“Blockchain – Victim of Implementation Failure” by CII Deep Work Interns Sampad Sagar Rath & Priyesh Mishra


In India, most organizations have an ERP system wherein they tend to maintain track of their work but even with such an effective system, there seems to be a work redundancy. These redundancies not only waste precious resources but also waste man-hour which could have been effectively utilized into some other work. Additionally, companies are growing more complex with their tie-ups and thus creating a complex ecosystem where there are multiple parties for a single product variant. The added responsibility of maintaining a check over the resources as well as the flow of resources is forcing companies into the run for the money. Does the question loom in the air as to what can be the possible solution to counter such a problem?
The answer comes with the technological solution Blockchain. On turning the pages as well as surfing through articles on the internet we usually come across words like Integrating resources, data accuracy, transparency, as well as better inventory and in-transit management. Broadly this is what blockchain looks like when each and every process is integrated. There can be seamless transfer of data which is accompanied by transparency and accountability
But what about the current situation? Aftermath of lockdown-5! How exactly will an industry overcome with their labour shortage and bridge-in those demand and supply gap that will be created once things start restoring to the normal routine? Can blockchain serve to the purpose or is it just the hype that has been stated as per Gartner’s report on Hype Cycle.

Why Blockchain is termed as hype as per Gartner’s report?

Is it a Hype and we can term it as an innovation trigger? Well to answer this we need to first understand the dynamics of the Industry. As per the report of PwC, 56% of the people find Blockchain useful but at the same time, 57% of the people are unsure about how to use it. Similarly, as per the survey report on 2019 Deloitte global blockchain survey, 83% of people see it as a compelling use case when it comes to blockchain. With such promising numbers, how can it be termed as “Hype”?

Well, the answer is quite simple, with just less than 3% of Industries in America using this technology and others still guessing about its implementation, it clearly states the reason of it being hyped and when it comes to India. As per the report of NASSCOM, “However, investments in the Indian Blockchain ecosystem have been relatively low, at less than 0.2% of the global investments.” With these reports, it’s quite clear that even though there is a requirement of blockchain technology into various spaces yet companies are not yet ready to absorb those changes. The saying “if it ain’t broke, don’t fix it” stands true in this case.

How can blockchain bridge gaps in the demand and supply of the manufacturing industry in India?

With the advent of COVID-19 and halt in the production process of Industries in India, we are experiencing a huge movement of labourers who are migrating towards their homes due to lack of work opportunities. Lockdown conditions being relaxed and things getting restored to normal operating process, labour-intensive industries are having a hard time to resume their work. If this situation is not resolved at the earliest, things might turn for worse and the gap between demand and supply would be ever-widening. Can blockchain minimize the gap in demand and supply?
To answer this, we need to visit the basics of Blockchain along with economies of scale application. With each step in blockchain creating a separate ledger, the level of accountability and transparency is maintained to the max. No industry wants its resources to go waste and thus to ensure Zero Defect Rate, they can capitalize on their resources which in turn would lower their wastage and bring down the cost per unit.

Can Blockchain serve the purpose in the Supply chain also?

Yes, it can but it all depends upon how well a company has integrated its resources. What we see as of now, a part of the process in the supply chain has been completely integrated whereas the logistics portion has been left out. With all good done in the sequential process, the logistics are the one that leaks and ultimately the whole process has to suffer. In current scenario, as per the report of EY, most companies have left out the process of logistics due to which there can be no real time-based tracking of in-transit process. For in-transit process companies start using systems like electronic data interchange (EDI) and XML messaging to try to maintain information continuity across
system and enterprise boundaries. This whole scenario ends up with one system speaking English whereas the other responding in Greek and this doesn’t go hand in hand with each other.
The solution to this can only be an integration of each unit. This will enable companies to have a complete track of their process and reduce the cycle time with improved accuracy, transparency, and accountability. Well, the cycle ends only when the payment is made. Thus, going by EY’s report “The average U.S. Fortune 100 company has more than 60 days of sales outstanding. That’s how long it takes for companies to get paid after completing a task or delivering a product in the real world. What’s odd about this statistic is that nearly all these
companies are interacting with each other in contracts that specify payment upon receipt or, at most, within 30 days.” What can be the possible reason behind such a lagging process?
The answer is quite simple it’s the manual generation of the bill which in turn is mailed to the customer, who on receiving such bill enters the bill into the system and then it proceeds for payment. With such inefficient process in a dynamically changing environment will surely lead to financial stress for the companies and there are options available but when we already have a Blockchain which integrates the whole system of company’s, then what’s the point of wasting another chunk of money on a system which can be alien to company’s in-house system.
With a concluding remark, Blockchain can bridge the gap between Demand and Supply but it all depends upon how well a company integrates its system and resources in one common language and if they do so, most of their problems related to supply chain can surely be minimized.