EY: revolutionising supply chain management with blockchain
With most leading companies using computerised ERP and supply chain management software, we look at how blockchain can evolve supply chain management.
“From connected manufacturing equipment to digital shipping notices and RFID scanning, products are tracked on computerised systems from their earliest origins, often all the way to the recycling bin. Yet despite this huge investment in digital infrastructure, most companies have only limited visibility and insight into where all their products are at any given moment. The culprit, in most cases, is the analog gaps that exist between systems within enterprises and across enterprise boundaries,” commented Paul Brody, Principal & Global Innovation Leader, Blockchain Technology, EY.
Traditional supply chains
While in traditional supply chains production is recorded digitally, when it comes to shipping Brody explains that maintaining information continuity across systems and enterprise boundaries is a challenge, there is “oceans of digital data but only islands of useful information.”
The use of systems such as electronic data interchange (EDI) and XML messaging are being utilised by these companies to try and maintain information continuity, but even these system pose their own challenges such as being out of sync and moving data only one stop down the supply chain, “The result: inventory that seems to be in two places at once,” added Brody.
“These systems were created for an era of big, vertically integrated companies with large, but mostly static supply chains.” Although relevant 30 years ago, in today's modern supply chain this is not the case.
The transformation of traditional supply chains
Global supply chains over the years have gone through two major transformations:
Supply chains are no longer traditional networks of OEMs and suppliers, they are now ecosystems with multiple products moving through multiple parties
Supply chains and operations have become increasingly dynamic, with shorter life cycles with more intense ramp-up and ramp-down periods
“With blockchain technology, companies can rebuild their approach to supply chain management at the ecosystem level and go from islands of insight to an integrated global view,” commented Brody.
The power of Blockchain
“Until the advent of bitcoin and blockchain technology, the only way you could get a large number of entities to agree upon a shared, truthful set of data, such as who has what bank balance, was to appoint an impartial intermediary to process and account for all transactions,” highlighted Brody.
With Blockchain technology, it is possible for ecosystems to share and agree on key information without an intermediary. “Blockchains synchronize all data and transactions across the network, and each participant verifies the work and calculations of others.”
For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital magazine.
5 minutes with: Ivalua’s Sundar Kamak
Who are you?
My name is Sundar Kamak, I’m Head of Manufacturing Solutions at Ivalua. I’ve been with the company for around two years now, and I’m responsible for our industry solutions and our pre-sales team. Before joining Ivalua I spent almost 20 years in the source-to-pay procurement space, working for a number of providers. But I got my career started in manufacturing and supply chain, specifically in automotive and aerospace.
And what is currently taking up the majority of your professional time?
The last year I've been focused in helping organisations put together a digital transformation strategy, especially manufacturing companies, so they can continue to address some of the challenges they face due to the COVID pandemic.
The traditional approach of engineers designing their latest product then procurement going off to source no longer works
What are the biggest challenges facing your corner of supply chain?
We have a lot of clients coming from different backgrounds - aerospace, high-tech, automotive - and they’re feeling the pressure and the crunch. There’s a lack of product, lack of material availability, lack of resources, labour shortages. So, I work with the leadership in these organisations, try to understand what problems they're looking to solve and come back with Ivalua solutions that can help them address some of these challenges.
Where do the biggest opportunities lie?
If we look at manufacturing, it all comes back to procurement and supply chain being involved sooner in the process. The traditional approach of engineers designing their latest product then procurement going off to source no longer works. It’s important to treat suppliers like partners, which means you build trust, so they can participate very early on in the product design and product development process. It’s not done consistently in the manufacturing sector, but it will be key.