An article in the Wall Street Journal (March 6, 2018) titled ” GE Units Expands program to speed up U.S. imports through supply chains”, describes GE Transportation’s work with the port of Long Beach in California to speed up imports through the port through use of its GE optimizer software. The software aims to pull data together from ‘shipping companies, port terminal operators, freight railroads and other supply chain layers into a single portal’, thus enabling visibility into shipments two weeks before they arrive. This improved visibility is expected to help coordination and thus better match supply and demand. Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections ? Will emerging blockchain initiatives reduce the need for such centralized software solutions ? How should users be charged for the visibility into their shipments ?
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Global Supply Chain Musings 
I believe that the software should be developed with open source elements to allow other systems’ software data to be pulled into the “optimizer” software. This would provide greater visibility into shipments and throughput densities.
I personally did not know what emerging blockchain initiatives were? What I discovered…blockchains are digital databases that contain information (such as financial transactions records) that can be simultaneously used and shared within a large decentralized, publicly accessible network. Blockchain technology is at the heart of bitcoin and other virtual currencies. It is an open, distributed ledger that can record transactions between two parties and in a verifiable and permanent way. I think blockchain technology could enhance and potentially replace centralized software solutions, but it is too early to tell. I’m not sure we fully understand the vulnerabilities that may exist with this technology and the impacts if compromised.
Charging customers for visibility of their shipments? Since the GE optimizer software is only as good as the data it receives, it requires companies to release their data to populate the centralized database to provide visibility of shipment throughput. If that is the case, then there should be no cost to those companies using the port for container trans-shipment. However, there is a cost to use the Port of Long Beach and this software capability helps port authorities to better manage flow and throughput of container shipments. As such, the port authorities benefit from this capability more than the companies using the facility. So shipment visibility is seen by the customers as an advantage for using the port. The port should leverage this capability to entice companies to use their facilities and services, rather than going to other U.S. ports. The cost should be incorporated in the overall service charges for using the port.
Ross,
I couldn’t agree more about the cost. The benefits(savings) for the ports in throughput and reduced wasted labor should be used to pay for the software. If the port is able to reduce the amount of time a container spends at the port, they should be able to increase the number of containers that flow through the port. Do you think this has the potential to allow or more throughput?
I think developing the software as open-source would be the most beneficial to all parties, that way each of the different users (shipping companies, freight railroads, port operators, etc) can develop their own tool that “plugs” into the system and they all can each communicate with each other through the one central software tool.
Blockchain is still in its infancy but the disruptive technology will most likely lead to many centralized bookkeeping technologies going obsolete. This will have repercussions across many industries from shipping supplies to financial ledgers. Imagine if you (your card) didn’t have to go through visa or mastercard to process the transaction anymore when you swipe your debit card, the entire industry is going to change and I don’t see shipping ledgers as being any different. One thing though to be cautious with blockchain is the security behind it. The software still has a way to progress before any major changes are going to come to fruition.
As Ross stated, the software is only useful if all of the parties use it, so I think it should be provided to the transportation companies relatively cheap if not free. The ports are the ones who would benefit the most by having such as resourceful technology that it could bring more business into their port, terminal, etc so they should be the ones footing the bill for the software, for the most part.
Nick,
You make a good point about ports bearing the costs to implement such softwares. Over a period of time, ports will have better understanding of the benefits of having the software and find additional ways to generate revenues rather than charging transportation companies upfront. Better understanding of activities within the software and using that data to develop new methods to generate revenue seem to be a standard today.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate data connections? Transparency and being able to “see” or track where goods are in the supply chain is almost a given now, with more companies following an Amazon style of visibility. Where is my shipment right now is pretty easy to answer, but understanding the what goes on behind this is challenging and the resources it takes to do so can be daunting. I believe such software should be developed, especially if it allows freeing up resources to perform other functions.
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
Blockchain was the backbone of alternative securities such as Bitcoin. Claims were made that such systems were impossible to hack, but then what happens? They get hacked. A lot more development work needs to happen with blockchain before anybody should entrust something as critical as the supply chain to an essentially unproven system.
How should users be charged for the visibility into their shipments? As I stated above, this type of visibility is a given now with consumers and I would expect nothing less further up the supply chain. The name itself, “Optimizer” suggests that GE is bringing technology to the field that will increase efficiencies and capabilities, leading to cost savings somewhere. The service should be provided at no cost, with a minimal investment in the software itself.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections ?
I’m hesitant to advocate for a third-party company orchestrating connections, as I personally continue to experience logistical hell with my organization’s freight and shipping and the landslide of billing issues that follow all due to companies outsourcing their data connections, a lot of which are off shore. Companies solely designed to coordinate data for a variety of industries, related or not, generally are lacking the expertise and background in each of those industries to intelligently (and efficiently) execute. There are many factors to consider including the material being freighted and its sensitivity to a given element (weather, terrain, etc.), loading and unloading, COD transactions, multi-stop routes, and many other details that vary among vendors. Without knowledge or a stake in these potentially very costly liabilities, there is no incentive for a third-party to perform.
Will emerging blockchain initiatives reduce the need for such centralized software solutions ?
As Ross mentioned, at this time I believe it’s too early to make an intelligent assumption about blockchain initiatives reducing “the need” for centralized software. He’s absolutely right that there are multiple vulnerabilities from a financial reporting standpoint, and at what cost is it worth unintended or accidental exposure?
How should users be charged for the visibility into their shipments ?
As others have stated, it should come at little to no cost as a cost-saving/efficiency incentive for all companies to participate. Without everyone’s skin in the game, the software will be rendered more useless than resourceful.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third-party company orchestrate the data connections?
I believe the decision between development or having a third-party orchestrate the data collections comes down to capacity. I think that GE has the ability to do this and therefore should take advantage of that to best improve their own abilities. With everything though once it is developed and executed it will become a marketable item and/or can be spun off or copied. Obviously, there are other solutions out there that do the same task but if GE is able to tailor a specific system based on their own goals I would do that. This is contingent on that capacity and barriers to entry. How much will development cost? Where do they stand with the technology etc.? The benefit to a third-party handling this would be the theoretical cost savings. The other down side to GE developing their own system would be the need for their customers and suppliers to utilize their software; where their customers and suppliers might be more likely to use a third-party application so they can apply it to multiple business ventures.
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
As the world we live in continues to evolve we rely more and more on technology. I think it would be silly to suggest that we wouldn’t trend towards blockchain technology and more cloud-based systems. There will always be a need to privacy and security pending on the company and product etc. but overall integration will drive these multi-functioning solutions to be the most efficient and beneficial for the company. I think there will always be a need for centralized software etc but the norm for day to day operations will make a large shift.
How should users be charged for the visibility into their shipments?
