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Supply Chain and the AI-enhanced Blockchain

Supply Chain and the AI-enhanced Blockchain


By William De’Ath, Chief Business Development Officer, GBC.AI

While blockchain is understandingly closely associated with cryptocurrency and digital asset trading, the technology is actually unlocking value across a wide variety of industries – including supply chain and logistics companies, which are increasingly looking to adopt this technology. 

This technology comes at a critical time as macroeconomics factors continue to make the supply chain landscape increasingly challenging, including; disruptions due to COVID, and economic sanctions in various regions, greater demands for increased transparency across the entire supply chain, and an increasingly complex and fast-changing regulatory environment. 

What is (and isn’t) the blockchain to Supply Chain operators 

To put it simply, the blockchain is a digital system for recording transactions among multiple parties in a verifiable and tamper-proof way. While there are overlaps with existing enterprise resource planning (ERP) systems, the primary difference is that while ERP runs on a system of single modification of data, blockchain technology allows for the shared database to be made available to each member node in the blockchain – but only allowing members to add to the database under specific conditions, with full traceability. 

ERP systems also typically integrate with other functions (e,g, inventory, invoicing, etc), with multiple complex data flows and interactions – all of which makes standalone ERP systems audit-heavy and error-prone. These problems become even more complex as more parties are added to the blockchain. 

How AI-enhanced blockchain can bring value to supply chain operations

The greatest strength of blockchain is in its ability to be the one single source of truth – and this has several advantages. Firstly, its immutability allows for greater security, transparency, and accuracy – reducing the need for audits and making systems less error-prone.  Discrepancies are also more easily detected, traced, and resolved. 

Secondly, the immutability lends itself to being a system that can synchronise between different workflows – whether it be between different functional systems or validation times for transactions between providers and clients (e.g. contracts, signatures, orders, payments, etc.) Having a synchronised source of data allows for greater data analysis – which translates to faster and more effective audits or optimisation analysis. 

Lastly, building supply chain operations off a blockchain allows for more secure systems that are more resistant to attacks and unauthorised modifications. One key data point that further supports the security of blockchains is the inclusion of AI in blockchain technology. 

To explain the power of AI in blockchain, imagine the analogy of getting a fish tank. Typically, when you get a fish tank, there is a specific use case in mind – i.e. a certain volume of water, a specific type of fish, salinity, temperature etc. However, over time, the use of the fish tank might change – the volume of water may change, it may go from warm salt water to cold freshwater. All these changes add up and can create flaws in the tank – eventually leading to a structural failure. 

What AI does is to create a self-healing tank that adapts as the usage of the blockchain changes and scales – allowing the foundational blockchain platform to remain secure and robust. 

How supply chain operators can accelerate blockchain adoption

So while most technology decision-makers understand the potential of blockchain, many still struggle to understand how the technology can be better adopted. While every company will have a unique set of circumstances, there are a few facets that need to be addressed. 

Firstly, senior leadership buy-in will be critical – and with new technology, communicating the business benefits in quantitative terms will be essential. In addition, there will also be benefits that are less quantifiable, including improved employee experience and greater security. 

From a technology perspective, there will also be some critical decisions to be made – including whether to use a private or public blockchain. While both systems have their benefits, our experience for the supply chain industry is showing that private blockchains may be the more effective solution – as private blockchains offer a greater degree of control, particularly in permitting who can access the blockchain and to what degree can they interact with it. This will be particularly important given how transparency and traceability are critical in supply chain operations. This also ties in with ensuring that all participating parties who are part of the supply chain have a consensus protocol. 

This also ties into integration with legacy systems – and like with more technological innovations, a rip-and-replace approach is unlikely to be an economically sound choice. Instead, most players are looking at how blockchain can be integrated with existing systems, both from a legacy and cross-functional perspective. Having a more “gradual” strategy can also help reduce concerns around security and interoperability.  Lastly, to pull this all together, companies need to address the skills gap. Blockchain, as a whole, is still a relatively emerging technology and as a result, the people with the skills needed for it are in short supply – and the resources needed for talent acquisition can put off some organisations from adopting blockchain. To address this challenge, many organisations are instead turning to specialist technology partners that will be able to support them on their transformation journey.