SAP Ariba Will Use Blockchain to Track Shipments, Ensure Authenticity

By Tom Groenfeldt for Forbes,

SAP Ariba, which connects 2.5 million buyers and sellers around the world through its network, today announced it will offer blockchain record-keeping across its cloud-based applications and business network.

Also today, its parent company, SAP announced that it has joined  Hyperledger, the blockchain development program from the Linux Foundation, as a premier member. It joins other industry leaders which are premier members  including Accenture, American Express, CME Group, Deutsche Borse, JPMorgan, IBM and Intel.

“We believe blockchain is a transformative technology for enterprise businesses,” said Juergen Mueller, chief innovation officer at SAP in a press release. ”We are committed to advancing its adoption via the creation of new standards, use cases, platforms and open applications. In joining Hyperledger, we plan to share our expertise and knowledge to help bring open distributed ledger technology to all businesses.”

SAP Ariba will use blockchain technology to improve its customer’s view of the business they are conducting, said Joe Fox, senior vice president for business development and strategy. The company’s focus  is around trading and moving physical assets, not currencies but movements of goods.

“Right now hundreds of billions of dollars of goods are moving that aren’t in the hands of the seller or the receiver.”

Blockchain will allow buyers and receivers to track and trace the movement of goods. SAP Ariba also announced today that it has formed a partnership with Everledger a London-based firm that can capture the defining characteristics of diamonds and create a digital thumbprint of the asset that is stored on the blockchain. SAP Ariba said this information, including history, transport, events and ownership, can be used to verify authenticity.

“If you can track and trace diamonds, you can track and trace anything.”

Everledger was one of several companies using emerging technologies such as blockchain, artificial intelligence, machine learning and the Internet of Things to present at SAP Ariba Live in Las Vegas today.


It’s similar, although on higher valued goods, to the way Walmart and IBM use blockchain to track produce from the field

Pea harvesters at work

Photo by Tom Groenfeldt

to supermarkets and restaurants so an outbreak of a food-related illness can be tracked back across the supply chain almost immediately.

Diamonds aren’t the only products that can benefit from verification of authenticity. SAP Ariba’s announcement cites Dana Gardner, principal analyst, Interarbor Solutions: “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.”

With the blockchain fabric, a seller can notify a buyer when a product has been shipped. The shipper does not have to be a member of the blockchain to post that details of the shipment’s progress. Fox said the assurance from the blockchain will also help companies reduce the excess inventory many maintain to ensure they don’t run short of key items because they will have a much tighter way to manage their assets.

With Everledger and blockchain technology, SAP Ariba can create a new trusted layer, or trusted commerce, said Fox. It sounded as if the branding is still a work in progress.

The technology will let SAP Ariba get involved  in the movement of assets, where is has never had a role, he added.  The company’s contract module will now have blockchain capability and be able to support smart contracts. The company is partnering with two trade finance partners it expects to announce soon. He expects that as the million companies which use SAP Ariba get onto the blockchain, they will find new uses, and new business opportunities. For example, banks might manage the flow of funds and interest payments for funds in transit. Smart contracts combined with the blockchain can show when a buyer reaches a point where his purchases earn him a volume discount and apply it to his invoice, automatically. Insurance companies might offer micro insurance through the blockchain.

“This is going to take a while,” Fox added. “It is almost like moving to the cloud, a multi-year process.”

First appeared at Forbes