NextGen Supply Chain: SAP does blockchain

Editor’s note: This is the third of 3 columns on blockchain in the supply chain. The first can be found here. The second can be found here.

Like all new technologies that capture the imagination, blockchain is a tool. And the key to any tool is figuring out what you can do with it. Hand someone a hammer, and they can build a house or break a car window. Right now in blockchain, we’ve got the tool; the challenge is figuring out what to do with it.

That’s one of the takeaways from a survey of 4,000 blockchain community experts and customers conducted by SAP last March. Respondents said they viewed blockchain as augmenting, not replacing, their existing systems, and there was almost universal interest in joining an SAP consortium to drive the industry forward. At the same time, respondents reported that at present, they had limited engagement with blockchain and no production systems in place. “The bottom line is that we’re very early in the game in terms of adoption,” said Gil Perez, SAP’s head of digital customer initiatives.

There are some folks kicking the blockchain tires. In the previous two posts, we looked at how Accenture is working with the cellular industry to us blockchain for asset tracking and aerospace and defense on the inbound supply chain. And Perez and I talked about a 6 month blockchain pilot with a number of leading players in the food industry. This is not the complete list, but it included Natureripe Farms, Simplot Foods; Maple Leaf Foods, Johnsonville, Kellogg’s, and Target.

For this effort, SAP played Yenta - all of the participants in the pilot were SAP customers - and provided a semi-private, permissioned SAP blockchain created for Natureripe. “They can provide access to the system to their suppliers, to their customers or to the FDA,” Perez said. “And they control provisioning. They could give the FDA the ability to review it, but not to write anything to the blockchain and give the farmers the ability to write, but with limitations. At the end of the day, it’s Natureripe’s decision.”

The goal of the pilot, according to Perez, was to track the ingredients in “a food that is a composite of ingredients” through the supply chain, from the farm where the raw product is grown and harvested up through the supply chain. For the pilot, they chose a chicken Caesar salad because of the variety of ingredients. “We wanted to see what happens when you grow it, harvest it and it goes up the supply chain,” Perez said. “Then, the question was, what if along the way, we have a recall? What would be the prescribed procedures we should take to not react in a panic, but to have an organized and prescribed set of actions to minimize what has to be done,” he said. As part of that, the participants had to figure out how they worked together end to end, and what information did the various players need to put in to reach the goal.

If all of that comes together, and there is a recall, “you’d have the complete track and trace of a box or pallet along with the complete provenance of the products in that box,” Perez said. “You could do the root cause analysis to determine whether it was the cheese, the lettuce or the chicken and then know who was the farmer, what warehouse did it go to? On the containment side, you could go to Target and say, take the following boxes of the shelf because we have a caution.” Perez added that SAP is now doing this in the ocean to understand the change of ownership that happens as tuna moves through the supply chain.

As Perez noted, we’re still in the early days, but as more companies conduct more pilots, we’ll begin to see more solutions as companies figure out what they can do with this new tool.