Blockchain or bust

John Denslinger is a former executive VP Murata, president SyChip Wireless, and president/CEO ECIA, the industry’s trade association. His career spans
40 years in electronics

John Denslinger explores the electronics distribution use case to identify tangible, measurable benefits of implementing blockchain for buyers and supplier alike.

Want to see someone’s eyelids elevate, just mention the word blockchain. Want to stump them further? Ask what they know about blockchains. Want to impart pain? Ask if they’re involved in mapping or implementing a blockchain multi-party solution. The point to be made here is blockchains are as much a mystery for most as it is a strategic priority for some.

In a 2019 global survey Deloitte found ‘Leaders wary of tech-based solutions have come to see the larger, transformational importance of the technology’. Yet that same survey mentions only 23 per cent have actually started some level of blockchain deployment down from the 34 per cent reported doing so in 2018. The top five barriers mentioned: problems adapting or replacing existing legacy systems; regulatory issues; potential security threats; lack of in-house capabilities; and lastly, uncertain ROI. With all that said, perhaps the most startling stat was 43 per cent still see blockchains as over-hyped up from 39 per cent in 2018. Deloitte concludes blockchain decisions are evolving in both pragmatism and maturation. As more use cases are confirmed, adoption is bound to gain traction.

So, let’s examine a buyer/supplier relationship typical of our industry. Is there a justifiable use case worth committing time, resources and investment in a blockchain solution? Is it really possible to achieve a buyer /supplier relationship that: further reduces cost; shortens cycle time of essential processes; mitigates multi-lateral risk; creates unparalleled trust; and is completely secure?

Blockchain information is readily available from a number of sources. ECIA recently hosted a webcast by Christophe Begue, director solution strategy & business development, discussing IBM’s blockchain and how it might relate to our industry. His Trust Your Supplier (TYS) blockchain solution essentially connects qualification, validation, on-boarding and life cycle management. Within that blockchain loop is the buyer and supplier as expected, but also included are: industry standards bodies; key government agencies; environmental compliance verifications; financial/credit/insurance/indemnity validations; embargo/watch-list screenings; 3rd party authentications; and auditors. The chain is scalable to fit small to large concerns. Sounds promising, but is there a tangible, measurable benefit?

Yes, it would appear so. Buyers gain: real-time access to supplier data at a fraction of former costs; speedy and consistent on-boarding new suppliers at substantially reduced cost; risk minimization; uniform compliance assurance; and permanent and easily accessible records of all events by all parties in the blockchain.

Suppliers gain as well: elimination of repetitive and redundant qualifications; cycle time optimization on-boarding as a new supplier; faster time to first order; reduced administration costs managing approvals, certifications, compliance and other life cycle expectations.

Obviously, there are a number of blockchain platforms to choose from. IBM is only one solution. Some are public, some private, others consortium based, and finally there is even a hybrid version. Regardless of your choice, plan for a lengthy period of intensive discovery, status quo challenges, and potential system upheavals. You will ultimately find digital networks create enormous efficiency when classic barriers are removed. Our industry definitely has a use case. The contribution of blockchains is just beginning.