only to invited participants. Permissioned is much more palatable across industry at this point, certainly for financial institutions.  Mercator sees trade services as a key proving ground for industrial strength corporate use cases in blockchain. Certainly one area of impact is in supply chain finance, where financing opportunities directly unfold due to the data recognition and analytical factor of digital processes. One might also come to a reasonable conclusion that the generic ability to minimize end-to-end process timeframes (primarily due the elimination of paper where applicable), indeed provides additional liquidity, thereby reducing the need for a portion of financing.

For example, an aggregated record between manufacturers or distributors and buyers can also include the financing partners, so that once all parties agree goods have been delivered, payments on invoices can be released. “The sooner manufacturers and distributors can agree on shipments and receipts, the sooner manufacturers can be paid for their goods. Getting paid faster improves financial liquidity for members of the supply chain,” Fearnley said.

Certainly worth a browse through and for some, the trailing video may be of interest (once you get past the ad).

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

Read the quoted story here