ITEM: If you’re in the supply chain sector and you’re not tired of blockchain yet, you will be – by 2023, 90% of blockchain-based supply chain initiatives will suffer ‘blockchain fatigue’ due to a lack of strong use cases, according to a new Gartner survey.
The survey – which explores the role technology plays in supply chains, how supply chain organizations leverage technology for competitive advantage, and their changing views about how best to exploit technology in supply chain management organizations – found that only 19% of respondents ranked blockchain as a “very important technology” for their business. Moreover, only 9% have bothered investing in blockchain at all.
Despite all the hype over blockchain’s immutability and applicability to supply chain management for things like verifying authenticity, improving traceability and visibility, and improving transactional trust, in reality most such pilots are limited in scope and the initial enthusiasm over distributed ledger technology as a supply-chain app has worn off quickly, the report says.
The basic problem boils down to a combination of technology immaturity, lack of standards, overly ambitious scope and a misunderstanding of how blockchain could (or should) actually help the supply chain, says Gartner senior principal research analyst Alex Pradhan.
“Inevitably, this is causing the market to experience blockchain fatigue,” she says.
Pradhan breaks it down further, noting that because distributed ledger tech is an emerging technology – particularly when it comes to just about any application outside of the cryptocurrency space – this makes it pretty much impossible for companies to identify and target specific high-value use cases. The best they can hope for is to run a bunch of different development pilots and rely on trial and error to see if the technology brings any value at all to the table.
Complicating things is the fact that because the technology is still emerging, so is the vendor ecosystem behind it – so much so that supply chain organizations who want to buy an off-the-shelf, complete, packaged blockchain solution can’t because there is no such thing.
“Without a vibrant market for commercial blockchain applications, the majority of companies do not know how to evaluate, assess and benchmark solutions, especially as the market landscape rapidly evolves,” said Pradhan. “Furthermore, current creations offered by solution providers are complicated hybrids of conventional blockchain technologies,” she says. “This adds more complexity and confusion, making it that much harder for companies to identify appropriate supply chain use cases.”
The point isn’t that blockchain is useless as a supply-chain technology, but rather that it’s still too early to know exactly what it can and can’t do in that capacity. Put another way, there’s still too much hype around it – and no useful standards – for organizations to properly evaluate its usefulness for supply chain management or anything else.
It’s also worth noting that sometimes, adoption barriers aren’t related to the technology itself. For example, the TradeLens blockchain for shipping logistics companies developed by IBM and Maersk has been reportedly struggling to get companies to sign on for the simple reason that Maersk (that is to say, one of their direct competitors) is running it.
According to a white paper earlier this year from Juniper Research, another key challenge to getting supply-chain partners to adopt blockchain is that more often than not, they don’t understand how it benefits them as an asset-tracking tool. Oftentimes they’re not even sure what blockchain is.
This point came up noticeably often at a blockchain tech conference in Hong Kong earlier this year, with a number of experts onstage saying that that the best way to pitch a blockchain-based solution to a company is to not even mention blockchain at all and just focus on what the solution delivers, otherwise you’ll just confuse them.
In any case, Gartner’s recommendation to organizations is to ignore the hype and approach solutions with extreme caution until until there is a clear distinction between hype and blockchain’s core capabilities, says Pradhan.
“The emphasis should be on proof of concept, experimentation and limited-scope initiatives that deliver lessons, rather than high-cost, high-risk, strategic business value.”