How a SAP CIO Can Get Started in Digital Supply Chain Using Blockchain & IOT

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You would be living under a rock if you haven’t heard of Blockchain or IOT. Do you agree that its high time you begun some experiments in these red hot technologies but didn’t know where to start? SAPs Leonardo platform makes it easy to get into these without green-field investments or making expensive & difficult hires. Read on!

How Blockchain & IOT Revolutionize Supply Chain

Blockchain connects businesses, business processes, humans, machines & algorithms in a frictionless & seamless manner with fast, open & secure data sharing. It creates trust in transactions by securing them in an unerasable distributed ledger.

Illustrating blockchain with a Letter of Credit

Let’s take the example of a Letter of Credit. A pilot in Europe using blockchain reduced the time taken to submit, verify and authorize an international trade transaction from ten days to 2.5 hours. The pilot included electronic signature of documents, simultaneous distribution of documents to all parties and reception of the ownership of the documentation at each step along the way. The operation was registered and securely validated at the same time for all parties by the distributed ledgers and the immutability of blockchain. Here all the parties had constant awareness of the status of the documents. The system allowed the option to make changes from the moment the goods were loaded until their arrival at the destination.

Every Part of the Supply Chain gets affected by blockchain

All elements of the Supply Chain are affected by Blockchain:

Supply Chain Elements

Elements of Supply Chain

Research: Sourcing raw material & component data offers better raw material selection choice with blockchain technologies.

Forecasting: Increased and easy sharing of forecasting between manufacturer & suppliers improves overall forecasting & planning risk for all – thanks to blockchain.

Sourcing: Smart contracts decrease sourcing costs, risks, & headaches post blockchain.

Making: For Contract Manufacturers complete visibility & compliance increases business confidence – after using blockchain.

Showing: End consumers & regulators get clear visibility of parts sourcing & manufacturing process – increasing trust all around – post supply chain.

Returns: Batch identification & decentralised information flow gets improved because of blockchain.

First think through which of the Supply Chain elements here are candidates for transformation in your company.

Three principles of Blockchain

Distributed Ledgers
– offer digital documentation, storage, verification & delivery. Ledgers have been around ever since we had money. Distributed ledgers use the power of computing, cryptography & some exciting new algorithms allowing a new level of trust between parties without the need of a central authority.This brings down the cost of trust – for distributed data record keeping & discovery. The same authentication & authorization help reduce fraud drastically.

Smart Contract – Self executing contracts that follow workflows and triggers exchange ownership of assets and currency when destination is reached or action is performed.

Blockchain amplifies power of IOT – Blockchain and IOT are made for each other. Proliferation of IOT enabled smart devices require continuous record-keeping that blockchain’s traditional transaction processing systems can’t keep up withBlockchain’s shared ledger is ideal for that. IOT devices also need transactions and activity based triggers – and Blockchain’s smart contract make that easy.

Think of how you can apply these three principles to the shortlisted Supply Chain processes that you would like to transform!

Why Blockchain from SAP

SAP Leonardo is the digital innovation platform from SAP. In May 2017 SAP introduced a new Blockchain as a Service (BaaS) offering which is “ready-to-use blockchain technology” under the “Leonardo” umbrella residing in the SAP Cloud. Leonardo is accessible remotely rather than dependent on ‘on premise’ technology or end-user software.

SAP Leonardo functions comprehensively, as it features blockchain Cloud service technology, as well as machine learning and the internet of things (IoT) – integrating as a single ecosystem.
This fusion of technologies offers the ability to automatically order new parts or consumables in a business supply chain connected to the IoT. Artificial intelligence (AI) is included in order to automate procedures, while the blockchain acts to propagate smart contract orders and/or pay for goods.

SAP BaaS delivered through SAP Leonardo

SAP BaaS delivered through SAP Leonardo

SAP’s BaaS offers an underlying layer, service capabilities, and unique set of APIs that will enable blockchain based applications independent of protocols.

Using these capabilities a SAP customer can have information about a pallet stored in SAP also embedded in the blockchain. The pallet can also be IOT enabled. Using Blockchain, IOT, & Analytics the customer can now do large scale & simplified tracking, regulatory compliance, sourcing information embedded at scale without any human intervention.

If you already have SAP, SAP BaaS is a low risk way to do some Blockchain proof-of-concepts.
At PEOL Solutions we have worked with some of the most demanding SAP customers in their SAP co-innovation journey. We have well developed Proof of concepts in some of the most innovative Blockchain/IOT use cases. Give us a call if you need any ideas / suggestions / help!