Developers are in the game to make money, so I think it would be unrealistic to say this would be free. However, as others have pointed out without the data input the technology will be useless. I think it has to be rolled out and as it expands, and usage increase is when you have the opportunity to start charging the customer. Where your GE or major companies that are reliant on these shipments and managing the logistics such as a C.H. Robinson will pay the highest fees compared to a local company. I would suggest it be based on scale, same as buying storage in the cloud.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third-party company orchestrate the data connections?
I believe the software should be developed as open-source to allow companies to connect via the standard protocols and own the development of their own tools. As vendors and data needs change companies will be able continue to connect and build an ecosystem of information in central place, which will enhance transparency and coordination. Hiring a third part to manage this could be extremely costly. The scalable solution is to build an open-source software.
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
Blockchain has the capabilities to be disruptive to centralized software solutions, but many gaps remain in the technology. One of the key items is who is governing the information and that today sits with specific organizations to review and then process. Blockchain makes the technology the owner of verification and there are many questions on the ability for this to be the sole owner of information without a 3rd party verification process. So yes, it could be disruptive, but gaps remain.
How should users be charged for the visibility into their shipments?
Users should not be charged as the key to the success of bringing all this data together is it has to have all information and all parties included to make a single resource. If fees are charged the risk of some parties not participating is high and the value of the solution will be limited as not all information will be provided.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections ?
In a “great modeled” world of course sharing knowledge and developing such software as open source is ideal. But living in a capitalistic system prevents often such developments. Of course GE improves the overall supply chain but also collecting massive amounts of data, which in turn they use for their operations, for sell, for analysis etc., getting an advantage.
As a compromise maybe it is possible to offer a part/the core as a open source software, getting the basis for other companies. A third party can then offer paid modules for further advantage (e.g. specific analysis, …).
Will emerging blockchain initiatives reduce the need for such centralized software solutions ?
I’m observing the blockchain initiatives for the recent years and know about huge R&D budgets of major companies to get the technology ready for the market. There are still security issues preventing to implement the technology. If the blockchain initiative will be integrated in the market, a new generation starts. It will be a game changer. Whole business models of major companies will change. To answer the question: If the blockchain technology will be used in the future, the data is centralized a there is no need for centralized software.
How should users be charged for the visibility into their shipments ?
The success of this software depends on data. Data provided by the users. You definitely should not charge the hand which is feeding you. In turn, they should get some benefits for sharing their data!
The whole software would not have a value if major data is missing…
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections?
In today’s market where customers can track their parcel through UPS/ DHL/ Amazon etc. it becomes seen as standard practice to be able to do this.
I would therefore agree with the others in that I agree that this should be an open source in order for other companies, and industries to utilise themselves which in turn may then assist with larger firms such as GE. By having this software as an open source it means that there is transparency in the information available and could help to free up the resources which currently track shipments.
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
As companies and consumers come to rely more and more upon technology there must be movement and growth within a company to respond to these changes. There has been a lot of financial input from major companies into utilising blockchains, however there are still security issues surrounding their use, but it would seem that there is some confidence in utilising them in the future.
How should users be charged for the visibility into their shipments?
Again, I agree with the group; they shouldn’t be charged. Why would you charge the people that provide the data this seems counterintuitive?
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third-party company orchestrate the data connections?
The main appeal of Open Source is that it is generally free. However, most interfaces are not so user-friendly and easy to use. In most cases the user must rely on the corresponding community or pay for external supporting service, which can be a heavy burden. The visibility and easy access to the source code can also be a double-edged sword as bad actors people find vulnerabilities and leave backdoors for future exploits. Therefore, I lean towards a third-party company orchestrating the data connections. The participants (shipping companies, port terminal operators, freight railroads and other supply chain players) would form a consortium to fund the development of the portal and develop a standard protocol.
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
Perhaps is the distant future blockchain initiatives may reduce the need for such centralized software solutions but this will not happen in the next 3-5 years. The barrier to entry is very high given the complexity of global supply chains and the number of participants in the networks.
How should users be charged for the visibility into their shipments?
The consortium of participants (shipping companies, port terminal operators, freight railroads and other supply chain players) would be able to charge a premium to customers based on the level of visibility desired. In low margin industries and industries with time constraints (think holiday sales), companies may be willing to pay a premium to transport and deploy their inventory in the most efficient and cost effective manner. The consortium could use these premiums to offset development costs of the software.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections?
Open source or even privately developed software with standard interface protocols would be in the best interest of the public. Private (corporate) interests could also support standard interface protocols with the intent of making it easy to connect to, and therefore increase utilization. A third party can help accelerate the initial adoption (through the company’s sales efforts), but could ultimately sub optimize the outcome. I agree with Vivek that a consortium could be a good approach to establishing standard protocols.
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
Blockchain technology could be useful in the long term, but may be an adoption barrier for lesser sophisticated transportation companies at this time. It remains to be seen whether complex interactions can be scaled up to the level needed for this type of initiative yet, and as others have pointed out the security still needs some work.
How should users be charged for the visibility into their shipments?
Many different “interface” solutions could be provided by intermediaries with different fee structures depending on the use case. A subscription model seems to be appropriate, perhaps with the fee basis tied to the level of detail the user wants to see (basic info for free, ability to purchase sophisticated analytics and drill-down capability). Companies that can make/save money from the more detailed visibility would likely be willing to pay in accordance with their level of benefit.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections ?
While I am in favor of the open source concept and theoretical ease of use that may come with it, I’ve experienced first hand the challenges to setup systems that share data between companies. The government is constantly looking for ways to gain access to financial transactions in response to criminal investigations, that multiple government agencies are creating their own unique system and requiring Banks to “hook into it”. As mentioned by Beth and Vivek, I think a third party company that is able to execute and accelerate the process may be in the best interest of the companies that may have resource and capacity restraints.
Will emerging blockchain initiatives reduce the need for such centralized software solutions ?
Blockchain technology could at one point become a disrupter in the market and reduce the need for centralized software solutions. However at this point, it has not been widely adopted to change the current or even short term future needs of companies to have centralized solutions.
How should users be charged for the visibility into their shipments ?
The data that would be provided to all users would be mutually beneficial, but I don’t necessarily think it should be given away for free. Instead of fees specific for the use of the system, I would rather see stronger partnerships and in turn contracts as a result of the system. I think there is a way to receive financial compensation for the system through increased sales,reduced costs from suppliers through the supply chain, multi-year contracts. This would foster a better relationship with the companies than a usage fee, but also provide for some additional financial benefit.
I think that the software should be developed in a data and company agnostic format. The protocols need to be able to accept information across multiple countries and organizations. If they require companies to use a 3rd party source, it could take years for large organizations to change their software, thus leading to slower returns on the initiative. Only by allowing multiple points and types of data entry can they truly maximize the data processing.
