New study finds supply chain mistrust impedes blockchain uptake

A new study from global management consultancy, the Boston Consulting Group (BCG), has found that,…...

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A new study from global management consultancy, the Boston Consulting Group (BCG), has found that, despite earlier predictions that blockchain technology would be a disruptive force in supply chain management and logistics, its adoption has been slower than anticipated.

BCG’s ‘Resolving the Blockchain Paradox in Transportation and Logistics’ survey found that 88% of those polled expect the technology to disrupt the industry to some degree, while 59% think that such disruptions will arise in the coming two-to-five years. However, 74% reported either that they were considering blockchain opportunities on a merely cursory basis at present or were not considering it at all.

The survey uncovered a ‘fundamental paradox’ delaying the uptake of the technology: while blockchain can radically increase transparency throughout the supply chain, powerfully assisting cost reduction measures and improving supply relationship management, understanding of the technology remains limited, and the trust and collaboration between competing firms necessary for its effective use is often absent. The mistrust impedes supply chain participants from entering a common blockchain ecosystem.

BCG partner, Andy Schmahl, said that the majority of industries have straightforward transactions that are rarely more than bilateral or trilateral. He added: “over the course of any supply chain or transportation move, a single good can change hands dozens of times and can have multiple dozens of players when you factor in brokers and regulators, customs agencies, and other things. Each of them has some vested interest, and things often don’t go as planned, which can lead to finger pointing, and that generates huge frictions, in terms of costs and time.” 

He went on to say that, despite this friction and mistrust, blockchain pilots had been undertaken but had yielded only modest results, leaving an impression that, at present, the technology isn’t yet worth investing in. Procurement practitioners may well find CFOs reluctant to sign off on tech products that haven’t yet met the ‘tried, tested and proven’ standard.

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