A Gartner supply chain technology survey of user wants and needs* found that only 19% of respondents ranked blockchain as a very important technology for their business, and only 9% have invested in it. This is mainly because supply chain blockchain projects are very limited and do not match the initial enthusiasm for the technology’s application in supply chain management.
“Supply chain blockchain projects have mostly focused on verifying authenticity, improving traceability and visibility, and improving transactional trust,” said Alex Pradhan, senior principal research analyst at Gartner. “However, most have remained pilot projects due to a combination of technology immaturity, lack of standards, overly ambitious scope and a misunderstanding of how blockchain could, or should, actually help the supply chain. Inevitably, this is causing the market to experience blockchain fatigue.”
The budding nature of blockchain makes it almost impossible for organisations to identify and target specific high-value use cases. Instead, companies are forced to run multiple development pilots using trial and error to find ones that might provide value. Additionally, the vendor ecosystem has not fully formed and is struggling to establish market dominance. Another challenge is that supply chain organisations cannot buy an off-the-shelf, complete, packaged blockchain solution.
“Without a vibrant market for commercial blockchain applications, the majority of companies do not know how to evaluate, assess and benchmark solutions, especially as the market landscape rapidly evolves,” said Ms Pradhan. “Furthermore, current creations offered by solution providers are complicated hybrids of conventional blockchain technologies. This adds more complexity and confusion, making it that much harder for companies to identify appropriate supply chain use cases.”
As blockchain continues to develop in supply chains, Gartner recommends that organisations remain cautious about early adoption and not to rush into making blockchain work in their supply chain until there is a clear distinction between hype and the core capability of blockchain. “The emphasis should be on proof of concept, experimentation and limited-scope initiatives that deliver lessons, rather than high-cost, high-risk, strategic business value,” said Ms Pradhan.