Blockchain is starting to permeate many industries and could eventually be utilized for shipping. I see shipping as a very stable and slow to move industry (pun intended) and as such would not expect them to be early adopters of blockchain based systems. I think it will have utility in the coming years to replace existing software based solutions.
The motivation behind the initiative is for the port to maximize their through put. So the majority of the cost should be covered by them. However, all companies can benefit from more data and competitive data. I would propose a basic package for free that is available to all who participate in the initiative. That way, each company has motivation to participate. However, more data or different ways of processing/accessing that is more advanced can charge for access and utilization. There should be a premium priced option that offers the user the ability to capture deidentified data that allows them to further improve their shipping organizations. This is currently being done in industries like healthcare to compare outcomes of a surgeon, within a surgeon practice, within a city or across the country.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections ?
While everyone enjoys the free cost of open source products, Vivek, Jessica and others have pointed out the obvious issues with them. I think software like this is best created by a 3rd party. Doing this allows the end-users the security they need as well as the ability to customize the software for their organizations.
Will emerging blockchain initiatives reduce the need for such centralized software solutions ?
Blockchain technology certainly has the potential to be used in this type of software environment but, as others have also mentioned, it’s many years away from broad use and it’s greater use isn’t in this field necessarily anyway.
How should users be charged for the visibility into their shipments ?
Lindsey makes a good point here – the motivation stems from the port. I know firsthand that the backlog at this port is significant and it’s not incredibly susceptible to weather and labor issues so the port needs to take the lead on through-put improvements to help compensate for the challenges this port routinely faces. Additionally the imports coming into this port are only expected to increase and software, like GE’s, is a sound investment. However, the port charging fee’s to shippers and warehouse facilities to help defray the investment is certainly reasonable as it will help them reduce costs as well.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third-party company orchestrate the data connections?
I like the idea of making this an open source software, getting public collaboration and made freely available. If GE decides to keep it an open source software, I think they have to keep it in house and manage all of the data. As others have stated, if it goes to a third-party, it will likely begin to cost the users. By GE making it open source, it will drive the port to become more efficient overall. The gains of increasing throughput would be the financial benefit to the companies involved. If successful, it could move to more ports in the US and globally, increasing the productivity of all shipping; in turn increase profits and potentially reducing price of goods to consumers (less S&H time, less money to do so.)
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
I would agree that blockchain technology will be a major player in the future, but it would be multiple years before it catches on to the masses. People don’t fully understand it and are concerned with the security risks, meaning they are rightly skeptical of the technology. I also think the thought of “all my information is public” scares people, making that one more hurdle for this to catch on.
How should users be charged for the visibility into their shipments?
I think it has to be priced so the increased throughput and matching supply/demand has to greatly outweigh the cost of the service. It seems to make the most sense to based off volume of how much each major company is bringing into and out of the port.
GE’s optimizer software looks very interesting for improving their own supply chain through the Port of Long Beach. It could certainly be leveraged by other companies with complex transportation networks – especially international networks. The issue then is, how could GE then make their software available where it meets GE’s interests, the interests of participating shipping companies and organizations, and the interests of prospective users.
To start, GE should think about how to build backend integrations with all sorts of private and public entities. A form that best secures GE’s interests in making their software available would be to hire a third party to orchestrate the connections. Opening the connections to open source connections makes their software both vulnerable to security and competition threats. It sounds nice that a company would make connections to their software available via open source connections – but, it does little to incentive GE to afford the resources in making their software available. The good thing is that there is already incentive in partnering organizations to provide access to their shipping information considering if customers have better access to their shipments, they can make adjustments as needed. Public entities such as Port Authorities already have to make their data available – so there’s hardly a threat there. Additionally, security can be managed with strong contracts and implementation of ISO 27001 and 9001 protocols. To help build partnerships with competing private entities, I agree with Vivek that a consortium could be put together to manage the connection protocols and levels of data availability.
As for emerging blockchain technology, there is no current incentive for GE or for any participating company to employ blockchain. Blockchain technology is in its infancy and poses serious security risks and IP technology loss risk. Additionally, with today’s security and privacy concerns trending upwards, the present is no place for blockchain technologies to be taken seriously. The organizations seriously interested in blockchain are either trying to rid the world of capital control or find a way to control blockchain so they can control capital flows. Honestly, those two concerns are antithetical to each other. So, while the world ebb and flows with trust – I just don’t see a future with enough trust built into structures where blockchain will ever be a serious part of technological communication. Blockchain is currently being investigated as a use for licensing software – so you don’t have to have decentralized software in order to employ blockchain. However, companies that have locked down their licensing models may never see a use for blockchain – keeping blockchain in the freeware space.
As is needed to make the availability of the software possible, GE needs to charge users for access to the optimization tool. Many companies have modeled access like this before such as Payscale, Microsoft, Amazon, or Google. Varying levels of access could be purchased at varying pricing levels. The base level could be simple access to a basic view via a more general portal with advertising. This level would be economical for both users and GE. The second level could be a specialized portal with analytics. The third level could have backend connections for more integrations with other internal tools like GL connections or Operations Management connections. a fourth level could include services that help optimize processes, lead times, and contingency plans.
The software aims to pull data together from ‘shipping companies, port terminal operators, freight railroads and other supply chain layers into a single portal’, thus enabling visibility into shipments two weeks before they arrive.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections?
There are several aspects and very technologically complex. I assume GE’s software is proprietary. The phrasing: “as open source elements” meaning “with open source elements?” Standard protocols provide a data communication methodology which allows every business to develop software which can communicate reliably with other equipment and programs. Very convenient and useful, as well as accelerating the implementation. The simplest way to think about this, is in terms of “Universal Plug and Play Technology.” Microsoft led the world and made billions of dollars, by giving access to each company to develop their specialty gadget and gizmo (which helped someone, somewhere) to the Windows Operating software and also some of their office products software. Business-wise it created exponential growth and opportunity across the globe. Unfortunately, with that convenience, came huge security risks. Below is just a glimps into one of the security risks.
…A virus, Trojan horse, worm, or other malicious program that manages to infect a computer on the local shipping network can use UPnP, just like legitimate programs can. While a router normally blocks incoming connections, preventing some malicious access, UPnP could allow a malicious program to bypass the firewall entirely.
We want the ability to pull information from many different systems involved in the shipping industry, right? One layer of the communication chain must utilize standard protocols with user authentication to get the data from the various platforms. Then the layers after that must ensure security. As these are US ports of calls, we are talking US National security, Customers and Borders, Department of Homeland Security, etc. to be interested and involved. We know who will be responsible – US Government. Who will develop this layered security software? There is no question, this will be a US-based company, with no-foreign employees working on it.
