With the rise in the price of bitcoin, not a day goes by without hearing the word “blockchain”. However, do you know exactly what’s hiding behind the concept and the possible advantages for the Supply Chain sector? Read on as we decipher this new technology trend in view of SaaS mode.
Blockchain technology brings many advantages...
According to Blockchain France, “blockchain is a transparent and secure technology for storing and transferring data without a central administrator.” It enables to create and share databases among various users based on the founding principles of transparency, security and decentralization.
The most popular blockchain application today is bitcoin, the famous virtual currency (or cryptocurrency) created in 2009 which can be bought online in exchange for other currencies. Aside from crypto currencies, blockchains offer the Supply Chain sector various possibilities.
Further reading: Supply Chain: an in-depth look at blockchain technology
Based on the principle of transparency, they ensure the traceability of operations over the entire production chain. By connecting to a blockchain, each user (client, supplier, administrator, etc.) can access the information they need within a context of complete trust among the parties.
But how is this atmosphere of trust created? Access is secure and limited based on users’ profiles, and blockchain users themselves validate and authorize the data they exchange. In this context, blockchains require fewer controls than an IT system in SaaS mode which stores
data on a centralized cloud.
Since blockchains allow all users to access information, there is no need for audits. In addition, because data is decentralized, blockchains do not need servers and do not generate infrastructure costs.
...but does not yet keep all its promises to the Supply Chain
With SaaS-based applications that store shared information on a cloud, the power of installations must be proportional to the number of users. Thanks to blockchains, this problem is solved, in theory, because data is no longer managed in a centralized way.
However, if we take a look at the Ethereum platform, launched in 2015 for the development of decentralized applications, we see that blockchains can work more slowly when there is an overload. Thought of as the most promising blockchain after bitcoin, Ethereum still needs to tackle scalability problems to handle load increases and maintain performance even in times of high demand.
After a first wave of initial improvements, blockchain developers are still working on updates (called forks) that are capable of handling larger volumes of simultaneous transactions. Soft forks are minor changes while hard forks are major changes that transform the entire blockchain and can have a large impact on the entire ecosystem it uses. Therefore, implementing a blockchain before it is mature and stable can be risky.
SaaS: the best solution for the Supply Chain
Although blockchains allow us to bypass hardware, they are still immature and their use is not widespread enough for them to be implemented correctly. In other words: nobody wants to work with a company equipped with a blockchain if the technology is not more widely deployed. However, the trust created by the principle of transparency in blockchains offers exciting possibilities—especially for the food Supply Chain— and could be a major area for development.
Today, SaaS-based applications remain the most reliable option for the Supply Chain. This technology perfectly adapts to the requirements of warehouse (WMS) and transport management (TMS) solutions. To guarantee a transition to SaaS, it is in the best interest of licensed software users to opt for a cloud-based solution. Otherwise, they run the risk of being restricted in their digital transformation if their solutions are not capable of transitioning to blockchain technology.
On the same topic: The 8 advantages of migrating from EDI to SaaS
Today, blockchains are used for the decentralized storage of files, the sharing of hard drive space and payment with crypto currencies— a technology of the future that is not quite up to par to be widely deployed but whose initial applications in the Supply Chain are emerging. Before taking the plunge into blockchain technology, the first step is to shift to SaaS mode and to start preparing for the future. Want to find out more? Contact Generix Group’s experts now!
Contact Generix Group's Supply Chain experts
Image credit: Wikimedia Commons – Davidstankiewicz