Blockchain technology is gaining momentum in the market and hugely impacting on the manufacturing industry
Currently, the world is highly fascinated with terms such as cryptocurrency, bitcoin and blockchain technology. The reason for this is simple - people are getting are really benefitting from them, especially blockchain.
When it comes to blockchain, the technology has largely evolved, bringing with it even more benefits. In this blog, we will cover the initial phase of blockchain technology, its evolution and how it can benefit the manufacturing industry.
Let us begin by taking a quick tour of what blockchain is and how it is impacting different industries.
When blockchain was introduced
Blockchain was initially just a technology supporting bitcoin but the experts could see that it had a much wider scope than just meeting the needs of bitcoin. Further analysis showed that it has the potential to bring a radical change to the internet itself.
Gradually, the technology has evolved and a variety of blockchains bloomed. The use quickly deviated from the pure money aspect. Today, it is widely being used as a distributed ledger technology.
This technology creates a chain of blocks where each block includes information, as well as data that is stored together and verified. These blocks are further validated and attached to the string of transactions and information in the previous blocks.
To explain this in simple terms, let us compare it to software like Google Docs. As you know, multiple users can simultaneously access and edit a single document on Google Docs. Similarly, with blockchain, you have a distributed ledger - one set of data that is replicated in multiple locations. Though, there is one difference here: unlike a Google Doc, you cannot change the previous entries. You can only add to the ledger.
Talking about its few features:
- Blockchain keeps a record of all data exchanges, which are referred to as a 'ledger'.
- All data that is exchanged is a 'transaction'. Once the transaction is verified, it is added to the ledger as a 'block'.
- In order to verify each transaction, blockchain uses a distributed system i.e. a peer-to-peer network of nodes.
- Once the transaction gets signed, verified and added to the blockchain, it can never be altered.
Lately, a growing demand for blockchain is being noticed in different industries. According to the reports of MarketsandMarkets, the blockchain market is expected to shoot up at a compound annual growth rate of 79.6% - i.e. from $411.5 million in 2017 to $7,683.7 million by 2022.
As said earlier, once the information goes in, it is virtually impossible to get the data altered or even get it out again without the original passcode or key. This means trust is established through collaboration and code. You no longer need a bank to transfer money wherever you want to in the world. You also no longer need security to buy a property or a real estate agent to facilitate the transaction of any kind. Isn't that great?
In short, blockchain technology has the real potential to revolutionize almost every industry. But the most likely ones that can largely benefit from it include:
- Banking and financial services
- Real estate
Out of all of these, the supply chain management, i.e. the manufacturing industry, is becoming more inclined towards blockchain technology.
Let's get into more details of how blockchain technology can impact the manufacturing industry.
The role of blockchain technology in the manufacturing industry
When we talk about modern manufacturing, the supply chain can work across multiple organizations, as well as countries. This can make the system complex in terms of finding solutions to increase efficiency and chasing the individual events.
Mostly, the company information in the manufacturing industries flows through the supply chain. They have a uniform way of recording, storing and exchanging the data.
When it comes to blockchain technology, it has the potential to create smarter as well as secured supply chains wherein you are able to track the journey of your product with real-time visibility.
For instance, if you are expecting a material delivery, you can track materials while determining where they arrived, who received them, how and when they are transported to the next stage, and so on. Everything is recorded as blocks in the blockchain.
So, your minutest details of the supply chain process can be seen by you and, there are no chances of any manipulations.
There are many such realistic benefits that the manufacturing industry can get while using the blockchain. If you are one amongst them who are keen on experimenting with the blockchain, you shouldn't miss reading these five realistic benefits.
What are the benefits of using blockchain in the manufacturing industry?
1. Enhanced inventory management
Blockchain provides a holistic and permanent record of every single transaction that takes place in your supply chain process. Moreover, it enables you to connect to each party in the value chain - be it suppliers, production sites, distribution centres or even the retail partners.
The records that are stored are accessible by everyone within the network. As everyone holds the copy of the information, there is no confusion or disruption created in the supply chain process. This, in turn, leads to enhanced inventory management.
Let’s take an example of Maersk, the world's largest container shipping company. The company make use of blockchain technology to exchange event data and handle document workflows.
In 2014, the company, Maersk, found that one simple shipment of goods from East Africa to Europe can go through 30 people or organizations, comprising 200 interactions and communications.
