Blockchain to transform supply chains, Capgemini Research Institute

Blockchain could become ubiquitous by 2025, entering mainstream business and underpinning supply chains worldwide.

Through investment and partnerships, the technology will dominate manufacturing as well as consumer products and retail industries, ushering in a new era of transparency and trust, according to a report by the Capgemini Research Institute.

It surveyed 450 organisations where blockchain implementation is underway in their supply chain as a proof of concept, pilot or at-scale. Currently, just 3% do so at scale, whilst 10% have a pilot in place, with 87% of respondents reporting to be in the early stages of DLT experimentation.

The UK (22%) and France (17%) currently lead the way in Europe, while the USA (18%) is a front-runner in terms of funding initiatives. Over 60% believe that blockchain is already transforming the way they collaborate with their partners.

The study also found that cost saving (89%), enhanced traceability (81%) and enhanced transparency (79%) are the top three drivers behind current investments in this area. Furthermore, blockchain enables information to be delivered securely, faster and more transparently.

The technology can be applied to critical supply chain functions, from tracking production to monitoring food-chains and ensuring regulatory compliance. Enthused by the results they are seeing, the pacesetters identified in the study are set to grow their blockchain investment by 30% in the next three years.

Concerns

Before you crack open the champers,. 92% of pacesetters point to establishing ROI as the greatest challenge to adoption, and 80% cite interoperability with legacy systems as a major operational issue. Additionally, 82% flag up the security of transactions as inhibiting partner adoption of their blockchain applications.

“There are some really exciting use cases in the marketplace that are showing the benefits of blockchain for improving the supply chain, but blockchain is not a silver bullet solution for an organisation’s supply chain challenges,” says Sudhir Pai, Chief Technology Officer for Financial Services at Capgemini.

“Blockchain’s ROI has not yet been quantified, and business models and processes will need to be redesigned for its adoption. Effective partnerships are needed across the supply chain to build an ecosystem-based blockchain strategy, integrated with broader technology deployments, to ensure that it can realise its potential.”

Despite these barriers, organisations are trying to drive wider adoption now while the technology is in its early stage. One example is the Mobility Open Blockchain Initiative (MOBI), a consortium comprised of a group of auto and tech companies focused on getting carmakers to assign digital identities to vehicles so that cars and systems can transact with eachother.

Current industry use cases

Capgemini Research Institute has identified 24 use cases for blockchain, ranging from trading carbon credits, to managing supplier contracts and preventing counterfeit products. Consumer product organisations are notably focused on tracing and identifying products, with Nestlé, Unilever and Tyson Foods implementing blockchain trials.

Retailers are looking at digital marketplaces and preventing counterfeits, with the likes of Starbucks investing in blockchain trials. More critically, the tech can safeguard food supplies, tracing food from farm to fork, to head off contamination or product recalls.

A copy of the report can be downloaded here.