Gartner says 80% of blockchain supply chain developments won’t get out of design and development for several years. So many of them are just recycling financial blockchain ideas into supply chain space without understanding the issues. A case of a solution chasing a problem, the bugaboo of ITY initiatives forever.
I’d like to get my hands on this report from Gartner. It should be interesting.
The Gartner source below says 90%!!! I like that number better as an estimate.
Here’s a quote from the latter press release from Gartner:
“The budding nature of blockchain makes it almost impossible for organizations to identify and target specific high-value use cases. Instead, companies are forced to run multiple development pilots using trial and error to find ones that might provide value. …
Furthermore, current creations offered by solution providers are complicated hybrids of conventional blockchain technologies.”
Here was one of the use cases for blockchain that everyone thought was innovative, addressed a real problem, and made some sense. Apparently the users don’t think so.
It was designed to provide a mechanism to make reservations for 3PLs and shippers for slots on container ships. The issue addressed was overbooking and no-shows. But apparently noi one was able to make use of it. Only 100 were traded recently, leading to the firm’s shutdown.
I suspect the problem is the ocean carriers’ propensity to cancel voyages if they don’t have enough cargo. that delays everyone’s cargo till the next ship goes. That could be a week or more on many routes. Why would anyone book using the TEU if the voyage will be canceled?
A bit more design thinking, developing user personas and use cases, might have revealed this flaw early on and prevented the waste of venture capital and startup labor, or created more usable modifications. But maybe it accomplished what the entrepreneurs wanted– they got funded for a year or so and put the money in their own pockets. So what about the users? The VCs have baked into their plans a 90% failure rate; they’ll just make it up on another better bet.
Matt Leonard @Matt_Lnrd has summarized Gartner’s survey in this article, which seems to indicate more clearly that blockchain is a solution chasing problems. The basic problems are “technology immaturity”, “lack of standards”, ‘too ambitious scope”, and a misunderstanding of the use cases. I think Gartner has made a fair assessment of the situation, if perhaps even a bit too enthusiastic! So much hype over blockchain, and so much development investment, forces companies to take a look at a technology that basically duplicates what many systems already do. In short, the use case doesn’t hold up.
We need trust between partners in our supply chains. Supply chains are all about cooperation, and current systems have nearly the same capacity for verification that blockchain based systems do. What current systems lack is an easy way to provide access for partners, and to control it. So the trustless paradigm is not immediately relevant. It might be in some of the commodity tracking uses Gartner details, though how it would prevent blatant fraud is not clear.
Gartner is also right about the impending balkanization of blockchain systems. Each one is its own chain, but logistics partnerships are shifting constantly. What’s needed is connections between blockchains so data can be translated between them readily. Gartner refers to them as APIs; in the old days, we called them middleware. It would be great, as one survey participant indicated, to have a replacement for a peer-to-peer system (EDI) which allows many to many communication without the hassle, but that is not what blockchain proponents are suggesting.
Finally, the lack of standards is a major problem for supply chains. Supply chains are about cooperation, and cooperation requires agreement on standards. My partner Chris Clott and I have written about the need in the maritime supply chain world, and there’s more coming. In fact, several groups have started up intending to create standards. (See the BCG article below.) Experience shows that standards take a while (read l..oo…oo..ng time) to become accepted. And there’s substantial evidence that standard setting in a top-down fashion is more likely to fail and less likely to get a good ecosystem of cooperating providers than evolution from the bottom up based on specific solutions to particular use cases. (See article by Hanseth etal below).
From this viewpoint, it’s actually good that there has not been too much success yet, and that there are still lots of entrepreneurial attempts at creating useful solutions to specific logistics and supply chain problems. Whether these can use blockchain or some other database technology is uncertain, but the effort is going to yield some progress, though over a longer time frame than we expect. I’m thinking more in the time frame of ERP’s rise as a must-have system, maybe 20 years.