Shared service centres key to supply chain blockchain

Written by FinTech Futures
23rd May 2018

It was a watershed moment for product data when in the summer of 1974 a packet of chewing gum became the first product with a bar code to be scanned in a store. This new standard was thanks to GS1 who are now leveraging standards to promote interoperability of blockchain applications across supply chain networks.

This is good news for supply chain sustainability as a distributed blockchain can provide a robust database to trace products back to their original source supplying the growing demand for transparency to prove the provenance of goods.

The need for consumers to know about factory conditions where their purchases come from has extended to a demand for information on the authenticity of goods that proves that their Irish whiskey or organic salmon is the genuine article.

Supply chain logistics involve a highly complex network, managing trade regulations, shipping distances and currencies. The blockchain opportunities inherent within this system have already attracted the attention of industry leaders.

Big supply chain players like Walmart, Maersk and Accenture have successfully completed pilots to show that blockchain can save hundreds of millions of dollars a year. Extra costs in gaining real time data to meet the demand for increased transparency can be mitigated as new immutable supply chain data drives efficiency stimulating the growth of blockchain to be eventually used by farms and fishing boats currently invisible to supermarket customers.

If a company unified all of its supply chain data onto a blockchain this would create in theory a utopia of super-efficient transparency with AI grade real time data, but in practice blockchain has only just arrived. But arrived it has, and although the recent piloted successes are not wanting to share detailed results after spending a fortune on R&D, experts are looking at shared service centres (SSCs) as the best place to start this ecosystem.

Supply chain paper based processes and duplicated digital records bottleneck in SSCs which makes them key for blockchain adoption. These are supply chain hubs where shared operational and financial services carry out tasks such as payments and credit checks between third parties using a diverse range of data sources. To integrate blockchain into a SSC a culture of openness is needed between stakeholders.

A distributed ledger is ideal to store supply chain data and with its ability to keep immutable records this will be a significant step forward in problem solving outside of an existing blockchain. By eliminating the chance of database corruption this can narrow the focus on the accuracy of other data sources reducing the time it takes to identify where changes need to be made.

When blockchain becomes the new normal within areas such as SSCs, this expertise will travel down the supply chain to everyone from customers to smallholder farms who are currently invisible to most of the market.

By Noel Peatfield