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Let’s look at an example to
illustrate. Let’s imagine there
was a Facebook for supply chain:
“Supplybook,” a privately owned
company that hosts a giant cen-
tralized system, ubiquitously used
by practically all companies to run
their supply chains, place orders,
execute shipments, keep inventory
records, and plan production. We
use it to “share data” with each
other about orders, shipments, and
payment. And since it’s a centralized
network, your purchase order is lit-
erally my sales order, one data record
we co-own. You change it, I see it.
So, from a standpoint of practicability,
blockchain solutions are best suited for
those supply chain problems requiring
fairly narrow and well-understood func-tionality that is not likely to change much
over time.
DATA DISTRIBUTION SOLVES WHICH
PROBLEM?
This is the second aspect of why blockchain
can amount to a Rube Goldberg device.
Today’s supply chain systems infrastructure is highly distributed. Each company
runs its own information technology (IT)
systems. Each has its own data representation. Your purchase order out of your SAP
system is my sales order in my Infor system. My carrier’s legacy operating system
has a data record for the same shipment
that sits in my Oracle transportation management system. The distributed nature of
the system landscape is one of the main
reasons why it’s so difficult to collaborate
across the supply chain. In fact, business
network-based cloud solutions like GT
Nexus and E2open were specifically created to move a shared dataset “into the
middle” and allow all partners to see and
interact—in their respective roles—with it.
So, if distribution is the problem, why
all the excitement about blockchain’s “
distributed ledger”? Well, it’s because this is a
different type of distribution. It is not the
kind we have today, the kind where I have
my data, you have yours, and we both
have a different version of the data with no
inherent synchronization. Instead, distributed ledgers are the kind of distribution
where everybody (every node, technically)
has all of the data. Furthermore, all of the
data conforms to a single representation,
all data stores are inherently synchronized
in real time, and a “private key” ensures
data security (I see mine, you yours). So,
although “distributed,” blockchain solves
the orchestration problem.
Computationally, however, that is a
horribly inefficient approach. The centralized cloud-based business network solution is actually far more efficient. If that’s
true, when would you choose a distributed
ledger solution over a centralized one?
Blockchain shines when supply chains
want to avoid dependence on a third-party authority or system host.
