SAP to use blockchain in logistics through Ariba business unit

sap blockchain logistics

The relentless rise of blockchain continues with the news that SAP has decided to use the technology in its logistics products. 

Enterprise software giant SAP dominates many market segments, and being a German company, where the auto industry is globally preeminent, logistics is a sector of particular interest.

Calling blockchain one of “the most disruptive technologies of the day”, SAP says it will use blockchain across its cloud-based applications and business network to “upend” the way goods and services are traded.

Joe Fox, senior vice president, business development and strategy, SAP Ariba, says: “Twenty years ago, SAP Ariba bet big on a fringe technology called the Internet and pioneered a totally new model for buying and selling.

“True to our roots, we are again investing at the edge of technology to drive innovations in business-to-business collaboration that will change the game.”

At its core, blockchain is a digital ledger that can be used to drive business processes involving multiple parties, says SAP.

“One of the things blockchain does is facilitate greater visibility and trust,” adds Fox. “In embedding it across our applications and network, we can enable supply chains that are smarter, faster and more transparent from sourcing all the way through settlement.”

Among the first applications of blockchain to procurement and supply chains that SAP Ariba sees potential in involves the tracking and tracing of goods.

Dana Gardner, principal analyst, Interarbor Solutions, says: “One of the biggest issues that companies face right now is tracking and tracing goods before, during and after shipment.

“All too often, a seller will ship something to a warehouse where it is swapped for a knock off without the buyer knowing. The distributed ledger capability of blockchain provides buyers and sellers with increased visibility and control from shipment to receipt, which ultimately reduces the risk of fraud.”

SAP Ariba says it plans to join forces with Everledger, a London-based financial technology company, to extend such capabilities to the Ariba Network.

Everledger securely captures the defining characteristics of valuable objects such as diamonds and creates a digital thumbprint of the asset that is stored on the blockchain.

This information, including history, transport, events and ownership, is relied upon by multiple stakeholders across global supply chains to verify authenticity.

Leanne Kemp, CEO and founder of Everledger, says: “By harnessing the best of disruptive technology, we’ve built a global platform of provenance by connecting records of authenticity to a physical object and its certification as it moves throughout the supply chain.

“We know the impact this can have. Integrating our technology with SAP Ariba’s business network can not only lead to a reduction of risk and fraud for stakeholders, but additionally helps to re-shape a new era of global trade focused on the pillars of transparency, sustainability and ethics.”

According to Fox, such technology is a natural fit within SAP Ariba’s solutions. “If you can track and trace diamonds, you can track and trace anything,” he says.