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
Blockchain initiatives equates to a decentralized, distributed network of platforms (nodes) for financial transactions, which could possibly be transformed and used for other types of transactions, such as shipping. In a public forum, anyone, anywhere can create transaction – even criminals. The key component, the authentication process, is theoretically spread across multiple nodes, so no one element is the weak element for targeted infiltration. There is an algorithm which changes the identification sources in a supposedly secure fashion. According to the Harvard Review, “The process by which a network of nodes confirms the record of previously verified transactions, and by which it verifies new transactions, is known as a consensus protocol.”
They go on to state, “Because the consensus protocol is energy consuming, the majority of users operate in countries with cheap electricity, leading to network centralization and the possibility of collusion, and making the network vulnerable to changes in policy on electricity subsidies. Both of these trends have led to an increased interest in private blockchains, which could ultimately give businesses a greater degree of control.” https://hbr.org/2017/03/how-safe-are-blockchains-it-depends
Bottom Line: Not any time in the near future. The Technology and Security aspects are not developed and tested to provide a statistically significant risk reduction the United States government would or should rely on.
How should users be charged for the visibility into their shipments?
There are many different options. One option would be just like tolls on an expressway, but instead of a concrete highway, it is an information expressway. Companies who value the shipping information quicker will pay, but only an amount that is reasonable with the potential increased profits generated from receiving the information sooner.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections?
The advantage to have a software using open source elements is to have easier way to join the program since they would use standards protocols without commercialized software protocols.
Will emerging blockchain initiatives reduce the need for such centralized software solutions?
More and more big companies are using the blockchain, I would suggest doing so.
It would be easier and more reliable to have a shared structure between all parties. A lot of companies are already utilizing this to have a better traceability for example Kroger. (https://progressivegrocer.com/grocers-embrace-blockchain-new-era-transparency)
How should users be charged for the visibility into their shipments?
Using a decentralized and shared structured, it would be fair to share the investment between the chain (marginal percentage). If a new party comes up they will also need to become part of the margin percentage program, that would be a good way to keep on growing with the database.
Yes, to improve the supply chain as a whole, or says to integrate the whole supply chain, the disclosure of some information source helps. Meanwhile, It also helps the third party company orchestrate the data connection. Benefits come with a cost.
In my opinion, Emerging blockchain initiatives reduce the need for such a centralized software solution since the idea of blockchain is that blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. People can track all transactions without central recordkeeping.
Customers should be charged based on the pay-per-task rate. When they have five transactions to track, the fee will be five times the fixed amount. If they do not want to pay for the superior visibility into their shipment, customers still can get information as they used to – one to two days ahead of the transactions verified.
I ‘m big fan of Open Source systems and top reason is its generally free. You can modify and adapt open source software for your own company requirements, something that is not possible with proprietary systems (third party). Using open source software also means you are not locked into using a vendor’s system that only work with their other systems.
But there are things which comes with it are Because there is no requirement to create a commercial product that will sell and generate money, open source software can tend to evolve more in line with developers’ wishes than the needs of the end user. For the same reason, it can be less user-friendly, less support available for when things go wrong and Although having an open system means that there are many people identifying bugs and fixing them, it also means that malicious users can potentially view it and exploit any vulnerabilities.
Because of the way it has been developed, open source software can require more technical know-how than commercial proprietary systems, so you may need to put time and effort into training employees to the level required to use it.
Blockchain have many benefits associated with it; Supply-chain management is one of the most promising areas of emerging blockchain systems. Companies like IBM are working to transform accountability in shipping, tracking, and transfer of goods. But it’s still a long shot, it will take time for companies to adopt it fully. Right now Blockchain has an environmental cost, no regulations, high complexity & security risk and these are few main reasons not many companies coming forward to support this.
In my opinion There should be a minimal fee associated to this and that should be utilized for operational/maintenance costs.
From my perspective, the data connection system need to be developed by GE itself, or outsourced under a very strict agreement with a third party, since the data involved are basically used by internal needs and the data can reflect the bias, sales, suppliers and other sensitive information of the company, it is important to keep the confidential information, and as an industry leader, with the current trend of intelligent industry, GE has the ability to develop such a system. For safety reason, all these data should be protected. As for the block chain choice. From the characteristics of block chain we can figure out that in the future, using block chain to save this kind of data will become a trend, but currently, this kind of material is not mature in to business sector, and it may calls long time and investment to run such a program, so at least in short period of time, it is better to build up self-owned centralized data collection and optimization system.
Should such software be developed as open source elements that can get connected through standard protocols or would it help to have a third party company orchestrate the data connections ?
There’s argument to be made on both sides of the question and there are pros and cons. At the beginning stages it probably makes more sense to have a third party company orchestrate the data connections until such a time when there’s a reasonable degree of standardization. Every comparable open source application out there starts out with a single entity doing the initial development work, creating the framework and base standards that others can plug into at a later point.
Will emerging blockchain initiatives reduce the need for such centralized software solutions ?
I think blockchain initiatives can be complimentary to the GE optimizer software, on the surface it may appear that both are identical, but I think a critical difference will be how GE software translates the transaction data from blockchains. Data in it’s raw form may not be that useful until it’s translated, marched with other data points and presented in a format that’s directed towards a particular audience or objectives.
How should users be charged for the visibility into their shipments ?
There are many ways to accomplish this, users can be charged on a per use basis, it could also be a per period subscription or some kind of membership. Another creative way could be to create different levels of access; limited access free for all users, standard access and premium. The last idea takes into account the different needs of the users, so they only pay for the level of access they need.
I think this optimizer software will have a huge influence on the development of supply chain coordination. If GE units would like to share this software as open source so that manufacturers, suppliers, retailers and other members of the supply chain could share and get useful information. A third company would be helpful to handle data connection if it is experienced and qualified in this field and they could help GE units to improve this technology so that everyone focuses on what they are good at.
As for emerging blockchain initiatives, it will greatly reduce the need for centralized software solution, but, it should also need a centralized system to carefully monitor the data and adjust the structure or coordination of the supply chain.
What’s more, users could be charged base on the number of data they used and the fee should be reduced if they have a contribution of other data that will make sense to the coordination of supply chain.
I believe that this software should be developed as open source elements. Choosing this option does not involve an additional cost to GE, which would be in place if GE decided to leverage a third party. Although security might be more of an issue with the open source option, I believe that the ability of other companies to connect to and use open source software easily will drive utilization which I think would do more good than harm for GE.
Emerging blockchain initiatives will reduce the need for centralized software solutions, but based on what I know about these initiatives, they have still have a long way to go. There are still security issues surrounding these initiatives, and even when these issues are resolved, implementing these initiatives would be a long, complicated process considering that these initiatives would completely revolutionize GE’s current software-related structure.
I believe that users should either be charged very little or not charged at all since they are the ones that would be driving utilization and efficiency within this software. If there was a charge imposed, participation would decrease amongst users, and the usefulness of this software would thus also decrease.
