Digital Disruption and Blockchain in Supply Chain Management
Aus dem Unterricht CAS Fintech & Blockchain Economy mit der Dozentin Kamales Lardi (“Kam”) und Dr. iur. Guenther Dobrauz berichtet Carlo A. Demè zum Thema Digital Disruption im Supply Chain Management.
The morning started with the “firework” of Dr. iur. Guenther Dobrauz, Partner and Leader PwC Legal – PwC Switzerland, who spoke on the topic of “Disruption Governance”.
After this we started the journey of defining and understanding words like:
- Invention: generation of ideas or concepts for new products or processe
- Innovation: translation of new ideas into marketable products or processes
- Diffusion: The widespread adoption of products or processes in the market
- Creative Destruction: Industrial transformation through radical innovation
Introduction of revolutionary products and services by successful entrepreneurs is the fundamental force driving sustained long-term economic growth. Consequently that destroys the power of established institutions and organizations in the short term.
Thereafter we defined and understood the key word “disruption”. Subsequently we continued to one of the learnings of the first morning part “How to break down disruption”, so “through radical innovation”.
After that we continued with the dynamics of innovation. The dynamics of innovation are defined on the one side by innovation/production efficiency. On the other side by dimension of time.
Consequently innovation hands over to the production/efficiency into the maximal outcome is radical innovation. When the early majority over time starts to turn into late majority and laggards then production/efficiency starts to the quadrant of dominant design.
For me one of the most impressive examples was to learn from the history of music: In the beginning one or more artists were playing for fewer people. This music was unique and not shareable – not repeatable and not scalable. There was effectively no possibility to store, save and replay music.
Then it turned to the stage where music was copied and recorded from various people over in a concert hall and then over the radio. “Next step” was the LP or CD. As a result a wider circle of people was able to listen and to enjoy music. After that, with the digital resolution of Napster and support of mobile devices and cloud technology, Music got scalable, either in the room, on the iPhone or with whatever electronic device.
In the beginning, when music was played, nobody ever thought and foresaw that such a development would have brought music to such a large majority of people – repeatable – affordable – distributable on different devices.
Another very interesting point that Guenther pointed out was the influence of smartphones. What was initially intended as a telephone has now developed (to this day) into one of the most complex – intuitive and easy to use – self-explanatory and versatile interfaces of mankind. The Smartphone.
It changes lives for many reasons. Availability, multiple use, network access and reachability and traceability. A single handheld combining all kinds of capabilities – from knowing where to go with the help of mobile cards – being able to take pictures/videos and share them with a community – doing banking – paying by interface or retrieving emails and other communication channels – and finally being available 24 hours a day.
The real diffusion of innovation or so-called key attributes for rapid adoption are the following:
- Relative advantages
- Complexity / Simplicity
The next chapter and the second part of the morning lecture dealt with the acceleration of technical progress and the adoption of technology: Welcome to the age of exponential technologies!
Looking back to the phase of computers in the beginning (room size) on the mainframe, transition to the minicomputer phase, transition to the phase that was the PC with the software that remembers me, when I started using this in my high school years, where we had the first PC weighing about 6 kilos and an EIZO screen of about 20 kilos. Laptops as an intermediate stage before mobile apps on the iPhone or other devices. The future will be the interconnected platforms between hardware and software that lie ahead of us, enabling the Cloud based SaaS technologies toda
Other examples to follow: Think of the days, when people were walking in the streets next to horses and horse-carriages.
The development of moving from one place to another. Bicycles and Vélo-Solex are included in the development. Horses and then Horse & Carriage helped people get from A to B. Later steam vehicles, then the internal combustion engine, the cars with hybrid engines, the electric motor and the future will be self-driving cars … with the future of a self – driving fleet of cars from Uber.
Another example that people in the 60s and 70s can recognise:
A former video rental shop in any Swiss city. A story of changing business demand and innovation. From picking up a video (VHS) in the city -> sending VHS by post to your home -> via VCD Compact Disc -> digital video -> video channel on TV -> to today’s individual videos ‘on demand’, on TV, on PC, on digital handholds / interfaces all over the world.
Let us now come to the point, why we study and sit in the HWZ building on Saturdays and during the week – or because of the pandemic situation of the wfH with “Microsoft-Teams” or “Zoom.us” – one of the reasons is exactly that we can use different learning solutions. Someone had to “invent” them … We are taught to make similar “mosaic stones” to move the world “digital yours” …
- What are the most important skills we should take with us when we go out into the world after this course – CAS Digital Blockchain and Fintech (version COVID 19):
- What are the leadership qualities for the new age and new perceptions?
Leadership in time of exponential technologies means, that leaders must understand and be able to manage:
- Meaningfulness and purpose.
- No industry is untouched.
- Global talent sourcing.
Many companies and industries must adapt massively and learn from what visionary people can do and “move” and today’s performance management systems (underlaying measurement criteria do not ultimately allow for visionary leadership either.
Let’s start by living what the Dalai Lama has already said – mostly it is in listening, even the most absurd solutions are usually already available today … but the people/leaders do not want to listen – because change is seen as “fear” and not as “opportunity”.
