By Co-Founders and Research Principals: Ken Cottrill, Sherree DeCovny and Pete Harris
Since we published our Blockchain meets Supply Chain eBook last April, we’ve had conversations with many professionals in supply chain, logistics, manufacturing and finance. Along the way, they’ve asked how we think blockchain’s adoption is going to play out in the near to medium term. With that in mind, our research principals have put together the following 10 predictions for 2018:
From Ken Cottrill:
1. As more companies become familiar with the technology and gain an understanding of how it can deliver value in the supply chain, proof-of-concept activity will surge in 2018. An increase in the number of industry initiatives will fuel this development work.
2. Blockchain development projects that tested the technology in key areas such as trade documentation and product track and trace in 2017 will move to the pilot stage in 2018. The first live applications will emerge.
3. Increasing interest from regulators in the growth of Bitcoin will spill over into other applications areas such as supply chain. The participation of regulators will add impetus to blockchain’s progress in areas such as the development of smart contracts.
From Sherree DeCovny:
4. Banks will build upon blockchain proof-of-concept projects to mitigate risk and take cost out of correspondent relationships. Look for more initiatives like Batavia (Commerzbank, Bank of Montreal, Erste Group Bank, CaixaBank, UBS and IBM).
5. More blockchain initiatives will crop up focusing on specific sectors. A good example is the one in energy commodities, which is being set up by BP, Shell and Statoil; trading houses Gunvor, Koch Supply & Trading, and Mercuria; and banks ABN Amro, ING and Societe Generale.
6. Banks will lead the way in expanding blockchain participant networks and building consortia comprising members that can provide specific supply chain and trade finance services on the blockchain. They will try to team up with freight forwarders, ocean carriers, shippers, third-party logistics providers, inspection and certification providers, IT companies and others.
7. In the second half of 2018, the first commercial, blockchain-based products and services will be launched around supply chain finance and handling transaction flows for letters of credit and collections, as well as for open account transactions.
From Pete Harris:
8. Supply chain applications will accelerate industry focus on the combination of blockchain technology with big data analytics, AI and machine learning, Internet-of-Things and cloud. Much of the current buzz about blockchain will be focused on how these technologies can play together.
9. While the majority of supply chain applications will focus on private/consortia blockchains, some public chain projects will emerge, along with Initial Coin Offerings (ICOs). Ethereum-based public chains will lead the way.
10. While blockchain technology issues – such as scalability and identity – remain, the main impediments to widespread blockchain adoption in supply chains will be related to organizational challenges of working with partners, incumbent commercial interests and the lack of business data standards. Also, interoperability across chains will become a technology focus area.
So that’s our take on the year ahead. Please let us know your thoughts on whether you think our crystal ball is clear or cloudy. Also, please share your own predictions. Above all, we wish you a happy, healthy and prosperous 2018.