Executive Briefings

From EDI to Blockchain

B2B efforts are now three decades old; yet, the primary mechanisms are based on manual efforts. The dependency on spreadsheets is limiting the evolution of supply chain visibility. EDI is the backbone of today's visibility, but the future of visibility will change dramatically through blockchain. -Lora Cecere, Founder, Supply Chain Insights

From EDI to Blockchain

Visibility is worth the investment. Improved supply chain visibility correlates to value (Price to Tangible Book). Supply chains are more complex.

  • Outsourcing Is a Reality. It Is Here to Stay. For the average company, outsourcing of manufacturing and transportation is a reality. Over 90 percent of companies are involved in outsourcing. Thirty percent outsource 40 percent or more of their manufacturing, and 55 percent outsource at least 40 percent of their logistics on a volume basis.
  • Supply Chain Visibility Has Many Forms. Few Are Being Delivered Well. The term supply chain visibility is nebulous. There is no consistent industry definition. Companies use the term with many meanings. Visibility within the company is being addressed by current IT architectures, but B2B architectures to support emerging supply chain visibility requirements are evolving. Blockchain is promising to improve track and trace, supply chain finance, and product lineage.
  • The Gaps in Supply Chain Visibility Are Large. The Satisfaction with EDI Is High, but it is Brittle. The average company with ERP has seven different ERP instances and 49 percent of respondents report ERP spending plays a major role in their IT budget. The gaps for supply chain visibility are high and the answer will not come from ERP.  In the words of one supply chain leader that we interviewed, “Today, it is much like chewing gum, bailing wire and a shoestring.”

Here are three steps to take:

1. Define Priorities and Align Solutions. While EDI is effective in the management of transactional data, it is important for companies to document requirements for supply chain visibility for transportation, sourcing and manufacturing. This includes planning and unstructured data. These are very different by visibility type and by tier of relationship.

2. Get Clear on What You Are Doing Today. Document the “As Is” and the “To Be” States. Most manufacturers are not clear on what they are doing today. The documentation of the “as is” condition is usually eye-opening. Most companies overstate their current performance. The goal is to have transactions flow hands-free and to have the right data for the right person in the supply chain when they need it.

3. Align IT Strategies with the Future Goals. Line of business leaders need to work with IT to align IT spending and future plans for supply chain visibility. This needs to include the rationalization of ERP spending, the maximization of private networks (where available) and the qualification of new forms of public supply chain visibility solutions.

The implementation of supply chain visibility grows more important with outsourcing and the building of supply chain relationships in the extended network. IT programs are not aligned to close the gap and blockchain offers promise.

The Outlook

Improving supply chain visibility is critical as supply chains grow more complex. ERP-to-ERP connectivity is not the answer. EDI is the workhorse of visibility today, but it is not equal to the task of real-time connectivity with bi-directional flows. Leaders will pave a new path using blockchain.

Visibility is worth the investment. Improved supply chain visibility correlates to value (Price to Tangible Book). Supply chains are more complex.

  • Outsourcing Is a Reality. It Is Here to Stay. For the average company, outsourcing of manufacturing and transportation is a reality. Over 90 percent of companies are involved in outsourcing. Thirty percent outsource 40 percent or more of their manufacturing, and 55 percent outsource at least 40 percent of their logistics on a volume basis.
  • Supply Chain Visibility Has Many Forms. Few Are Being Delivered Well. The term supply chain visibility is nebulous. There is no consistent industry definition. Companies use the term with many meanings. Visibility within the company is being addressed by current IT architectures, but B2B architectures to support emerging supply chain visibility requirements are evolving. Blockchain is promising to improve track and trace, supply chain finance, and product lineage.
  • The Gaps in Supply Chain Visibility Are Large. The Satisfaction with EDI Is High, but it is Brittle. The average company with ERP has seven different ERP instances and 49 percent of respondents report ERP spending plays a major role in their IT budget. The gaps for supply chain visibility are high and the answer will not come from ERP.  In the words of one supply chain leader that we interviewed, “Today, it is much like chewing gum, bailing wire and a shoestring.”

Here are three steps to take:

1. Define Priorities and Align Solutions. While EDI is effective in the management of transactional data, it is important for companies to document requirements for supply chain visibility for transportation, sourcing and manufacturing. This includes planning and unstructured data. These are very different by visibility type and by tier of relationship.

2. Get Clear on What You Are Doing Today. Document the “As Is” and the “To Be” States. Most manufacturers are not clear on what they are doing today. The documentation of the “as is” condition is usually eye-opening. Most companies overstate their current performance. The goal is to have transactions flow hands-free and to have the right data for the right person in the supply chain when they need it.

3. Align IT Strategies with the Future Goals. Line of business leaders need to work with IT to align IT spending and future plans for supply chain visibility. This needs to include the rationalization of ERP spending, the maximization of private networks (where available) and the qualification of new forms of public supply chain visibility solutions.

The implementation of supply chain visibility grows more important with outsourcing and the building of supply chain relationships in the extended network. IT programs are not aligned to close the gap and blockchain offers promise.

The Outlook

Improving supply chain visibility is critical as supply chains grow more complex. ERP-to-ERP connectivity is not the answer. EDI is the workhorse of visibility today, but it is not equal to the task of real-time connectivity with bi-directional flows. Leaders will pave a new path using blockchain.

From EDI to Blockchain