In an era of information explosion, data sharing and integrating becomes more and more important, both to the suppliers and demanders. Therefore, the GE optimizer software is a beneficial attempt, through which, supply and demand can be matched more accurate and demand forecast can be easier.
While, considering information security, it may be difficult for such software to be developed as open source platform because competitors in the industry may obtain useful information from it, which may cause losses to certain corporations. Therefore, letting a third party company coordinate that messy data may be a good idea. A third party company can integrate data from different sources and put encrypted data on the platform. Compared with bloakchain, such platform may be more useful for some small-scale users. And such users can be charged by their utilization of the platform. Moreover, the charge can be combined with revenue.
Having the software be developed in an open source setting would be beneficial due to the enhanced collaboration and integration potential, but it could leave GE vulnerable to losing an edge it would have over competitors with this software. It comes down to whether GE wants to collaborate with other companies to fully develop this software with a wide range of functionality or keep it internal and tailor it for GE’s own needs to develop a logistics solution edge over competitors.
Block chain initiatives do have the potential to reduce the centralized need of software solutions, but the risk/reward of the decision will have to be weighed. While there is a lot of talk of the potential upside of block chain implementation, it is still not a widely used and a fairly new solution that needs to be closely vetted before being trusted and integrated into any software solution.
When it comes to pricing, there could be several methodologies to approach the pricing strategy. Initial users of the software or users that provide certain levels of data could receive reduced and or free use of the software. Also, there is a potential to create a tier pricing system, where a company could pay certain levels based on how much advanced visibility they want, how much of the supply chain they want to see, and what type of information they want insight on. With all new software solutions the key factor will be getting companies using the software and sharing data, so GE will have to entice users to want to be a part of the logistics network, otherwise there won’t be much value in the insights offered to users.
It would be in GE’s best interest to develop the software as open source, because it wants a high adoption rate and there would be thousands of companies needing to utilize the software.
I don’t believe blockchain technology would have an effect in the short-term, definitely not within the timeframe that would apply for the open source development and rollout of the software.
As far as fees go, I believe any upfront costs should be covered by the Port of Long Beach. This system will only make their port more efficient and attractive to business in the end, so the volume will increase dramatically at the port with a successful rollout. GE could collect a royalty or fee for the work it provides as technical support and product development, but the Port will see the greatest benefit so it should shoulder the costs.
I think such software should be developed as open source elements which the companies should build upon to tailor their own requirements. This will increase transparency and co-ordination of the supply chain. Also, the major benefit to this is the cost which ultimately increases its utilization and gives more benefits and ease of access to the customers.
Emerging blockchain initiatives will definitely reduce the use of such centralized softwares. But the biggest drawback is a that it is still evolving and there might be a lot of security risks involved for companies to fully adopt such technology.
Users can be charged based on the level and complexity of the data that they would want to have access to and additionally users who contribute to this system to enhance the co-ordination should be given benefits or reduced prices.
I feel flow of information is one of the biggest problems currently in the field of supply chain. Making such software would help companies to plan their logistics in a coordinated manner and plan other activities like production around it. I feel giving it to a third party company to manage it would be a better option as a third party can manage the shipments and flow of information in a better way. This way GE can also earn revenue from the software charging premium price to other companies needing information about shipping. I also feel since import shipments through sea are so critical the companies would definitely pay good amount to get the information which would allow them to plan in a better way in the future. So the product should be priced accordingly by the company.
Block chain technology might have an effect on this software but looking at the pace of development of the technology, it is improbable that the block chain technology might affect the profitability in coming few years.
Visibility of shipments is a boon for the companies. Companies can reduce the cycle stock and safety stock for the inventory if they can track their shipments. E.g., Toyota tracks the purchases of various parts which are procured from multiple vendors and asks them to notify if there is any change of routes. Tracking helps the company reduce the overall inventory and plan the production accordingly, thus reducing the total costs to the company. Advancement of technologies like Blockchain will reduce the use of these kinds of software as it enables all the stakeholders in a chain to communicate directly with one another and that this should be incentivized considering the benefits it can offer to the entire chain.
The central idea for businesses has always been to minimize the uncertainties in a transaction and save costs. Technology is a facilitator towards optimizing the supply chain structure to benefit all partners in the supply chain. Enhancing the visibility for companies’ international shipments by building a network database would help these companies to plan better and reduce costs, However, building such network is a task of collaboration between shipping companies, government customs department and businesses who trade internationally. Collaboration and coordination are the key factors for success of such inter-organizational projects. GE Transportation has realized the synergies and hence is working with all the supply chain partners to save the money spent on coordination and intermittent information flow.
Though open source platform seems a great proposition that would help everyone involved in trade. However, such integrated technology is only in its nascent phase and needs some nurturing before it becomes a standard. Therefore, in my opinion, a third party company that can act responsively to change the attributes of the information system based on players involved would increase the flexibility and value of having such network in place. Open-source systems always suffer from lack of flexibility and security issues. Block-chain technology is also quite nascent and has not matured enough. Governments around the world has not laid out any definitive strategy towards handling this technology. Probably, it is quite early to comment about using this technology for supply chains because of the risks involved.
The pricing model for using such network should probably be like having a ‘LinkedIn’ account, where certain features are free while the speciality features are charged based on the complexity. For example, the tentative days of arrival and delivery for the products shipped should be made free for the companies in the network. If the companies want to get real-time product tracking, then they can be charged some fee to offset the development costs. Also, the customs office can plan their resource management based on the data available in the network. So, the idea could also be sold to the customs department for them to handle their resources efficiently.
With my experience with integrated software designs, open-source data dumping is usually never a good idea. The first problem that arises with that is understanding the fields that you’re filling in. Field names can often be interpreted in several ways, which could lead to skeptical data integrity, which is one of the foundations upon which such a software functions.
Second, there would need to be very clear guidelines for for how companies access this software, how they share the data (data format, timing of data entry, etc…) which is very hard to manage when the software is open-source. It would also be very difficult to attribute and enforce accountability when it comes to inconsistencies with the data.
Third and finally, the data that this software is accessing would be at risk of being stolen, and as we know, data in the wrong hands can be disastrous. Not only could a a malicious third party use this information to their advantage, they could even inject false data into the software and disrupt the whole vision of this concept.
For these reasons, a third party must be managing this software and the way that vendors enter their data into it. Sure, this would be more expensive, but when you’re considering something of such massive scope, opting on the safe and expensive side is far cheaper than a disaster.
Hi Karim, I agree with you completely. As supply chains become more complex, need to invest in IT is becoming inevitable. It only makes sense for a company to outsource their IT since it takes a lot of effort and resources to operate smoothly and securely. Data protection is certainly a big concern and the more we rely on data, the more we put ourselves at the risk of losing valuable information. Every new technology has its risk but an accurate benefit vs risk analysis can go a long way.
