- Blockchain has been buzzed about for years, but enterprise adoption of the technology has been tepid at best.
- Instead of full-scale productions, companies are opting for smaller pilot projects that could give a window into the potential return on investment.
- The Estée Lauder Company, for example, in partnership with provider Wholechain recently began a blockchain-based pilot project with its Aveda brand to track vanilla bean.
- The $93 billion beauty supplier waited to begin the project, however, until the technology matured.
- “Being on the leading edge was better than being on the bleeding edge,” Greg Polcer, executive vice president for global supply chain, told Business Insider.
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Blockchain is one of the most buzzy technologies today, largely because of its critical role in supporting the adoption and use of bitcoin.
But digital currency aside, it also holds the promise of helping enterprises track global supply chains more closely or more quickly run background checks on potential partners, among other use cases. Unlike emerging tech like artificial intelligence, however, enterprise adoption of blockchain has been tepid at best — with many companies opting for small pilot projects instead of large-scale deployments. Some have even labeled it a “solution in search of a problem.”
Apart from questions over the long-term return on investment, a key reason is the difficulty in actually setting up the distributed ledger systems that often require proprietary data from the company itself, as well as from its suppliers or other firms that are involved in the creation or distribution of a product. That information is effectively held confidential, so with so few public use cases of blockchain available, it can be difficult to assuage skeptical executives of its value.
Even those that have launched initiatives acknowledge they’re more proof of concept than anything else. The Estée Lauder Company, for example, in partnership with provider Wholechain recently began a blockchain-based pilot project with its Aveda brand to track vanilla bean, a key ingredient in over 125 products that’s predominantly sourced from Madagascar.
While blockchain was on the firm’s radar for years, Estée Lauder wanted to wait for the tech to mature before launching any projects, according to Greg Polcer, executive vice president for global supply chain at the $93 billion beauty supplier.
“Being on the leading edge was better than being on the bleeding edge,” he told Business Insider. “We could have sunk a lot of money in it earlier, but we had other places to go from a technology standpoint which would give us more value.”
Once Polcer determined that the technology had developed, he put together a small team to work on the initiative. From there, it took them roughly a year to get the project up-and-running.
Estée Lauder’s efforts in the space highlight the benefit blockchain can bring organizations, as well as the difficulty companies face in deploying it to full-scale production.
“It will be scalable”
The basis of Estée Lauder’s new project is straight-forward: track the progress of vanilla from beginning to end.
Such a tool could be helpful, for example, in substantiating claims to consumers about responsible sourcing. On a larger scale, it could help eliminate compliance concerns by allowing companies to verify transaction histories and vet potential partners or acquisitions for fraud. Or track inventories in much clearer detail to cut down on wasted product.
A seemingly easy task, however, is made immensely more difficult by the global nature of supply chains today. The vanilla, for example, will ultimately travel from Africa, to Europe, to the US, then shipped all over the world.
And each of the 450 partners the ingredient eventually touches have varying technological capabilities. Some of Estée Lauder’s early partners, for example, still track operations in notebooks. While a critical piece of overall revenue, vanilla is a “relatively small part of the supply chain,” per Polcer. So it’s easy to imagine how complex it can get for the more substantial portions.
And while it’s still early days, he says the information it’s producing “looks really good and really clear.”
“How we leverage it? Still to be determined,” Polcer added.
The project is enough of a success, however, that the company is looking into what other areas of the supply chain it may make sense to expand to.
“Once we get more learnings, it will be scalable,” said Polcer. “If we prove that it works here, we can use it across many of our supply chains.”