Blockchain is set to "supercharge" global supply chains by 2025, according to a newly released report from technology consulting firm Capgemini.
The study conducted by the firm's Research Institutive said blockchain could become ubiquitous within seven years, entering mainstream business and underpinning supply chains worldwide. Through investment and partnerships, the distributed ledger mechanism will dominate manufacturing as well as consumer products and retail industries, "ushering in a new era of transparency and trust," the report said.
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The report is based on a survey of about 450 organizations in consumer products, retail, and manufacturing, where blockchain implementation is underway in the supply chain as a proof of concept, pilot or at-scale. And it shows that blockchain has a long way to go to reach broad use. Currently, just 3 percent of organizations that are deploying blockchain do so at scale, and 10 percent have a pilot in place. A majority of organizations (87 percent) report being in the early stages of experimentation with blockchain.
The UK (22 percent) and France (17 percent) currently lead the way with at-scale and pilot implementation of blockchain in Europe, while the US (18 percent) is a front-runner in terms of funding blockchain initiatives. supply chain functions, such as tracking production, monitoring food chains, and ensuring regulatory compliance.
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Despite general optimism surrounding blockchain deployments, organizations remain concerned about issues such as establishing a clear return on investment (ROI) from technology, and interoperability between partners in a supply chain. The majority of the blockchain "pacesetters" (92 percent) said establishing ROI is the greatest challenge to adoption, and 80 percent cite interoperability with legacy systems as a big operational challenge. Additionally, 82 percent said the security of transactions is inhibiting partner adoption of their blockchain applications, undermining blockchain's status as a secure technology.
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"There are some really exciting use cases in the marketplace that are showing the benefits of blockchain for improving the supply chain, but blockchain is not a silver bullet solution for an organization's supply chain challenges," said Sudhir Pai, chief technology officer for financial services at Capgemini. "Blockchain's ROI has not yet been quantified, and business models and processes will need to be redesigned for its adoption. Effective partnerships are needed across the supply chain to build an ecosystem-based blockchain strategy, integrated with broader technology deployments, to ensure that it can realize its potential."
The report identified 24 use cases for blockchain, ranging from trading carbon credits to managing supplier contracts and preventing counterfeit products. Capgemini applied these use cases to retail, manufacturing, and consumer products, finding that blockchain can be and is being used for tracing the production, provenance, and inventory of contracts, products, and services.