The major challenge that inbound shipments face these days is the reliability on the schedule communicated by the transporter. Although most of the warehouses now use Advanced Shipment Notices(ASNs) as a communication between the supplier and warehouse, the data communicated is insufficient to plan the inbound operations based on the incoming loads. Therefore a more advanced communication network has to be developed which can give real-time visibility of freight movements. GE optimizer software would not only give an insight into their freight movement but also provide a better inventory control. Blockchains are still evolving in the realm of supply chain. Implementing block chains in logistics would eliminate intermediaries and can record all transactions without the need of third parties. But the success of which depends on the technological infrastructure available. Nowadays as it is not the companies that are competing with each other rather the supply chains that are, having a centralized open source software comes with its own kind of challenges
Hi Mounika, I agree with your comments that reliability and communication needs to improve and a better network is required which can provide more transparency and improve accountability of the process. Block chain is something that can definitely revolutionize the shipping industry, if implemented correctly. Having private shipping companies have their own block chain system would not be beneficial. However, this is where one of the issues of block chain in this case comes in of public vs. private development. Given that this technology is still at an early stage, I agree that for now, software such as GE optimizer can bring about a change in the industry.
Open source software gives the flexibility in terms of customizations, data sharing, and integration. Trackability of shipments gives companies huge dividends as they can plan better their inventory levels, safety stocks and production, thus minimizing the total costs e.g. Toyota keeps tracks of the routes which the truckers take to plan it’s production schedule.
Emerging technologies like blockchain provide transparency. Everyone on the blockchain can see the chain of ownership for an asset. Companies are able to better track and record data, thus eliminating the middlemen. Not only will it increase efficiency, but also will allow the companies to have better and effective communication with its vendors.
GE’s pilot program to develop Long Beach port optimization software and similar test runs at Los Angeles port will reap profits for both the ports in terms of better managing the containers and the traffic at the port. We are talking about the US top two container ports which accounts for total of 16 million container through this area in an year. This comes as the peace of mind for the truck drivers whose greatest nightmares are to maneuver through port areas. In addition to this, the port has to utilize the maximum possible space.
Previously, the transportation companies had to navigate through various websites for each port terminals and manage the containers through last minute updates. The optimizer solution will be able to provide details some two days in advance. This will help the port utilize the space available is optimized way and help transport and truck companies to plan their schedule well in advance. This brings in the transparency sought by various departments like shipping companies, port and custom officials and transport companies. GE anticipates the efficiency gains of 8 to 12 percent across the entire community.
Should this software be open source? An open source will enable the various departments from far ends of shipping companies, port and custom officials, transport companies, retailers, distributors, warehouses and end customers who were working in silos to co-ordinate with each other at far greater levels. An open source can further empower them to utilize the software best suited for their purpose. A shipping company can integrate the container and package information from the open source to their own platform whereas the warehouse and retailers and use the open source for better management of available space and throughput.
Reference: https://www.ge.com/reports/software-delivers-ges-port-optimizer-pilot-expands-long-beach-california/
For this blog, I would like to integrate my logical arguments with my personal experience on the subject matter. Since the implementation of “standard containers” last century, there has not been any significant revolution in world trade of this scale. However, introducing Blockchain technology in shipping and transportation industry has a massive potential that we need to carefully nurture.
My brother in India is actually working with a shipping company that has introduced a new vertical called “Portall” that works on the same fundamental idea as what the blog discussed. The two of us have talked about the pros and cons of this and we both feel that if its done correctly and carefully, the benefits outweigh the costs with a huge margin, especially in India where not only do port customs take extremely long to process the paperwork, but they also require more manpower just to process the documents. He told me that the paperwork required begins when a cargo owner reserves a space on a ship to move goods. Then, filling of documents takes place after which it needs to be approved before cargo can enter or leave a port. Currently, a single shipment can take hundreds of pages that have to be physically delivered to a number of different parties, banks, customs and other entities. Not only does this technology eliminate paperwork, but it also minimizes errors associated with it. Should Blockchain succeed, the documentation that takes days will be able to process in minutes, with minimal human input. For the logistics part, the cost of transporting goods across continents could drop dramatically, which could add a new edge to relocation of manufacturing or sourcing materials from overseas.
However, as this technology is still emerging, we are yet to see how legal hurdles surrounding it might be resolved. The real benefits of trustless decentralization and free movement of goods will not be realized if each shipping company builds its own proprietary blockchain. There needs to be a protocol which can integrate all systems into one platform to be used by all parties. I feel having something like a national customs agency, that could use this platform to approve shipments on an auditable open Blockchain would work much better than having each individual shipping companies doing it. However, with the combination of issues with this technology such as private vs. public, trust, permissions, transferring of chain of custody, etc are currently present. The main challenge is that Blockchain, something that is being used in a public, trustless environment has to now be used for an industry that requires trust. Hence, I would like to end by saying that there two questions to this; a technical one and a cultural one. In this case, the cultural question is the one that has the potential to make this a dead-end for Blockchain and it is the one that we need to address.
I think this software can really make a difference in this industry. I would be interested in knowing how the customs process would be included in this projection. The ability for the port to move containers less times and have transportation assets coordinated to meet cargo would be a game changer. This would allow ports to increase the though-put and increase the number of containers they can handle at the port.
As other students have mentioned, I think the software cost and ownership of that cost is key. The port authority stands to benefit the most from all shippers using the data. Also, the benefits may not be realized if non-user containers hinder the quicker movement of others by requiring extra handling. I would suspect that this may come with a decrease in the amount of time a container is allowed to stay at the port before a detention fee begins in an attempt to push customers to use the software and coordinate transportation.
Mark,
Definitely agree with your assessment, especially about the port authority being able to benefit the most and seeing how the customs process can be augmented. Do you think we could see a potential coordination with customs to allow essentially a 100% cross docking situation at US ports where all containers go straight from the ship onto a trailer? I think it would be an innovative way to really cut down on costs and time spent in port for products.
Adam McKinney
In my personal point of view this software should be managed by a third party company that also has cyber risk security protocols. With a software like this one that gives full visibility to a company about shipments, competitor could also take a look at your movements so thats why I believe some entity should take care of this. The port personal and authority needs to be on this to. They are the ones who should manage a system as complex as this since is their core business.
Since extra work should be done a cost will be added by the third party company and the port. This GE optimizer should be acquired as a 1 time payment or as a monthly fee to the company that wants to use it and all of this income should go to the ports in discussion so infrastructure, maintanence, etc could be cover and this software could improve too.