When you speak, you are only repeater what you already know; but when you listen you may learn something new. – Dalai Lama
The competencies of agile innovation managers consist of being a good listener and networked thinking, ask and understand, be fast in execution, having informed decision makers and being aware of opportunities and changes and the willingness to learn fast from mistakes and success iterations.
Kamales Lardy, Chief Executive Officer (CEO) – Lardi & Partner Consulting GmbH, known as “Kam”, spoke of practical experience and solutions.
The Saturday afternoon was divided into 4 parts.
- Fundamentals of blockchain in supply chain
- Value of blockchain for supply chain management
- Physical, financial & information flow
- Implementation of blockchain in supply chain
Firstly – Fundamentals of blockchain in supply chain – was giving an insight of Supply chain management, like the essentials, the factor for impacting and the Blockchain use cases in supply chain.
With the experiences that Kam has earned over the years, she quite easily explained us the essentials of Supplying Chain Management and the factors which links Supply Chain and to blockchain.
The globalisation, rapid changes, regulatory requirements, ecological footprint and the markets as well demand for compliance to be met. Negative factors like lack of transparency, in certain cases corruption, the high costs and relative slowness, demand for determination in solving these issues.
The real need to change is particularly tangible and visible in the poor customer service. Kam then explained us for example how luxury goods in Switzerland in one case have been managed by Blockchain solution and showed an example consulted and implemented by her company.
Additionally, she showed us an example of tuna fishing in Indonesia.
“Blockchain’s biggest benfit to business is not to do something we could not do before… It is driving the supply chain world towards innovations it should have implemented over the past 20 years.” – Kamales Lardy
In the second agenda part she explained some of the key drivers for Blockchain solutions in future in the Supplying Chain Management area from her experience and view:
Drive and improve:
- Data and product security
- Better visibility into (internal) supply chain processes
- to achieve better visibility in inventory and accuracy and information
- Asset management and tracking
- Productivity and operating costs
Out of this and various other iterations, Kam came to the point where she brought the key challenges in supply challenge management versus the promises which an application in blockchain could deliver. I take some out of it one key element is the lack of traceability, the lack of responsiveness and the promise of blockchain application can be leveraged for:
The absolute Highlight for me:
Walmart can in effect identify wherever and whenever which Mango comes from which Plantation. They know where it is currently, when it was harvested, what way it has been shipped and on which temperatures it has been stored during the whole journey.
In the third part we looked at the five key parties involved in “the flow” = physical, financial transactions and information flow which involves suppliers, producers, distributors, retailers and customers.
Everything was done on paper in the earlier days. Today quite a lot is and can be monitored and managed by digital solutions, interfaces and instruments.
New solutions shall be implemented on blockchain for various reasons:
– they allow a transparent ledger system,
– tracing in real-time,
– faster transactions,
– traceless chain,
– product certification,
– greater security,
– lower carbon footprint,
and last but not least – reduced costs – one key benefit in this area.
As fourth and lastly, Kam came to the practical part of the afternoon session.
Kam and her company (Lardi & Partner Consulting GmbH) have implemented a Blockchain Solution for Supply Chain in the Palm Oil area. This solution is adoptable and usable for various other supplier organization and scalable with adaptations.
The project has grown, because the need was high and demanding for Change.
Amazing, that this is happening in an area where the digitalization and education are not on the level, which many people think.
It is obvious that seeing the challenges of these days in this area leads to the point that people are aware of the inefficiency of the system. The system is containing too many risks and pain points and urges for change. So what in the end leads them “the community” to find a better solution for allowing costs to be better managed. Constantly reviewing with the stakeholders of situation and how to proceed is essential. The next step is deep dive and high-level design. This asks for stakeholders input and taking them into responsibility to validate. The pilot implementation and review are the first step to move to the direction of full implementation. Once completed the work will continue to the last phase of continuous improvement.
- The challenges around moving environments and system from an old to a new environment take time. This transitions are “slow” although mostly time is urging for change.
- Theses projects need quite a lot of expectation management and stakeholder management. Daily showing people that the new environment gives them opportunities and good possibilities is fundamental for success.
- The more clearly you communicate the earlier you move less harder outside demand and regulators forcing change.
- Show and create trust to support change – generating new perspective is central.
- Be able to show the stakeholders what in future will be their stake and role around the new solution. Make them aware that not changing actual solution will have a much more serious and severe impact on the environment. To be the first mover is a competitive advantage.
From a personal point of view, I can only agree that in various environments as a first mover. I have experienced much more attention and learning processes. These skills allow to share knowledge. They allow to be seen as a leader and important resource that is ahead of the industry. In this way it gives them the opportunity to “influence” ongoing positive developments.
Insights of the speaker of the sessions and the exchange with fellow students.
- Learn to be humble.
- Use your skills and be willing to learn and innovate.
- Understand your stakeholders and actively drive change.
- Work directly with clear goals and expectations.
- Think out of the box and “search” for solutions in and out of people’s daily way of thinking.
- Provide the solution around the customer’s needs/pains – not around the product.
- Be agile and adaptable and quickly implement a “failure culture”.
- Do not bind your ideas to what was in the past. Eradicate things that are not realistic today!
That will be the key to a new and bright future and a better world in the future.
- Innovations need failures and mistakes! Only then come smarter solutions. Better solutions are born usually under financial time pressure.