(Credit: U.A.M.N. 360, Flickr Creative Commons)
A new blockchain network is launching that is meant to help companies improve supply chain management, including elements such as supplier qualification, validation and lifecycle information management. IBM and Chainyard are collaborating on the network, dubbed Trust Your Supplier (TYS), along with founding participants Anheuser-Busch InBev, Cisco, GlaxoSmithKline, Lenovo, Nokia, Schneider Electric and Vodafone. TYS is meant to eliminate the time-consuming processes involved in verifying identities and tracking documents like ISO certifications and other elements throughout the lifecycle of a supplier.
Ultimately, by using a decentralized approach and an immutable audit trail built on blockchain, companies can create “frictionless connectivity across supply chains,” resulting in reductions in cost, complexity and speed, says Renee Ure, chief supply chain officer for Lenovo’s Data Center Group.
Supply Chain Challenges
The primary supply chain challenge for businesses is ensuring the availability, quality and costs of supply. The supply chain organization must first ensure it can meet customer demand.
Companies must also ensure that suppliers and product components live up to the values and expectations of customers in terms of environmental and considerations. And, for a growing number of businesses where innovation can mean the difference between success and failure, supply chain organizations are being called upon to tap their suppliers as a source of innovation, IBM wrote in a recent white paper.
Risk management ranks remarkably high on the supply chain agenda as well, with organizations struggling to predict and mitigate events in a proactive or timely manner. Eighty-seven percent of supply chain executives consider proactive risk management critical, yet only 36% say they are equipped to adequately manage it, IBM says.
How TYS Works
Blockchain ensures a permission-based data sharing network; Trust Your Supplier creates a digital passport for supplier identity on the blockchain network that allows suppliers to share information with any permissioned buyer on the network.
This is expected to help reduce the time and cost associated with qualifying, validating and managing new suppliers while creating new business opportunities among suppliers and buyers. Third-party validators, such as Dun & Bradstreet, Ecovadis and RapidRatings provide outside verification or audit capabilities directly on the network.
TYS can also connect existing procurement business networks by relaying necessary supplier data required for exchanging purchase orders and invoices, without the need for suppliers to enter it in multiple different networks. The IBM Supply Chain Business Network can connect to Trust Your Supplier using open industry programming interfaces for access to existing verified supplier information.
IBM has over 18,500 suppliers around the world and will begin using the Trust Your Supplier network initially bringing on 4,000 of its own North American suppliers over the next few months. IBM Procurement projects a 70% to 80% reduction in the cycle time to bring aboard new suppliers, with a potential 50% reduction in administrative costs within its own business.
The TYS network is currently in limited availability with existing participants with plans for commercial availability later in quarter 3 of 2019, IBM says. TYS is built on the IBM Blockchain Platform hosted on the IBM Cloud.
By 2023, blockchain will support the global movement and tracking of $2 trillion of goods and services annually, according to Gartner Inc.