The “tech breakthrough megatrend”, known as blockchain technology, is rapidly gaining broad acceptance. According to IDC, globalspending on this innovative technology was expected to reach $2.1 billion in 2018. These days industries all over the world are still investigating ways to use blockchain to increase trust across their business value chains and address primary challenges around complexity, transparency, and security.
What are the opportunities of blockchain in numbers?
Before talking about numbers, let’s go back to the roots for a while and remember that traditionally, such institutions like banks, governments, and corporations play risk management roles to facilitate trade and commerce. But now is the very first time when organizations on their own can use technology to manage those risks to reduce uncertainty, as well as the daily transaction costs of doing business. This is the transformation that is expected to have a significant impact on the wider economy called programmable economics. It is expected that the transition to the era of a programmable economy will ensure the efficiency and cost of new business in the amount of more than 3 trillion US dollars by 2030. This will be mainly due to improved cash flow, the origin of assets and the creation of own assets, as well as the creation of new business models based on trust.
Since the impact of the blockchain permeates our entire economy, it transforms those industries today depend on centralized infrastructure and business processes. First of all, it’s supply chains, where blockchain is able to improve the ways of tracking components and finished products, as well as the creation of anti-counterfeiting applications. Secondly, the decentralized and autonomous blockchain model is ideal for the Internet of Things. This model eliminates single points of failure and creates a more secure and resilient platform on which devices can operate. Thirdly, of course, we are talking about smart cities and creating a safe and unified ledger for managing real-time data on transport, energy and utilities, which will help cities to optimize interaction with citizens, reduce resource consumption and share publicly available data with authorized by third parties.
Although the blockchain has the potential to change the business landscape, important issues remain for wider adoption. Firstly, it is necessary to establish platform standards that meet the complex needs of the enterprise. In addition, today organizations are looking for industry solutions to transform their business processes, despite the fact that blockchain is basically a transformation technology. Thirdly, since large enterprises with complex business relationships are striving to build blockchain networks on a scale, the true value will be revealed from the interconnectedness of many independent blockchain networks.
Now the enterprise blockchain landscape is dominated by two major platforms: Hyperledger and Quorum. Companies from a wide array of disciplines are building on these platforms. Moreover, not only the financial sector is involved, but also healthcare, logistics and manufacturing.
Most likely, you have already heard about a successful blockchain implementation in Walmart supply chains. Thanks to Walmart IBM Food Trust Solution you can track the origin and processing of goods in just a couple of seconds.
What’s more… In August, the Danish business conglomerate Maersk Line and IBM announced the creation of TradeLens. It’s a blockchain solution that helps to manage and track shipping containers across the world by digitizing the end-to-end supply chain process. This can save the shipping industry billions of dollars by reducing admin costs and eliminating delays.
For example, the company demonstrated how TradeLens can reduce the transit time of a shipment of packaging materials to a production line in the United States by 40 percent, avoiding thousands of dollars in cost. Some supply chain participants estimate they could reduce the steps taken to answer basic operational questions such as “where is my container” from 10 steps and five people to, with TradeLens, one step and one person.
“Our joint collaboration model allows us to better address key feedback from ecosystem participants while ensuring TradeLens interoperability and data protection among Maersk, IBM and all ecosystem participants,” said Mike White, TradeLens leader for Maersk.
Karim R. Lakhani, professor and leading educator of business administration at Harvard Business School, thinks that blockchain improves E2E processes with regard to quality control. Manufacturers and customers who buy parts will have all the info on the origin of each part and the certificates it holds. All this data will be captured on a single platform. The fact that customers can check the origin of the parts (and make sure, for instance, that no child labor was involved) can contribute to a more ethical production system.
The difficult aspect of implementing decentralized systems in the manufacturing sector is that both developers and conglomerates have to acknowledge the fact that the blockchain, at least in its early phase, will be more inefficient and impractical than centralized platforms.
According to Karim, blockchain-led transformation of business is still many years away. That’s because blockchain is not a “disruptive” technology, which can attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly. Blockchain is a foundational technology: It has the potential to create new foundations for our economic and social systems. However, while the impact will be enormous, it will take decades for blockchain to seep into our economic and social infrastructure. The process of adoption will be gradual and steady, not sudden, as waves of technological and institutional change gain momentum.
Today, we are already witnessing examples of successful blockchain implementation in various areas of our life. However, it will take some more time for this technology to truly gain a foothold in the market and bring maximum benefit.
CertifyIt is a web quality certification platform helping manufacturing and supplying companies accelerate quality proof for international market partnerships and developing supply chain networks. CertifyIt helps SMEs increase trust and transparency of quality certification background on the international market. Passing quality certification on CertifyIt platform based on blockchain technology gives the opportunity to tell publicly about quality and implemented quality systems in the company brining more trasparancy, trust and information access speed up and sharing among players on the market. That significantly increases the credibility of the company primarily from B2B partners side, and subsequently end consumers one.
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