Supply Chain is ‘Killer’ Blockchain Use Case, says IDC


After more than enough hype, blockchain use cases are lately becoming more numerous and real.

In fact, improving supply chain processes will be the “killer” among blockchain uses cases, according to Bill Fearnley, IDC research director of worldwide blockchain strategies, who spoke at the IDC Directions 2018 conference held recently in Boston.

“I get asked often ‘What are the killer [blockchain] use cases?’ and [supply chain] is it,” Fearnley said. Blockchain ledgers can help improve the supply chain in three ways: shipment track and trace, inventory management and proving a product is genuine.

“Increasingly consumers and manufacturers are getting more concerned and more aware of country of origin,” Fearnley said. “For example, you’re trying to make sure that you’re not getting conflict minerals — you want to make sure that the country of origin is the right place to be buying products from, that it’s not in a war zone or from a criminal element.”

Other blockchain use cases are found in financial services, manufacturing and distribution and government services, Fearnley said.

A Foundation for Digital Trust

“Blockchain is the new foundation for digital trust which drives digital transformation and business transformation at scale,” he said. “This changes security and trust both between companies — suppliers, distributors, retailers–– and also between you and end-user customers and consumers.”

Improved data security is the primary reason blockchain can reach killer application status, particularly for supply chain and financial services, Fearnley explained. Records are created in a ledger that’s secured with advanced cryptography, and all the records are linked, so they are immutably chained in theory. The records are sequential and the ledger gets longer as more records are added, making it more secure the longer it gets.

“The immutability of the blockchain record makes this a very attractive solution for some of the most data secure organizations in the world, including supply chains, financial services, [healthcare] and governments,” Fearnley said.

This security allows companies to have trusted records that they can use internally and extend externally. For example, an international company could share information among its operating divisions across borders, or manufacturing could share information with sales and marketing. They can then extend that ledger to partners or regulators.

The growth of blockchain has occurred rapidly in the last few years, Fearnley said.

“In 2016, most of the conversation was ‘What is this, what is blockchain, what is distributed ledger, smart contracts?'” he said. “The tone and timbre of the conversation changed in 2017 to ‘Why should we care?’ and by 2018 we’re hearing more questions about ‘How are we going to do this?'”

This growth in blockchain use cases will continue: IDC estimates that worldwide blockchain spending will amount to $10 billion by 2021. The spending will be distributed fairly evenly throughout industries, as IDC estimates that 35% will occur in financial services, 25% in distribution and services, 20% in manufacturing and resources and 10% in public sector.

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