“The central purpose of supply chains is to fulfill the needs and wants of humanity — delivering all the food, medicine, energy, apparel, and other worldly goods needed by the eight billion people in the planet,” wrote MIT professor Yossi Sheffi in the preface of his 2023 book, The Magic Conveyor Belt: Supply Chains, A.I. and the Future of Work. “The societal and economic spasms of the early 2020s highlighted the crucial role of world-spanning supply chains in the modern global economy, as well as the growing role of digital technology, including A.I. and automation, in the future economy.”
I’ve been following the evolution of global supply chains for the past three decades. The 1990s ushered a golden age of globalization, when the world seemed to be coming together. Thomas Friedman’s The World is Flat became an international best-seller in 2005, nicely explaining what globalization was all about, including the key forces that contributed to the flattening of the world, from the explosive growth of the Internet to the rise of just-in-time global supply chains.
My interest in global supply chains increased significantly in the mid 2010s, as a result of my growing interest in the business applications of blockchain technologies. In 2016, the World Economic Forum (WEF) included blockchain in its annual list of Top Emerging Technologies. The WEF report compared blockchain to the Internet, noting that “Like the Internet, the blockchain is an open, global infrastructure upon which other technologies and applications can be built. And like the Internet, it allows people to bypass traditional intermediaries in their dealings with each other, thereby lowering or even eliminating transaction costs.”
I became convinced that global supply chains would emerge as the killer app for enterprise blockchain applications. Over the following years, I closely tracked the evolution of blockchain-based supply chain systems. I assumed that, much like the Internet in the 1990s and Linux in the 2000s, it was just a matter of time before blockchain technologies would be widely embraced in the business world.
But, as we now know, things didn’t quite turn out as I had expected. “Blockchain, the technology underpinning bitcoin and other cryptocurrencies, for years has been viewed by some companies as a way to drive industry-transforming projects, among them the tracking of assets through complex supply chains. So far that hasn’t happened,” wrote the Wall Street Journal in a December 2022 article, “Blockchain Fails to Gain Traction in the Enterprise.”
A few weeks ago I was in a call with Dale Chrystie, Business Fellow and Blockchain/Web3 strategist at FedEx. In addition, Chrystie is the chair of the BITA Standards Council, the global transportation and commerce initiative of the Global Blockchain Business Council. Given his expertise on the topic, I asked him to recommend any recent articles that would help me understand the future evolution of global supply chains.
Chrystie recommended that I read “The Future of Global Supply Chains,” a chapter that he had personally written for GSMI 5.0, the most recent annual report by the Global Standards Mapping Initiative (GSMI), an industry-focused effort in support of open standards, digital assets, blockchains, AI, and other advanced technologies.
The key focus of GSMI 5.0 Supply Chain is as if you were looking at earth from space, such as from the International Space Station (ISS), explained Chrystie in the introduction to his chapter. “At this planet-wide level, there are no companies, industries, or borders, and data knows no geographic borders,” he wrote. “The future of global supply chains from this view, will require harmonized, interoperable, and open standards, and a global digital ecosystem that seamlessly and instantly moves trillions of data elements around the world daily.”
Achieving this vision requires standards that serve everyone — individuals, organizations, and nations — regardless of their size and must depend on machine-verifiable paperless proofs to ensure the authenticity, legality, and origin of shipments.
How do we get the support of key supply chain stakeholders?, he asked. “This journey starts with harmonization and interoperability, which leads us to ‘open’ data standards, which leads us to ‘digital’ (including blockchain/Web3) and all of those are connected by centuries of network effects of trade, industrialization, and globalization that predict the inevitability of this outcome.”
GSMI 5.0 Supply Chain has identified over four hundred major standards organizations worldwide, collectively responsible for more than 60,000 published standards. While the volume of standards is not an issue, they are not yet harmonized and interoperable. The challenge lies in understanding how they relate to each other, and determining which standards provide the best pathways toward inclusive and frictionless global supply chains.
Furthermore, GSMI 5.0 Supply Chain has distilled over nine hundred data elements related to global shipments, drawn from the broad landscape of existing supply chain standards, into forty-eight fundamental data elements that capture the essential movement information, an important first step in harmonizing the data elements across standards.
All data elements must be digital. This will enable the digitalization of supply chain processes as well as the use of digital identity, digital twins, sensors, blockchains, artificial intelligence and other existing and yet-to-be-developed advanced technologies that will transform global supply chains in the future.
“Standards are an important piece of streamlining global commerce; however, there are other key components that have brought us to this point and will take us forward. Standards propel a ‘network effect’ which is also a key part of this discussion. Network effects have been seen before in many ways, from the earliest days of trade to the Industrial Revolution, to Globalization in the 20th Century, to now the Digital Revolution and beyond.”
In addition, “standards, technology, and emerging governance models, along with existing government and regulatory components, must work for all parties, public and private, large, and small, and they must be both open and interoperable.” The World Trade Organization (WTO) has identified six key principles that should be supported by all global standards organizations:
- Transparency: All essential information regarding current work programs, as well as proposals for standards, guides, and recommendations under consideration and progress reports on the work programs, should be accessible to all interested parties.
- Openness: Membership of an international standardizing body should be open on a non-discriminatory basis to relevant bodies of at least all WTO members.
- Impartiality & Consensus: All relevant bodies should be provided with meaningful opportunities to contribute to the development of international standards, guides, and recommendations. The procedures should not give privilege to, or favor the interests of, any particular supplier, country, or region.
- Effectiveness & Relevance: International standards need to be relevant and effectively respond to regulatory and market needs, as well as scientific and technological developments.
- Coherence: In order to avoid the development of conflicting international standards, it is important that international standardizing bodies avoid duplication of, or overlap with, the work of other international standardizing bodies.
- Development Dimension: Constraints on developing countries’ effective participation in standards development should be addressed. The development dimension should be taken into consideration in the development of international standards.
The Global Standards Mapping Initiative (GSMI) will focus its efforts on the ten standard organizations that both meet the WTO criteria and make available their open standards for digital documents at no cost.
Chrystie’s article on “The Future of Global Supply Chains” made me realize that neither blockchains, the Internet, AI, nor any one technology would be the key to transform global supply chains by improving the efficiency and security of transacting business among institutions around the world.
“For over a century, current day standards organizations have been foundational in facilitating trade and innovation,” wrote Chrystie in conclusion. “However, in the digital-first era, the traditional, siloed approaches must give way to a new paradigm of global collaboration, a pro-competitive ‘coopetition’ approach. No single entity can address the complexities of the evolving supply chain alone. We must break free from sector-specific approaches and work together to create open, digital definitions and standards that transcend industries and borders.”
“The time is now for international standards development organizations and all other stakeholders to align in a concentrated push toward the development of these harmonized and interoperable standards. By doing so, we will accelerate the creation of a truly global supply chain that is faster, more resilient, and equitable, capable of meeting the demands of the 21st-century economy, and beyond. Inspired by the global view from space, we must build a future where the movement of goods and services is seamless, sustainable, and powered by open, collaborative standards. With that focus from the ISS view, let us begin the work together to build the harmonized, interoperable, and open standards and infrastructure that will power the commerce of the future and benefit all stakeholders.”
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