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Blockchain Technology Will Have a Significant Impact on the Manufacturing Industry

Blockchain technology will bring improvements to the following manufacturing processes: supply chain management, machine and equipment leasing management and contract management; each area will see significant changes and developments.

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Blockchain technology will bring improvements to the following manufacturing processes: supply chain management, machine and equipment leasing management and contract management; each area will see significant changes and developments.

Since the initial release of blockchain technology in 2008, its potential and impact on several economic sectors—including the manufacturing industry—has been discussed at great length. According to published reports, it is expected that the business value-add of blockchain will grow to slightly more than $176B by 2025, then exceed $3.1T by 2030.1

The manufacturing industry stands to be one of the most effected industries by the implementation of blockchain technology, specifically the industry’s processes and procedures.

Blockchain technology will bring improvements to the following manufacturing processes: supply chain management, machine and equipment leasing management and contract management; each area will see significant changes and developments.

Supply Chain Management

Enhanced traceability and transparency of products/materials within the supply chain, made possible by blockchain technology, will result in an increased ability to track and forecast. One of the most significant advantages that blockchain brings to the industry as a whole is providing the ability to conduct quality control, compliance and attestation services for materials through the ledger. Additionally, the industry also faces challenges tracking raw materials in the warehouse and monitoring the proper shipment of parts—with devastating impacts on costs. With blockchain technology brought into the supply chain, participants will easily be able to predict and forecast such problems due to the increased traceability of raw materials, which will reduce risks and lead to greater efficiencies within the industry overall.

Machine and Equipment Leasing Management

Blockchain technology will help to change the current processes around machine and equipment leasing management. Specifically, this relates to managing payments, tracking usage of equipment, repaying outstanding loans and granting participants access to the equipment by using technological innovations such as smart contracts, sensors, and Internet of Things (IoT) devices. This increased ability to lease a machine and pay for the corresponding usage is called Machinery as a Service (MaaS). Blockchain technology will also lead to a reduction in documentation preservation and an increased ability for management forecasting. With the complementary technologies of blockchain, RFID and IoT devices, the transparency and traceability of equipment usage and corresponding upcoming maintenance downtime required can be tracked and monitored in real-time. This will allow for more strategic decision‑making capabilities by management personnel and the executive team regarding the usage.

Contract Management

Blockchain technology will help lead to a number of previously unseen advantages pertaining to contract management, such as reducing information asymmetry amongst participants and assisting in resolving legal disputes, notarization-related applications and overall efficiency. A problem in the manufacturing industry is a lack of sustainable trust between many of the involved parties that often rely on each other for their raw materials and critical components. Blockchain technology, and the underlying immutable distributive ledger, helps to minimize that obstacle by enhancing trust amongst participants through the technology itself, which improves relationships and sharpens the overall business model.

Blockchain technology will bring improvements to the following manufacturing procedures:  contract management, intellectual property protection and product management, with each area seeing a variety of changes and corresponding developments.

Contract Management

Automated payments will have a major impact on blockchain technology implementation, as a result of the utilizing smart contracts with major vendors, which decreases the necessity for reconciliations amongst all parties conducting business transactions in a blockchain ledger. This will result in a two-part impact to the manufacturing industry: the first will introduce a mutually trusted automated payment system amongst all participants in the blockchain ecosystem; and the second will be the complete removal of the need to perform reconciliations amongst blockchain participants, allowing companies to repurpose their current resources to be more profitable. The overall contract management net effect of blockchain implementation is enhanced efficiencies for all participants involved.

Intellectual Property (Sensitive Data) Protection

Sensitive and confidential information, such as intellectual property, will be protected using blockchain technology in the near future of the manufacturing industry. Highly secure, protected passwords to safeguard sensitive information being stored on an unhackable and immutable ledger will be the new procedure for securing and accessing sensitive and confidential data. In a sense, this creates a “virtual safe” where the documents can be securely stored and readily accessible to all necessary parties who have the appropriate login credentials. Also, the virtual storage of information allows for data redundancy and a reduction in associated risk as a result.

Product Management (Product Recalls)

The enhanced ability to perform supply chain management tracking, and tracing both upstream and downstream, will affect this procedure and drastically enhance turnaround times, allowing manufacturing companies to stop losses faster and resolve issues sooner. A use case example is Walmart’s use of blockchain technology in response to its previous E. coli outbreak linked to contaminated lettuce that had occurred in 2019. Prior to the implementation of blockchain, it required seven days’ worth of effort to obtain all the necessary information to mitigate the situation. After the implementation of blockchain technology, the effort required to obtain all necessary information was reduced down to 2.2 seconds.2 This represents a 99.999% reduction in the time needed to obtain the required information to assist in the resolution of the problem. Clearly the organization and storage of the blockchain ledger provides a capability that currently does not exist in the marketplace.

Lastly, it is important to note that all data and information tracked and stored through blockchain is not merely being preserved for compliance purposes and self-storage reasons. The collection of big data will allow for the underlying participants to run machine learning, artificial intelligence and predictive analytics against the ledger information to gain additional insights from the data such as pattern recognition—resulting in enhanced forecasting as well as the discovery of additional synergies between participants. The future of the manufacturing industry is always evolving as enhanced technologies emerge, and blockchain technology will be at the center of this evolution.

 

sourcecs

https://www.forbes.com/sites/louiscolumbus/2018/10/28/how-blockchain-can-improve-manufacturing-in-2019/#c587a0c5db66 1

https://corporate.walmart.com/newsroom/2018/09/24/in-wake-of-romaine-e-coli-scare-walmart-deploys-blockchain-to-track-leafy-greens 2

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