More manufacturers are expressing interest in blockchain technologies to bring greater visibility and security to their supply chains and contracts, but they’re slow to adopt. Skepticism about the technology, integration, and a shortage of skilled talent to manage blockchain initiatives remains a challenge.
Gartner recently reported only 1 percent of 3,100 chief information officers (across various industries) surveyed last year said they had “any kind of blockchain adoption” within their organizations. Less than a quarter said they were planning some sort of testing in the near future while 43 percent said it was “on their radar,” but they had no plans to develop it. Surprisingly, 34 percent said they had “no interest” in the technology.
Blockchain ledgers have the potential to digitize the various hand-offs between trading partners, suppliers, manufacturers, distributors, and transportation companies. It has since caught the attention of several companies in many sectors.
The Blockchain in Transport Alliance was founded in August 2017, now has more than 250 members, and is working towards developing and embracing a common framework and standards from where industry participants can build applications.
“For producers and consumers alike, the gains could be manifest in improved traceability of goods and work processes and ultimately, in greater efficiency and lower costs.”
Maja Vujinovic, CEO of OGroup LLC and a former CIO of Emerging Tech and Future of Work at General Electric, told CoinDesk that blockchain technology can drive greater efficiency and transparency across the supply chain. With a common data architecture that enables non-trusting parties to more securely share information, blockchain could make complex compliance and due diligendatace processes more efficient and secure.
In contrast to centralized databases which can be altered after an entry is made, blockchains are designed to permanently record transactions in a way that records cannot be tampered with. Blockchain can also be used to support “smart contracts” to automatically verify milestones and shipments and to issue payments. While manufacturers can’t depend on blockchain alone to make their operations more manageable, they “should be looking closely at their potential,” he said.
“For producers and consumers alike, the gains could be manifest in improved traceability of goods and work processes and ultimately, in greater efficiency and lower costs,” Vujinovic said. International Data Corp. estimates corporate spending on blockchain software will grow to $2 billion in 2018, more than double the $945 million spent in 2017.
While the promises of blockchain have attracted several companies from various industries, “the incident of turning proof of concept into anything close to resembling a minimum viable product is extremely low,” said David Furlonger, Gartner fellow and vice president in The Wall Street Journal.
One of the biggest challenges organizations face is that it requires significant new skills to implement. Many survey respondents said blockchain skills are difficult to find and the technology requires change in the way IT departments operate. Other issues include the “immaturity of underlying technical components,” such as adequate technical and business and governance models, Furlonger said.
Manufacturers that rush implement blockchain too quickly may face wasted spending, failed innovation and bad decisions. On the other hand, those who wait too long or write off the technology risk being left behind in the wave of innovation. “If business leaders wait for the hype cycle to run its course they may no longer have a business to operate in—at least nothing like they have previously experienced and profited from,” Furlonger said.
Read more: If you’re Considering Blockchain, Ask your Team these 5 Crucial Questions