Blockchain could become ubiquitous by 2025, entering mainstream business and underpinning supply chains worldwide, according to a new report by the Capgemini Research Institute, Paris. Through investment and partnerships, the distributed ledger technology will dominate manufacturing as well as consumer products and retail industries, ushering in a new era of transparency and trust.
The report, “Does blockchain hold the key to a new age of supply chain transparency and trust?” provides a comprehensive overview into the businesses and geographies ramping up their blockchain readiness, and predicts that blockchain will enter mainstream use in supply chains by 2025. Currently, just 3% of organizations that are deploying blockchain do so at scale and 10% have a pilot in place, with 87% of respondents reporting to be in the early stages of experimentation with blockchain.
The UK (22%) and France (17%) currently lead the way with at-scale and pilot implementation of blockchain in Europe, while the United States (18%) is a front-runner in terms of funding blockchain initiatives. These "pacesetters" are optimistic that blockchain will deliver on its potential, with over 60% believing that blockchain is already transforming the way they collaborate with their partners.
The study also found that cost saving (89%), enhanced traceability (81%) and enhanced transparency (79%) are the Top 3 drivers behind current investments in blockchain. Furthermore, blockchain enables information to be delivered securely, faster and more transparently. The technology can be applied to critical supply chain functions, from tracking production to monitoring food chains and ensuring regulatory compliance. The pacesetters identified in the study are set to grow their blockchain investment by 30% in the next three years.
Despite the optimism surrounding blockchain deployments, concerns remain around establishing a clear return-on-investment and interoperability between partners in a supply chain. The majority (92%) of pacesetters point to establishing return on investment as the greatest challenge to adoption, and 80% cite interoperability with legacy systems as a major operational challenge. Additionally, 82% point to the security of transactions as inhibiting partner adoption of their blockchain applications, undermining blockchain’s status as a secure technology.
“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,” says Sudhir Pai, chief technology officer of financial services. “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.”
Current industry use
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. The report highlights that consumer product organizations are notably focused on tracing and identifying products. Retailers are focused on digital marketplaces and preventing counterfeits. More critically, blockchain can safeguard food supplies, tracing food from farm to fork, to head off contamination or product recalls.
“Our study underscores blockchain’s potential, but also shows that currently there are few large-scale implementations of this technology and clear barriers to adoption. Organizations should use our analysis of the pacesetting organizations to understand how feasible blockchain is for them, strengthening their blockchain program and turning hype into a reality,” adds Pai.
Research methodology
The Capgemini Research Institute surveyed around 450 organizations where blockchain implementation is underway in their supply chain as a proof of concept, pilot or at-scale. The research probed their approach to blockchain, the applications they are implementing and the challenges they are facing in scaling their initiatives. The respondents were drawn from across the consumer products, retail and manufacturing industries.