However, Blockchain technology can help the company to manage and track the paper trail of over tens of millions of shipping containers around the world. By digitizing the supply chain process, companies involved with inventory can reduce fraud and errors, total time spent on products transit and shipping.
2. Improved data security
Information like invoices and contract details that are exchanged in any supply chain process is highly confidential. Communicating this information using traditional methods can be quite risky, as they can leak easily in a number of ways. On the other hand, blockchain keeps the floating information secured with the best cryptography techniques.
As explained to you earlier, it is built with secure blocks. These blocks are nothing but the copies of the documents that are chronologically stored as well as linked to the previous blocks. This eliminates the chances of your information getting hacked. This is because a hacker would have to change hundreds of copies at the same time, which is next to impossible.
So, if you are looking for an option that can shield your supply chain data against such cyber attacks, blockchain has to be your ultimate pick.
Let’s take one such example of IBM company that offers its Watson IoT platform with an alternative to managing IoT data in a private blockchain ledger that is integrated into Big Blue’s cloud services.
Another company, Ericsson’s Blockchain Data Integrity service offers fully auditable, compliant and trustworthy data to mobile app developers, who are working within GE”s Predix Paas platform.
3. Better transparency and traceability
The blockchain that works within the supply chain is able to provide you with all the data relating to or the status of your transaction. For instance, how the goods are made, where they are shipped from, how they are managed and much more - all the information is stored in the blockchain-based system. Moreover, as the data is permanent and can easily be shared with your supply-chain network, it gives them a comprehensive tracing and tracking abilities.
For instance, if you own a pharma company, you can use this information as a proof of legitimacy for products in your pharmaceutical shipments. Not only you, but even the consumers get benefits here, as they are able to find out more about the products they wish to buy with the details like where they been sourced from, whether it has been preserved in the right condition or whether it is original or not.
In short, total transparency is developed, which is obviously a major benefit that you can get while using the blockchain for your manufacturing industry. Similarly, tracing will give you, as well your supply chain network, peace of mind that the entire supply chain process flows smoothly.
In fact, a good example here is SyncFab, the world’s first peer-to-peer industrial marketplace for manufacturing. The company is using Blockchain technology to revolutionize the way buyers connect with manufacturers. This technology helps SyncFab to connect.
A good example here is SyncFab, a manufacturing supply chain blockchain – the world’s first peer-to-peer industrial marketplace for the manufacturing industry. The company aims to connect buyers directly with hardware manufacturers saving them time and maintaining transparency.
4. Automated supplier payments
Blockchain also facilitates the transfer of funds to any corner of the world. You don't need to indulge in the traditional banking methods. Transfers can be made possible directly between the payer and the payee. The entire system of paying through the blockchain is secured and above all, it is done quickly! You don't have to wait for a day or even for an hour. It is that quick.
Once the digitally-secure transaction data becomes a part of blockchain agreements and your network agrees on the terms and conditions, the smart contract can begin automation of the commercial process.
Through this, you can be sure that what was promised is delivered and what is delivered is paid for. Even Bank of America Corp. and Mastercard, Inc. have already moved to adopt blockchain technology and have over 48 blockchain-related patents and applications.
5. Enhanced customer engagement
The blockchain is much more than a storage technology. You can analyze the data to create forecasts and predictions, which can further help you solve the lags in the supply chain. Not only this, but the analytics can also contribute to boosting customer satisfaction. You can use the blockchain database to find ways of building a delivery timeline.
Moreover, even the customers can access the blockchain data to some extent. For instance, a clothing brand can give the customers access while showing them an approval form or a labour union sheet. Sharing such data creates a transparency, which ultimately results in loyalty and creating long-lasting customer relations.
One such example of the company that makes use of Blockchain for customer engagement is Digital2Go (D2GO), a US-based consumer engagement and marketing intelligence firm. The company aims to leverage this advanced technology in marketing, especially consumer engagement.
Blockchain can prove to be a game-changer for your manufacturing industry
There are much more to these benefits. A lot of new technologies are redefining the way manufacturing industries used to work with their supply-chain management and blockchain is one of them. As blockchain technology continues to advance, the supply chain industry is sure to see the true forms of transparency, accountability and efficiency.
On an ending note, the sooner the manufacturing industries adopt the lucrative blockchain technologies, the sooner they will be able to benefit from a much better way of running their business.