This is a very interesting proposal and as someone who has worked in warehouse and transportation before this could have a massive impact on the total supply chain. As the port is the major sticking point in transporting goods through the United states it is in every supply chains best interest for this port to operate more effectively. I think that every company that owns a spot in this port should fund an open source project that will allow everyone who is operating in this port to have limited visibility to there shipments that are coming in and flowing out of the port. This could be as simple as providing the shipment numbers as well as the containers with when and where is was going to be. I think that companies using this port should then build there own software that will tie into the ports open source data and pull out the necessary information for there transportation team. In this way you can get the system paid for gain the efficiency in the port and claim that efficiency for yourself in regards to transportation.
Since the US port is the key way to import goods, all data of the parties that need to go through the port should be properly handled.So I think we should hire a professional third-party company to manage this data instead of opening source elements that can get connected through standard protocols. Because it may cause management confusion of all parties under opening source situation, and there are security risks such as leaking private data.
As for the blockchain, I think this is the trend of data development in the future. We should pay attention to the application of blockchain.Speaking of expenses, I think that if you manage the data to co-ordinate the behavior of the parties to achieve a better performance, you should use the system for free. A part of the money saved by the system to support system costs. And government departments should fund the subsidies.
I believe an open source solution will be the better alternative. There are multiple data sources and multiple users. If the same software platform is used by all stakeholders in the value chain, the standardization will ensure the availability of the single version of truth and help drive efficiency. Also, it will facilitate crowdsourcing of ideas, thereby resulting in quicker innovations.
When there are multiple transactions in the supply chain, blockchain will ensure the integrity of those transactions but I feel there will always be a need for a software solution that enables end-to-end visibility of the supply chain.
As for charging users, a subscription-based business model can be developed – interested suppliers/agents can register themselves on the platform and users can subscribe to those suppliers/agents they’re dealing with and can be charged for the data sources and data quantity that they use during the time they’re dealing with the suppliers.
I agree with you Sai Krishna. open source Software will enable the standardization in the huge data which is processed. Also, time required to process the data through a third party company can be avoided. Though some protocols need to be put in place regarding the visibility of data.
I think the purpose of blockchain is to integrate and bring visibility to every link in the supply chain. I don’t see a need of another software for that. Rather some changes in the user interface which will enable users in better understanding the flow.
In my view, the software developed should be an Open Source. Based on the different requirements of various vendors and stakeholders in the Supply Chain, it would be quite efficient for them to tweak and integrate with their existing system, which definitely would help them in making the whole process cost efficient. Keeping aside the technical capabilities, the port and the customer are the two teams, which will highly benefit from the constant flow of information. The information passed on will not only help the ports in dispatching the goods at the appropriate time but will also help the customer in managing their inventories, subsequently resulting in the efficient transaction of goods.
Block chain which works on the principle of decentralised data base might be a good option since the collaborating partners will get to know every transaction made but because of its newness and not widely being accepted, it might not bring all the stakeholders on the same platform of co-ordination and acceptability. It does have the transparency but what if there is competition among the stakeholders.
First, I think it is a better way to develop the open source elements that can get connected through standard protocols. In this way, the different parts who are involved in the process are gathered under this software and the information asymmetric will be solved. Then, the different parts will operate according to the data driven from the software, which will decrease the cost accordingly.
Second, if the blockchain initiatives become popular and mature, we should consider whether the centralized software solutions are worth a try. Actually, the block chain is much more efficient than the software as it makes data, information and other key issues transparent.
Last, as for the charge issues, it depends on the bargaining power of different parts. If the leading part is GE, then it will be the leading role in this system and can make rule to introduce the incentive to the other parts to make sure the profit can be allocated in a reasonable way.
Introducing new software to collate and analyze all the data available from various sources to better manage supply chains is a great idea. However, having an open source software may lead to security issues with sensitive details of one company or any particular shipment being exposed to the general public. Even if security is ensured, without having a base established when several parties are involved, data management will another issue. A third party can come in as a game changer, collate all and only the necessary data from the parties involved and provide insights, enabling improved visibility into shipments. Pricing strategies can be implemented after analyzing the market and the players.
Blockchain technology has been around for a while, but it is not widely practiced because of unexplored security issues. Implementing this technology at ports ( entry point in nations) can result in threats against national security. This is not to deny that future applications in blockchain cannot be implemented once the technology is fully explored.
Aiming to develope GE’s optimizer software as a open source is a good idea , which improves visibility and enhances coordiation in the whole supply chain. However, when it comes to implementation, there are lots of aspects needed to be considered. First of all, who formulate the standard protocol? Nowadays, more and more companies realize the importance of data. When fomulating the standard protocol, what guidlines will they follow? Will they maintain impartiality? and What’s GE’s opinion about making its software to public. Secondly, What if some companies post wrong data and proceed malicious competition. The whole information system will be destroyed. What are the remedy measures? I think the opinion of different entities is important and further research is needed to continue before putting the system into real life.
Tracking the visibility of shipments have always been a big pain point for all the stakeholders across any supply chain, especially when the movements involve multiple cross-border parties. Digital technology integrations to bring together the real-time updates provides visibility for planning capacities for the in-transit junctions/interchange points, transport lanes, people, equipment etc. However, the adoption of such tools by all the links in a supply chain has faced varying push back and friction and most of them still rely on the manual paper-based processes.
Availability of an opensource solution which can integrate the end to end components of a supply chain to provide advanced visibility and planning intelligence could be a boon for Supply Chain industry. It’s fascinating to imagine how retailers, distributors, inland logistics, customs/tolls, ports, ocean freight, all can be tracked under one integrated network to provide real-time decision-making tools across the complete supply link. Being open source, these could easily integrate with customs requirements differential to the parties involved. Blockchain initiatives can simplify the transactions by decentralizing the monitoring/control instead of a centralized hub, increasing efficiency. A distributed yet connected permission platform, easily accessible by all the parties would provide a more secure and transparent global trade. Maersk and UPS have started to use such initiatives as a pilot, however, the long-term benefits and adoption timeline across the complete link is hard to predict.
Reference for Blockchain in Supply Chain: https://www.ibm.com/blockchain/industries/supply-chain
I bielive that developing this software is useful because it sure can improve the efficiency. I also think this kind data should connect to standard protocol due to the possibility of illegal transportation and the openness of the data should be considered on the sensitivity of information. However, I do not know wheather the logistics will be coorperating because of the security and return of the investment. Also, the accuracy of the data is questionable.
Using the open source elements would reduce the development cost of the system so that all stakeholders can take advantage of the cheaper and efficient infrastructure. Thus, systems based on open source elements might help small and middle size companies to reduce the cost. However, it also includes risks for the leaking of transportation data and companies’ supply chain strategy. I think GE would like to take advantage of using the real data to collect strategies and test its optimizer software in the real world. The companies which involved in the system might face on the risks. To prevent these risks, the blockchain technology might be a good way because it would help protect transaction data within the network. But, we still need rules and infrastructure about blockchain to keep the high-security environment so that a leading company or organization take initiative and make centralized infrastructure might be the most efficient in such a blockchain system.
