Everywhere you turn these days, there’s a blockchain pilot underway for the supply chain. But they’re all missing one crucial element: a single, coherent set of standards.
Blockchain technology as we know it is already 11 years old, conceived as a transactional ledger in support of bitcoin. But businesses quickly realized that it was good for something more than recording the transfer of cryptocurrencies. With its promise of storing data among multiple computers, thereby ensuring against tampering or unauthorized changes to the record, blockchain seemed an ideal tool for validating the provenance and progress of goods throughout the supply chain.
Blockchain pilots are well underway, steered by big names such as IBM, Walmart, SAP, Maersk Line, Panalpina and Nestlé. Early beneficiaries of the technology include small farmers in Africa, a wine and spirits marketer, and purveyors of luxury goods.
Missing from all those projects, however, is an overarching set of standards for communication that can propel blockchain into everyday use. In fact, the lack of standards is one reason why Gartner has predicted that 90% of current blockchain-based supply-chain initiatives will experience “blockchain fatigue” by 2023.
Enter GS1, the not-for-profit entity that gave the world standards for formatting and placement of the ubiquitous barcode. Now, through the GS1 US Blockchain Discussion Group, the organization is pursuing a similar path on behalf of blockchain.
Just under a year ago, GS1 US members in apparel, general merchandise, foodservice, healthcare and retail grocery met with GS1 experts in Chicago to discuss the prospects for deploying blockchain in data exchange. Among their goals was the establishment of GS1 standards for blockchain development across industries. Food production executives were particularly interested deploying the technology to ensure product safety.
“We set up a cross-industry group to start driving some of the hype out of blockchain,” says Kevin Otto, senior director of community engagement with GS1 US.
Standards are essential to the technology’s wider use, he says. “If you don’t have underlying data in a standardized fashion, you can’t just go out and buy a blockchain.”
The GS1 US discussion group consists of more than 120 members, representing some 90 companies, as well as associations and software vendors. Their initial target, Otto says, is managing the data that provides supply-chain visibility.
GS1 customarily focuses its work on individual industries, but has taken a broader approach for this initial set of blockchain standards. Says Otto: “It’s a good time for an industry-agnostic look.”
Various blockchain pilots are moving forward without the participation of GS1, but Otto sees no inherent conflict. He views the organization’s work as “a natural fit” with efforts such as that of IBM, especially with respect to cementing standards for communicating with external partners. (A need, to be sure, that exists within every global supply chain.)
Some efforts underway are drawing on the early work of GS1, while others are choosing to take another route. The latter, says Otto “are doing themselves a disservice. That solution is just not scalable.”
GS1 isn’t exactly starting from scratch. The organization’s existing EPC Information Services (EPCIS) Standard for sharing visibility event data can serve as a starting point for creation of the blockchain standards, Otto says.
“One of the misconceptions that people have is they think they’re going to have to change everything they’re doing,” he says. “Blockchain is just another way of sharing data.”
Past efforts to forge standards for the supply chain haven’t always resulted in consensus. Witness the emergence of parallel message formats in the U.S. and Europe for electronic data interchange. But Otto is optimistic that various independent efforts at creating blockchain standards won’t force supply-chain partners to choose which “language” they want to speak. The Blockchain in Transport Alliance (BiTA) originally set out to craft its own standards for the transportation industry, but ended up partnering with GS1. “We had a couple of calls with them to make sure they’re not spending time reinventing the wheel,” says Otto.
GS1 hopes to publish its initial set of cross-industry standards for blockchain in December. But standards alone won’t guarantee success for companies eager to deploy the fledgling technology for achieving supply-chain visibility. First, they need to ensure that the necessary information is in place.
“If you want to have a discussion around supply-chain visibility as a core for blockchain, there are masses of data you need before you even get started,” says Otto. “It’s not going to be a case where the technology creates the data for you.”
Nevertheless, standards can’t come to the table too quickly. Already some companies are beginning to question the long-term value of blockchain. On Gartner’s “Hype Cycle”, tracing the adoption of new technology, Otto locates blockchain within the “trough of disillusionment.” (To be followed, if the cycle plays out properly, by the “slope of enlightenment.”) Further progress depends on broad agreement over the underlying means of communicating key data between supply-chain partners.
“Blockchain could be here to stay,” Otto says. “It’s at an inflection point right now. If they don’t start talking interoperability, the technology could fall by the wayside.”
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