Looking forward: How blockchain drives value in Logistics & International Trade in 2019
There is a broad consensus on the natural fit of blockchain technology for supply chain use-cases. International Trade and Logistics are marked by a high number of parties, clearly lacking a central source of truth that could optimize data exchange and thus operational performance. During 2018, we observed a wide proliferation of blockchain initiatives in Logistics. However, adoption is still in its early days, with most initiatives still being proofs-of-concept and some early pilots or production use-cases. It’s clear that blockchain is still a nascent technology. Moreover, blockchain triggers companies to reconsider collaboration with their customers, suppliers, and competitors. This new “coopetition” creates interesting new challenges and opportunities for International Trade & Logistic companies.
The number of blockchain initiatives will continue to rise and even accelerate in 2019. Most of the early blockchain adopters are now in a Pilot phase, rather than a Proof of Concept phase like 12 months ago. Setting up a blockchain pilot becomes easier and less costly, with shorter iteration cycles, so changes can be tested faster. Blockchain initiatives that are only focused on the hype around the technology, will most likely suffer from a lack of real business value.
Challenges like interoperability, scalability, performance, … should not be underestimated: blockchain is still a nascent technology. Especially for supply chain, with many competing stakeholders, the “coopetition” paradox is a tough one. Will companies trust a solution that is shared with their competitors? Initiatives that start small and grow step by step, will have the highest chance to succeed.
Today, most value is perceived in optimizing business processes through reducing the amount of paper or through better exchange of data. However, these benefits are just a start. And blockchain is not always the best technology for a given problem. However, more and more, blockchain will be used to create a “neutral” platform between stakeholders, which might disrupt the business model of traditional “centralized” platforms today, as many of them are disproportional asymmetric.
In the short term, blockchain technology will mainly be applied to improve operational efficiency by optimizing existing business processes. For example, blockchain has the potential to make supply chains less depended on paper documents. In the mid-term, business processes will be re engineered, rather than optimized. This will impact traditional business models and create even more value. One can ask why a document is still needed for a certain process. Last, we expect entire new markets and business models to be created, similar to how the internet created email, social media and e-commerce.