As a recordkeeping technology for Bitcoin, “blockchain” has emerged in the finance industry. The “block” is a piece of digital data that is stored in a publicly accessible database (the “chain”). Known as a “distributed ledger,” it helps record and shares financial transactions across multiple systems in a more secure and tamper-proof manner that is impossible to alter.
This technology can potentially solve the authentication and security issues faced by the finance industry in a digital world, as it provides a fast and secure method of authenticating transactions. As a result, the spotlight is now on different sectors. Testing shows that blockchain in manufacturing industries can create new business models without limits. Asset tracking, trade finance, and transaction settlements are the most common use cases.
Many manufacturers have yet to incorporate blockchain technology into their digital transformation plans. More than 80 percent of supply chain blockchain initiatives are expected to remain in the pilot stage through 2022, according to Gartner. 2
The company also claims that blockchain will help track and move $2 trillion worth of goods and services worldwide. 3 In the manufacturing industry, blockchain can revolutionize supply chain management. Rather than large corporations, small and medium-sized businesses are most likely to lead the way in the long run with blockchain-powered initiatives.
Companies across a wide range of industries are eager to invest in blockchain technology because of the potential benefits it has for streamlining business processes. A variety of manufacturing industry segments have benefited from current use cases and POCs.
Defense and Aerospace
Industry players face daily challenges due to the intricate ecosystem and extensive supply chain that characterize this highly regulated industry. It is possible to track transactions across global suppliers using a blockchain, allowing for more efficient regulatory compliance and a more efficient supply chain management process. Additionally, it can be used to gain real-time inventory information from supplier sites to avoid running out of stock.
Automobiles and blockchain technologies go hand in hand, making it one of the most promising sectors for the future. The technology is currently being tested by several major automakers, including General Motors, BMW, Ford, Honda, Jaguar, and Land Rover, for various purposes, including vehicle identification, ownership, and service history. Every aspect of this industry will be affected by blockchain technology. This encompasses procurement, manufacturing, distribution, and service. This technology is currently being extensively tested in a product recall, which results in billions of dollars in losses every year.
The use of blockchain in food manufacturing is seen to eliminate or prevent contaminated food from making its way into the food supply. To build consumer confidence, most of the initiatives in this field aim to provide assurances about the product’s origins, quality, and raw materials. The IBM Food Trust Initiative, which includes more than 200 members, harvests data from food growers, manufacturers, and sellers to help consumers trace the origin of their food.
Medications and Medical Equipment
For medical devices or machines, blockchain allows them to securely share data with other parties without compromising privacy and compliance. Connected devices are now generating many private health records, and the blockchain addresses all of the most pressing privacy issues. It can securely store, record, access, and share data. In the pharmaceutical and medical device industries, supply chain traceability can take a huge amount of time and resources to implement.
Small and Midsize Manufacturers
These companies make up most of the global economy’s growth, and they have a significant impact. Because of this, the vast majority of people have limited resources. As a result, many new businesses fail within the first three years because they cannot secure financing from banks and other financial institutions.
The blockchain can help by transforming the way trade finance is carried out—blockchain technology. Every supply chain step is recorded and verified by the system, making it verifiable for all parties involved. Invoice financing options for this well-deserved segment can greatly benefit from this level of verifiability and accuracy.
Smart contracts can also benefit from blockchain technology. There is no need for expensive business documentation practices, as agreements are automatically executed and enforced. To some extent, it can narrow the gap between large corporations and encourage more competitive trade.
These are merely a few examples of the many possible alternatives. Many startups are entering the market to broaden the application of blockchain to as many different industries as possible. Governments, too, are beginning to see the benefits of these initiatives for the economy.
Stakeholders have a very specific request: streamline and improve the complexity of the current production and trade processes.
Blockchain-powered shipping platform TradeLens is an essential part of this story. Major shipping companies have signed up for it and share data to make it easier for information to flow between different trading hubs. They have signed up for it. Even customs agencies have begun using the platform to verify and clear goods more quickly and digitally, as it covers more than half of the world’s shipping container cargo.
Suitable for the Future
Every industry with high value, high risk, and a lot of regulation can benefit from blockchain. Its list of advantages is extensive, from preventing tampering and counterfeiting to providing preventative maintenance.
Manufacturers who deal with complex supply chains and need systems to monitor components from the source to the final product for authenticity and safety can benefit from blockchain technology. It’s still in its infancy, and it may be another five years before the proofs of concept become real-world applications. Manufacturers should keep an eye on developments and POCs relevant to their segments. Keep an eye out for blockchain-related opportunities in your business.