Information transparency and collaborations are always good for the supply chain. The difficult part is how to bring people together and how to share the cost and the pie. In this case, I would expect the job to be done by a 3rd part company that has solid IT technic and consulting experiences. As is always a concern, information exchange and collaboration is an issue for most entities that try to solve problems together. A 3d part consulting firm can, therefore, potentially resolve issues for GE and the rest of the chain regarding technical and cooperation problems. Bring the 3rd party from an outside perspective helps to eliminate doubt and facilitate further cooperations. It is important to understand that the benefits will only come when information disclosure goes to a certain degree, as well as the communication. The project may end up being unsuccessful due to communication problems and information exchange failure.
This age is always called data age. On the one hand, data gives us a big convenience. However, on the other hand, it exposes information in a risky position. Blockchain is a popular technology which raises layers of wave recently. Through decentralization, data could be recored scientifically and accurately. For GE, the implement of this software could improve the visibility of the supply chain. However, use the idea of blockchain may reduce the flexibility of supply chain. The initial objective of this software is to better record, track and control the chain. When blockchain sets down all the data, it is hard to change or handle emergency although it provides a great safety. For the users, they could not only visual their supply but also monitor the chain, which is good for both themselves and supply chain. What’s more, they could be charged according their time period of using.
As everyone knows, the concept of coordination to match supply and demand reduces risk for all the parties involved. In this case too, all the parties will definitely benefit from it e.g. trucks can be scheduled according to the ship’s timing, things can be planned in advance, more convenient way to get information about the other parties,hence saving time for everyone and many more.
In my opinion, the idea of coordination is still being explored at various levels, connecting it with another emerging concept of block chain or directly bringing an open source can go into either directions. Since the idea is definitely beneficial , the company can start have a testing period and then decide on what works best. In addition to this, blockchain +coordination idea does sound like an interesting concept as all the data can be traced back and the data is connected to each other and decentralized at the same time.
Through the integration of all the components in the upstream and downstream of the supply chain, the data can be processed uniformly, speeding up the information flow in the upstream and downstream of the supply chain, and improving the operational efficiency of each unit. After realizing the visibility of goods, we can better understand market trends and adjust supply and demand. Therefore, such software will be open to all companies through standard protocols and will be convenient for all parties. The structural security and invariance of blockchains have been widely discussed and validated in the industry and seem to have advantages over traditional data storage. However, application and user-level vulnerabilities may reduce the security of the blockchain. Therefore, the implementation of the blockchain plan will not reduce the demand. The upstream and downstream of the supply chain can be determined by the depth of the respective requirements through the allocation of contract negotiation costs.
Technological advancements today have definitely paved way to drastically reduce the effects of uncertainties seen in traditional supply chain systems. While creating open source solutions will help several small-scale businesses looking for simple tracking, this may not be the most ideal option for mega-sized complex supply chains. Most large supply chains today use customized software systems to monitor the movement of shipment across the globe. Having managed data for a large corporation like Unilever that has a diverse 5300 strong supplier base, I understand the need for tailormade solutions. Blockchain quickly making its way to revamp all industries and functions including supply chain management. I do believe that eventually blockchain will override other implementations, solely based on the reliability and ability to handle large volumes of data. However, this transition will take a few years, until which time centralized systems will continue to rule the roost. The visibility offered by these systems lead to reduced uncertainty upstream in the supply chain, thereby reducing bull whip effect. For this, it seems appropriate for technology solutions to be priced at a fraction of the cost savings that the supply chain is projected to save during the expected life of the technology.
From this article I believe GE is looking towards the line of a 4PL system. A 4PL provider is a supply chain integrator who assembles and manages all the resources, capabilities and technologies of an organization’s supply chain and its entire array of providers, and ideally should be managed by a separate entity. Hence, the 4PL provider should orchestrate the data connections.
The emerging blockchain initiatives would definitely reduce the need for such centralized software solutions. If it is used within GE’s supply chain I do not anticipate any setbacks, but if it is opened up to other supply chains or to the public, the risk of security breaches must be properly looked into and mitigation plans against these risks must be well thought out.
The article does not tell us about the costs of developing the software, but for a successful implementation of this system I believe all the entities in the supply chain must have visibility into their shipments. Placing a cost to use the software may deter some entities. If, however, there is a huge cost to GE that must be recouped, they could convince the ports to pick the tab and transfer the costs to the public in the form of an increase is tariffs.
This improved visibility is definitely expected to help coordination and thus better match supply and demand. If such software is developed as open source elements, the information cost is relatively less compared to hiring a third party for the same. But at the same time, the data obtained may or may not be structured and credibility of data is also questioned in the case of former whereas Third-party’s data is quite reliable.
The emerging blockchain initiatives will surely reduce the need for such centralized software solutions just because of their reliability in handling large volumes of data. Giving users visibility into their shipments could potentially save embarrassing situations like stock out and other times when they could end up with more than average inventory. Thus, they could eventually save thousands of dollars. So, it would be a perfect scenario for those who provide shipment visibilities to take control of the pricing negotiations. They could as high as possible until it is a win-win situation for both the parties.
There is no doubt that we need a software for better visibility and tracking. I think an open source platform is the way to go. This is because we would be restricting ourselves to better functionalities and capabilities if we go otherwise. An open source platform will give an assurance towards continuous improvement keeping cost in check. there are many opensource platforms which are safe and secure.With some checks in place we can definitely keep the security part of the problem in line.
Blockchain may or may not reduce the need for such centralized software solutions. Blockchain is the hype for today. We don’t know how much of a problem it is capable of solving. It is secure, it is accessible, it is integrated and provides better visibility as well, but is it the answer to the problem? We don’t know. May be if we broaden our thinking we may get a better cost effective technology that is already in the matured state to solve the visibility and trace-ability issue. Our systems are already integrated, may be just a little tweaking in the middle layer to have better access is the answer in the supply chain area. I think jumping to blockchain for all the answers is too early. Blockchain is nothing but cubes of data combined together to get better accessibility. This we already have in various systems incorporated in different organizations. Leaving this and shifting to a completely new technology which is also giving the same thing is not advisable I think. And if we are shifting towards that new technology we must be certain that it is adaptable to future changes too.
Having the software as open source elements would not be a viable choice for the company who initiated the idea as it would turn out to be a competitive edge for their supply chain. In order to monetize this sort of plan and ensure growth of supply chain IT network operations, they could consider an API of the same and provide it to those in need. Emerging block chain solutions will definitely reduce the need for such centralized solutions given the transparency it provides at all points with increase in data security and compliance.