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ACCENTURE STRATEGY


April 13, 2018
Blockchain for the supply chain
By: Gary Hanifan and Harry Morrison

Say “blockchain” and, if people understand it at all (a big if), they’ll probably associate it with financial services and the “bitcoin” phenomenon. Fair enough. Blockchain has gained the earliest traction in finance. But Accenture Strategy believes blockchain is on the verge of revolutionizing the supply chain operating model, as well. Why? Three words: Transparency, tracking, trust.

Blockchain is a distributed (decentralized) digital network that enables the exchange of value or the ability to confidently share data—including financial assets and contracts—in a secure and trusted environment. By design, blockchain builds trust into every transaction and shared data source, enabling greater security, better transparency and tracking, and optimized reconciliation processes.1

Blockchain’s capabilities mean it can address challenges that will arise with a more complex operating model that involves a distributed supply chain ecosystem. Accenture Strategy research has found that 84 percent of supply chain executives say that they will increasingly use distributed manufacturing networks to meet customer demands. To build faster, more responsive supply chains, companies will connect with an ecosystem of third parties to access shared assets. But this distributed network is also dynamic, as well: 85 percent of executives agree that each customer order will dynamically activate a specific set of nodes in real time to best meet the order requirements.2

In such a distributed, dynamic network, how can you bake trust and transparency into the system so people know what they’re getting, who they’re dealing with and where things are in the process?

That’s where blockchain comes in. Blockchain’s ability to generate trust and create the right permissions around the sharing of data enables companies to break through some of those operating model challenges. People can access the information they need without revealing commercially sensitive data to other parties.

Blockchain: Why now?
Why does the time seem right for blockchain as the foundation for the modern supply chain?

  • First, corporate incumbents are ready. Accenture recently surveyed 800 large companies about which digital technologies will have the greatest impact in the coming years. Eighty-four percent of respondents anticipate using blockchain within five years and 47 percent are using it now. These figures are higher than those for hot topics like artificial intelligence, virtual reality, drones and 3D printing—and only just behind IoT and wearables in anticipated take up.3

  • Second, the diversity of solutions and use cases is growing. Blockchain use cases for the supply chain are growing more sophisticated. Early examples included product traceability, anti-counterfeit protection and solutions to streamline import/export controls and paperwork. For example, blockchain technology within a new supply chain operating model can streamline the product recall process and provide a level of supply chain transparency that can enhance the efficiency of suppliers around the world.

  • Today, more advanced use cases are in play, with blockchain potentially enabling new peer-to-peer marketplaces, supporting automated payments and smart contracting, and giving suppliers access to services including insurance or trade finance. Ultimately, blockchain can become the enabler for new service ecosystems—for example, a connected car where owners could seamlessly access and pay for charging, parking, insurance and in-car entertainment on the blockchain while also securely controlling access to the vehicle. Increasingly these opportunities are being matched by specialized and industry-specific applications and solutions built on top of underlying blockchain platforms.

Beyond pilots: Create a “proof of value”
How should you get started? Conducting proofs of concept and pilot projects is one important part of the journey to blockchain success. But proofs of concept typically have a narrow technology focus and fail to answer key commercial questions about the real-world governance and processes of full-scale applications. A proof of concept needs to be accompanied by what Accenture Strategy calls a “proof of value”—a strong business case for your own organization as well as evidence that supply chain partners are also incentivized to participate in the new solution.

Conclusion: All in, now
Blockchain is maturing rapidly. There are platforms and applications today that are production-ready. Leaders must think and commit to blockchain as a foundational technology for the supply networks of the future. The time to get started is now.

An "all in" mindset focuses less on optimizing today's processes and more on building an agile, data-driven operating model that creates new commercial possibilities and entirely new value chains. Companies will generate value primarily from big plays that disrupt established supply chains and relationships.

It’s time to think big about the possibilities and get serious about the new operating models, partnerships and governance structures required for successful delivery.

RELATED CONTENT


1 Accenture, “Unlock trapped value with blockchain”, 2017.
2 Accenture Strategy, Architecting the future of supply chain research, 2017.
3 Accenture, Supply chain analytics research, 2017.

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