Blockchain and Supply Chains: What’s On Our Minds for 2019

By Chain Business Insights' Co-Founders and Research Principals: Ken Cottrill, Sherree DeCovny and Pete Harris ​​​​​​

A year ago we published a blog with 10 blockchain in supply chain predictions for 2018. Upon review and reflection, we reckon our predictions are generally holding up, but it’s still a work in progress for most of them. In reality, rolling out blockchain technology in the supply chain space is going to take a number of years. 
 
That said, we each have a few matters on our radar for the coming 12 months, and so we thought it would be worthwhile to share them with you. Here goes …
 
Ken Cottrill’s thoughts …

1. In 2019, companies will move closer to identifying blockchain applications in supply chains that make business sense. Blockchain literacy is improving, and as many of the misunderstandings that have impeded the technology’s progress become less impactful, supply chain professionals will become more adept at pinpointing worthwhile applications. Importantly, they also will develop a clearer vision of what blockchains can and cannot do. 

---

 
2. Interoperability is a key issue in the blockchain world. Expect some real progress in this area as projects to develop foundational standards for blockchain-based communications bear fruit. The International Standards Organization plans to release a series of blockchain standards by 2021 at the latest, and organizations such as the Blockchain in Transport Alliance and the Institute of Electrical and Electronics Engineers are working on industry-specific standards.  

3. Blockchain’s high-profile introduction has focused attention on its promise as a cure-all for business ills. As the technology, and perceptions of it, mature, more attention will shift to where blockchain sits in the wider universe of digitalization. As the supply chain community develops a more discerning view of blockchain’s capabilities, it will become easier to align incentives and create the communities of users that are intrinsic to future successes. How blockchain integrates with and supports artificial intelligence and Internet of Things applications, and security implications now that Europe has introduced General Data Protection Regulations, are among the issues that will promote this wider view of blockchain’s role.  

What Sherree DeCovny is thinking about …
 
1. During 2019, the leading public cloud providers will continue to develop their blockchain-as-a-service (BaaS) offerings. Microsoft was the first to bring blockchain to the cloud three years ago, and in 2018 the company launched its Azure Blockchain Workbench. Google has partnered with Digital Asset and BlockApps to enable customers to experiment with digital ledger technology (DLT) frameworks on its Google Cloud Platform (GCP). GCP also announced plans to run open source integrations for Hyperledger Fabric and Ethereum. Meanwhile, AWS has introduced its own managed blockchain service and has also partnered with Kaleido to offer cloud services on which to host an Enterprise Ethereum-based, open source blockchain platform.

BaaS offers a faster, more cost effective and less risky way to create proof of concepts and production blockchains. It will be interesting to see how supply chain organizations take advantage of it in the year ahead.

2. There have been some breakthroughs in quantum computing recently, and that could fuel the conversation about whether blockchain’s cryptography will be resistant to this emerging technology over the long haul. Google and IBM are working on their implementations of quantum computers, which are supposedly 100 million times faster than classical computers. Rigetti has gone one step further in building an even more powerful machine, and the first quantum cloud platform. Meanwhile, Quantum Resistant Ledger (QRL) is seeking to provide a blockchain that is resistant to both conventional and quantum computing attacks. 

​Admittedly, this is all very futuristic because no one knows exactly what these machines would be good at. In supply chain, could it be developing global distribution networks, algorithms for transporting freight optimally or risk modeling? And how would that impact blockchain implementations? That said, a sudden development could turn quantum computing into a reality sooner than expected. So for the sake of future-proofing, it’s worth keeping an eye on this space.
 
3. In terms of specific industries, the cannabis supply chain is a good candidate for implementing blockchain. The industry is emerging quite quickly as more countries around the world move toward legalization and decriminalization. This trend is likely to continue into 2019 and beyond. Some applications for blockchain include licensing, background checks, anti-money laundering and other regulatory compliance; improving visibility as well as track and trace capabilities along the seed-to-sale supply chain; clinical trials; and monitoring for environmental impact. Since some countries with optimal growing conditions are exploring the potential export market, blockchain could also be deployed in trade finance.  

​4. Finally, regulators around the world are working to build a legal framework around the various types of blockchain-based tokens: payment, security and utility. Those initiatives are in their early days, but we could see supply chain participants start to look at ways of leveraging these digital assets in their business. Utility tokens, which are essentially a digital coupon for a future service, have run into implementation headwinds in early use cases, but might make sense in the supply chain area. 

From the mind of Pete Harris …

1. How will the hiring of Walmart’s Frank Yiannas make a difference at the Food & Drug Administration, where he is in the new role of Deputy Commissioner, Food Policy & Response? Given the agency’s November directive to the troubled leafy greens industry that it adopt “state of the art technology” and that Yiannas is a blockchain believer possessing experience of the technology, it seems likely that blockchain is about to get a regulatory boost in the food supply chain space.

Walmart’s own leafy greens initiative will no doubt be monitored closely, and lauded if it proves a success with further FDA directives for blockchain adoption in other fresh produce areas. It’s also worth noting that blockchain is already being tested for pharma supply chains and those efforts could well receive positive action from the agency.

2. How will different blockchain technologies fare for supply chains in 2019? It appears that the majority of supply chain and trade finance projects to date have been built on either Ethereum or Hyperledger Fabric. But Ethereum is overdue for a performance and scalability boost and the price of its ether cryptocurrency suggests that the community is not sure whether one will be forthcoming. Perhaps the work that’s been started by the Enterprise Ethereum Alliance will show promise. 

For Fabric, much rests on whether IBM is successful with its Food Trust platform, which is being implemented by Walmart and others. The progress of Oracle and SAP with their offerings will also be worth keeping tabs on. It’s also worth noting that Fabric’s design could lead to scalability issues for projects that are widely deployed.

Will another blockchain technology emerge in 2019 to impact supply chains? Ripple and Stellar might well play a real role on the payments and eCommerce side. NEM, now re-invigorated with new leadership, could expand its use cases in the space. And the Hyperledger Sawtooth platform might also be more widely adopted, especially if some marketing effort is put behind the Intel-inspired technology.  
​
Of course, we would be delighted to receive your feedback and perspective on all of the topics listed above, or others that you have in mind. In the meantime, here’s wishing all of our industry colleagues a happy and prosperous 2019.