IBM launches blockchain-based supply chain service with AI, IoT integration

IBM launches blockchain-based supply chain service with AI, IoT integration
IBM this week launched a new supply chain service based on its blockchain platform and open-source software from recently-acquired Red Hat that allows developers and third-party apps to integrate legacy corporate data systems onto a distributed ledger.

Through the use of open APIs, the new Sterling Supply Chain Suite allows distributors, manufacturers and retailers to integrate their own data and networks – as well as those of their suppliers – onto a Hyperledger-based blockchain to track and trace products and parts. Among the data that can be integrated are IoT sensor systems for real-time shipment position location.

"This is the first move from IBM in what we anticipate to be a significant investment in the reinvention of supply chains by global organizations in the coming decades," an IBM spokesperson said via email.

Through APIs, the IBM Sterling Supply Chain Suite ties to legacy infrastructure such as Warehouse Management Systems (WMS), ERP systems, Order Management Systems and commerce applications.

IBM blockchain supply chain sterlingIBM
The IBM Sterling Supply Chain Suites stack of applications enabled by blockchain and AI.

Because the new suite falls under the "Sterling" Order Management (SOM) brand name, which IBM acquired from AT&T in 2010, it already has an existing user base of more than 7,000 customers who have an additional 500,000 trading partners, according to Inhi Cho Suh, general manager of IBM's Watson Customer Engagement business unit.

"The complex, global nature of our omni-channel operations presents a significant supply chain challenge that could be turned into a business opportunity if the right technology is applied," said Juan Andres Pro Dios, CIO of El Corte Ingles, Europe's largest department store conglomerate. "The IBM Sterling Supply Chain Suite provides open development capabilities that let us quickly tailor solutions to meet our unique business needs. This allows us to embrace operational complexity while optimizing ... performance and improving omni-channel customer experiences."

IBM integrated Watson's AI capability to offer applications – among them, Order Optimizer and Supply Chain Insights – that can produce real-time alerts and recommendations through its Supply Chain Business Assistant (SCBA). SCBA, for example, can generate faster response times to anomalies like supply chain disruptions.

Simon Ellis, a research director for IDC, said IBM may not be alone in promoting a multi-tenant cloud network for supply chains, but it has advanced A.I. and blockchain as components of that service more than other vendors.

The new service, Ellis said, is a solid foray into the supply chain market.

"I think companies can leverage this with some other supply chain apps they already have so they don't need to rip and replace stuff," Ellis said. "The value of any blockchain will be square of the number of users it has, so how you make those connections [is] important, and this certainly moves it forward."

Current IBM Sterling SOM clients include companies in distribution, industrial manufacturing, retail and financial services: Adidas, AmerisourceBergen, Fossil, Greenworks, Home Depot, Lenovo, Li & Fung, Misumi, Parker Hannifin, Scotiabank, and Whirlpool Corporation.

Outdoor sports retailer REI, for example, is using the Watson Order Optimizer for its supply chain to factor in the various goals it has throughout the year, such as product margin, shipping speed and fulfillment costs, and matches that to its inventory in its three distribution centers and 155 stores.

"For us, the one thing we discovered was in existing supply chain networks...the majority of the industry was on point-to-point interactions through EDI systems and paper," Suh said. "Clients want to digitize...and understand the state of where their goods and services might be across multiple parties...so we added a blockchain shared ledger capability on top of our existing network.

"So any customers and their partners in their broader ecosystem have visibility into transactions and interactions they have," Suh continued. "Those transactions could be around invoicing, shipping, delivery – and then the combination of that shared ledger allows you to have a trusted understanding of who those partners are."

Once a customer is logged into the Sterling Supply Chain Suite service it has its own dashboard allowing it to search the status of a purchase order or product inventory. Users can also quickly onboard trading partners by choosing an "add new partner" icon and then filling out fields that include company name, contact communication protocol (email, for example), and what transactions and data sets they're allowed to view.

"Then you click 'OK' and the other party gets a notice that they click on and they're onboarded," Suh said. "It's pretty fast."

IBM had already launched supply chain network pilots for food, general cargo shipping and even the diamond trade to track products through its cloud-based Hyperledger blockchain platform. The new supply chain network will enable greater integration with existing enterprise ERP and database systems, Suh said.

IBM, for example, has already created an SAP connection to the Sterling Supply Chain service.

"We also created an open framework for applications and ISVs to be able to connect into and expand," Suh said. "It's live and in production."

Copyright © 2019 IDG Communications, Inc.