Unlocking Blockchain ROI: Researchers Examine Opportunities and Limits

Blockchain Concept

A blockchain is a method of storing a list of entries, such as transactions, which cannot be changed easily after they are created.

Blockchain has been one of the most hyped technologies of the past decade, predicted to lead a revolutionary change in the way businesses operate. Gartner estimates that it will generate $3.1 trillion in new business value by 2030, addressing the problems and opportunities of end-to-end information sharing. A new study from the Global Supply Chain Institute (GSCI) helps companies determine whether blockchain is right for them.

“The only thing certain today is that uncertainty will continue,” said Alan Amling, GSCI Fellow in the University of Tennessee, Knoxville’s Haslam College of Business and co-author of the white paper “When Is(n’t) Blockchain Right?

This uncertainty manifests in many areas. As supply chain leaders pursue network resiliency and flexibility, they often add new, relatively unknown supply chain partners. Blockchain’s unique capabilities can ensure commercial trust for transactions within these increasingly distributed networks.

A blockchain is a growing list of records, called blocks, that are linked together securely using cryptography. Because each block contains information about the one before it, they create a chain, with each new block strengthening the ones before it. As a result, blockchains are resistant to data tampering since, once recorded, the contents in any one block cannot be changed retrospectively without affecting all subsequent blocks.

GSCI conducted dozens of case studies and interviews with leaders from a broad range of industries to discover the current benefits and limitations of blockchain. The paper breaks down the terminology and structure of the technology and helps supply chain management professionals understand how blockchain can be used, how organizations are using it, and how to know if it will support their organization.

“Determining the ROI of blockchain can be challenging for many supply chain management professionals, who usually haven’t fully explored its capabilities and compared them to their business models,” said co-author Randy V. Bradley, an associate professor of supply chain management at UT. “Too many businesses waste time and effort on blockchain archetypes for problems that already have solutions in the market.”

The study found that the interoperability of blockchains through standards being set by organizations such as the Blockchain in Transport Alliance could be a significant benefit. Executives interviewed consistently called it a game-changer.

At present, blockchain is helping solve specific organizational challenges such as establishing product provenance and invoice reconciliation. While the number of current applications with a definitive ROI is limited, early adopters believe that learning the technology and required process adaptations now will give them a market advantage later.

For companies examining blockchain feasibility, this research can serve as a toolkit. Best practices from blockchain pioneers, such as requiring a value proposition for every member of the blockchain and making sure business professionals are involved in pilots, can save companies time, money, and frustration. The paper also provides a blockchain screener and blockchain decision support framework to assess the relevancy of and resources required for blockchain investments.

When Is(n’t) Blockchain Right? by Alan Amling, PhD; Randy Bradley, PhD; Mary Holcomb, PhD and Emily Cagen is the Global Supply Chain Institute’s 25th white paper.

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