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OM in the News: IBM and Maersk Apply Blockchain to Shipping

January 19, 2018

Shipping giant Maersk and IBM formed a joint venture using blockchain

Shipping giant Maersk is the latest company jump onto the blockchain train, entering a joint venture with IBM to create a more efficient and secure platform for organizing global trade using blockchain technology, writes The Wall Street Journal (Jan. 17, 2018). The platform could be used to streamline operations for the entire global shipping ecosystem. The idea came from the current stack of paperwork needed to process and track the shipping of goods. The cost of the required trade documentation to process and administer many of the goods shipped each year is estimated to reach 1/5 of the actual physical transportation costs.

The companies said blockchain, the technology behind increasingly popular cryptocurrencies such as bitcoin, is ideal for organizing large networks with different partners like the shipping industry, which transports more that $4 trillion goods a year. “The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit,” said a top Maersk exec.

More corporations, including General Motors and P&G , are exploring ways to use it to streamline supply chains and customs clearance. Singaporean and Peruvian customs also are exploring collaborating with the platform to facilitate trade flows and enhance supply chain security.

The move comes as Maersk and IBM have been attempting to reinvent themselves. IBM, the 106-year-old technology giant, has been looking to new lines of business, including blockchain, as sales in its legacy business of selling hardware and software slow. Maersk has been trying to transform itself to into a global supply-chain major like UPS and FedEx by integrating its transport and logistics units.

Classroom discussion questions:

  1. What is blockchain and why is it important in OM?
  2. How does blockchain relate to supply chains?

 

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