Connecting...

End of the World or Start of a Better One? Supply Chain & Block Chain Automation

W1siziisijiwmtkvmdgvmtgvmjmvntcvmzqvnza1l1n1chbsesbjagfpbibhbmqgymxvy2sgy2hhaw4gyxv0b21hdglvbi5qcgcixsxbinailcj0ahvtyiisijiwmdb4nzawiyjdxq

Thanks to movies like The Terminator and I, Robot, any talk of an automated society often leads us to thoughts of worst-case scenarios, whereby Schwarzenegger-sized robots have totally lost it and set out to solve all humanities problems by getting rid of humanity. Fortunately, at this stage we only have robots that focus their energies on very limited tasks such as chess and dancing (not exactly a cause for concern just yet).

Dancing robots aside, the major talking point for the supply chain industry is not so much about a supply chain run by artificially intelligent robots, but one that is nearly completely automated – and there is a difference, especially at this early stage of the game.

Whilst artificial intelligence and automation are seen as going hand-in-hand, we don’t have AI that are currently sophisticated enough to handle the complexities and fluctuations that are so common in supply chain (see Min, 2010). We do however possess the capability to automate supply chain – or at least certain parts in the process. The biggest concern regarding automation is:

  • How these technologies will be successfully implemented
  • What implications these new technologies and systems will have for the way we work

 

Block Chain Technology

One of the most talked-about innovations is the use of block chain technology across supply chain. The technology behind the open source peer-to-peer payment network Bitcoin, “represents a decentralised environment for transactions, where all entries are recorded on a public or private ledger that is visible to users” (see Rosanna et al, 2019, p. 2). Block chain is essentially an online platform to record any kind of transaction or process and have it verified by party members.

 

The opportunities within and beyond supply chain are endless with block chain technology. You could use it to:

  • Track exactly where you food comes from and how it got to you

 

  • See exactly where the election votes are coming from

 

  • Monitor the spending of a home, town, city, or local government

 

  • See where your charitable donations end up

 

  • Track ownership rights (music, art, writing etc.)

 

  • Improve public transport, planning  and more

 

Block chains promote transparency and traceability, creating a system that everyone can view and crosscheck, although there are of course rules around ensuring the feasibility and accuracy of any human input. The system will automatically cross-verify proof of delivery before invoices are issued, for example (see Rosanna et al). One action triggers another and it is quite hard to circumvent the systems accuracy.

Despite being over ten years old, applications of block-chain technology have been mostly limited to the financial sector. There are some examples of FMCG giants like Unilever (click here for more) now implementing block chain, but no one really knows what outcomes it will have.

The best insights I can give are based on what experts see as the pros and cons of using block chain technology in supply chain. So what are they?

 

The (Potential) Pro’s

  1. It connects supply chain

Block chaining will allow companies to interact in real time with all of their interested parties (think your distributer, 3PL’s, Manufacturers and more). With instantly available data on who has what and when, interested parties can take immediate action that is then received by all within the network.

  1. It promotes transparency

With a fully traceable system for supply chain, the industry as a whole would not fall prey to some of the global scandals that have occurred in recent times. We could see exactly how sustainable a company’s sourcing methods were with data from region and employer-pay. Block chain would do what we expect of supply chain by promoting ethical practice across the board.

  1. It saves time

Efficiency is an integral part of supply chain. With block chain technology enabled, a lot of the manual work (delivery tracking, order verification, payment processing) can be taken out of the equation. Of course, this has setbacks for those employed in these areas!

 

The (Potential) Con’s

  1. It comes at a cost

The bigger the block chain becomes and the more parties that involve themselves the more data that the system will have to deal with. You’d be surprised to hear that in terms of energy consumption, block chain user Bitcoin uses as much energy as the Czech Republic. Kind of goes against the sustainability pro mentioned earlier doesn’t it?

  1. It’s difficult to implement

Any new systems change brings about the challenge of implementation. A block chain company would look very different post-implementation. Redundancies could ensue; staff would have to be trained on the new system and how about the cross-functionality of a block chain ledger with ERP (enterprise planning) and RFID (radio frequency identifiers, think track and trace) technologies. Would we need to scrap them or could we use them together? So many ethical and technical questions arise from this.

  1. We don’t know if it’s effective!

There is scant evidence out there currently to show how effective block-chain implementation really is (see Rosanna et al). We are still in unchartered territory with this kind of tech and until more is done to highlight effectiveness, it’s unlikely many will be willing to adopt it.

 

To Summarise….

Automation is coming to industry whether we like it or not. We need to recognise both the pros and cons of new technologies related to supply chain and need to analyse any new breakthroughs in technology before we accept or refuse them.

Automation isn’t about evil robots; it’s about making things better. We have to decide from both an ethical and rational standpoint as to whether or not it really does!

 

 

Borrowed Insights From….

Cole, Rosanna & Stevenson, Mark & Aitken, James. (2019). Blockchain technology: implications for operations and supply chain management. Supply Chain Management: An International Journal. 24. 10.1108/SCM-09-2018-0309.

https://eprints.lancs.ac.uk/id/eprint/131605/

Min, H. (2010). Artificial intelligence in supply chain management: theory and applications. International Journal of Logistics: Research and Applications, 13(1), 13-39.

https://www.researchgate.net/publication/247523024_Artificial_intelligence_in_supply_chain_management_Theory_and_applications