30% cost reduction, up to $12 billion a year for banks
Average investment in 2017:
Top use cases:
Secure financial transactions, data sharing
Gartner Hype Cycle 2017 status:
Blockchain is peaking, but bitcoin is in the trough of disillusionment
Supply Chain Dive's Buzzword of the Year Award goes to blockchain, but that doesn't mean the ledger technology is all hype and no fulfillment. As it turns out, there's legitimate reason for the buzz. According to a recent piece from Quartz, the word "blockchain" is skyrocketing in frequency in corporate boardrooms and earnings calls. Quartz concludes that this must be because the technology has become "impossible to ignore."
Blockchain promises big results
According to Ingrid McDermott, Vice President of IBM Blockchain, the technology is the missing "puzzle piece" supply chain managers have been waiting for. In short, there's buzz and hype because it's a legitimate solution being quickly integrated into operations, and companies are really excited about it.
"That's why I think blockchain has captured the imagination, because it's both this new technology that sounds very interesting, but it's also very realistically something that can, in a relatively short time, make some fundamental changes that the industry has been really striving for, for a long time," she told Supply Chain Dive.
McDermott says supply chains have struggled with three main problems for decades: data visibility, process optimization and demand management.
"When I say these three things, I'm not saying something that nobody knows," she told Supply Chain Dive. "Everyone in supply chain is frustrated about data visibility or their inability to optimize processes or to truly manage customer demand."
The missing puzzle piece
The irony is, there are many tools companies can use to ensure better data visibility, provide data sharing between companies and prescriptive and predictive analytics to better meet customer demand. The problem is solving the problems of data visibility, process optimization and customer demand within what McDermott calls "the ecosystem that supply chain covers."
"The problem is not how do you solve visibility within one company that has total trust and transparency and a hierarchy," she said. "You have the ability to solve data visibility, but in practice you can’t actually achieve data visibility across the ecosystem, the same with optimization and demand management."
And that's where blockchain comes in. "Blockchain isn't this pill that solves all problems, it solves the major problem that still really remains for data visibility: how do I get all the parties involved to trust enough to share their information so I can use the digitization tools, the demand management tools, data sharing tools, and use them efficiently and effectively?"
Legitimate business interest has skyrocketed
While blockchain may be the biggest buzzword in supply chain management for 2017, it's got a pretty good reason to be so popular. The buzz is no joke, either: the tech has been around for a while, but over the past five years interest has spiked dramatically, according to data from Google Trends.
The internet's interest in blockchain 2012-2017
Although Gartner's Hype Cycle shows that blockchain interest has descended into the "trough of disillusionment," that's still just based on general public interest, and current business attitudes seem to suggest the opposite. McDermott said ever since IBM launched its blockchain hyperledger with Linux, she's been "absolutely amazed" by the energetic response from the business community, especially financial services companies.
"When your business is 1's and 0's, it's very easy to think about digital transformation. And usually other industries are followers," she said.
Because big companies across the supply chain are heavily investing in the tech, blockchain is more than just a ballyhoo, and that's why it takes home Buzzword of the Year. Through the tech, buyers and suppliers, shippers and carriers will be able to trust each other enough to share necessary data for innovation and problem-solving.
"Fundamentally, blockchain is a trusted, shared system of record," McDermott said. "That's all it is, right? What it does is it says, 'I'm going to make sure the data that you have is something you can trust.' That’s going to allow you to remove inefficiencies. I see tremendous opportunity in the supply chain."
Supply Chain Dive predicts blockchain will be widely implemented over the next few years as a secure means of completing financial transactions and sharing data. As the tech is adopted, the buzz will likely die down, and blockchain will no longer be just a buzzword but an important tool in digitized supply chains.