NextGen Supply Chain: Blockchain as a Business Solution
Asset tracking has long been an expensive process for telecom companies. Applying blockchain can lower costs and reduce friction across the partner network.
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Editor’s note: This is the first of 3 columns on blockchain technology in the supply chain.
Blockchain technology is increasingly demonstrating value within the supply chain industry. This is why as of 2018, 69% of supply chain organizations noted they are investigating in further exploring the technology, according to statista.com.
At Accenture, our clients are seeing immediate bottom-line results, driven by improvements in data quality and management, cost reductions through more efficient logistics and increased revenue opportunities in new products and markets. Having secure access and transparency to the data source solves for a recognized gap in the market: 79% of executives agree that companies are basing their most critical systems and strategies on data but many have not adequately invested in verifying it, according to a 2018 Accenture study. That same study found that bad data has a price – one major airline identified $1B in annual costs of inaccurate data. Blockchain can help enable the solution—creating secure, accessible records that can be used to generate critical insights.
Consider asset tracking, which has long been an expensive, time consuming process with significant leakage for telecom companies. Applying blockchain to this scenario can lower data costs, generate insights, and reduce friction across the partner network. Customer-premises equipment (CPE) provides an excellent example.
CPE is essentially any terminal or related technology located with an end user but connected to a carrier’s telecom network. The business model is straightforward: carriers lease boxes to their consumers. When a lease expires, or an old one undergoes maintenance, the asset is moved throughout the network. Further exacerbating this complexity are partners that lease and manage CPE owned by carriers.
There is a complex ecosystem surrounding the lease and transfer of these assets, with multiple third parties involved. Obvious issues arise: suboptimal utilization of assets, poor visibility into asset location and status and leakage as physical assets disappear in the system or are damaged. These issues lead both to higher capex for original equipment manufacturers that produce CPE and declining end customer satisfaction as supply chain issues threaten service quality. With increasing competition in the space, telecom providers are facing pressure to improve customer service while keeping supply chain costs low.
Blockchain offers a solution to visibility and utilization challenges. By tagging devices with unique identifiers, and logging each handoff, carriers create exceptional supply chain visibility. Device transactions, CPE taken off-line for maintenance and re-introduced, are recorded. This prevents asset loss and de facto creates a utilization log as well. Now, the length of time an individual asset spends undergoing maintenance is visible to the telecom carrier. This enables them to proactively manage both their asset pool and their supplier contracts, informed by visibility into the time and success of service from different maintenance providers.
Blockchain thus solves issues that currently incur high costs for carriers while also eliminating time and spend on reconciliation and administrative tasks across the partner network. Insights enabled by superior data then improve business investments and enhance the end customer experience. For instance, knowing who is in possession of a given CPE reduces the potential for leakage and all the effort previously required to locate the asset. What was complex and time consuming becomes simple—enabling swift responses to customer inquiries and proactive asset management.
Accenture has already begun teaming with clients to solve these issues. In the UK, Accenture is working with a local telecom to explore track and trace of internal stock and assets using blockchain technology. The technician verifies the parts and equipment are correct through a blockchain-enabled app, providing data transparency of the assets to the appropriate parties.
Asset utilization is just one example of how blockchain facilitates the asset tracking process. Consumers increasingly are demanding ethical sourcing, while companies face challenges that include natural resource constraints and heightened regulatory requirements for product safety. All problems that blockchain can help address.
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