Is Blockchain Altering Manufacturing?

As blockchain with its speedy, secure, and traceable approach to operational processes has proved its disruptive potential within different industries, the technology is gaining recognition with manufacturers too.

For now, blockchain solutions for manufacturing mainly target supply chain, that’s why logistic companies became the first to implement such technologies in their internal processes. As we will see in this post, manufacturers are ready to catch up.

Key Advantages of Blockchain in Manufacturing

Blockchain-based applications are taking over classic enterprise software where it deals with document and supply chain management.

Imagine a craft beer manufacturer cooperating with 50 contractors and supplying its products to ten distributors in retail chains all over the country. What benefits can this company get from using a blockchain?

Reduction in Paperwork

To get ingredients for beer production and supply a ready-to-consume product, the company should sign contracts and do invoice reconciliation every single day.

If the manufacturer uses paper-based processes, in one year it can collect tons of paper. On top of that, finding a required document becomes painful.

Versioning is also important here. Even if the company uses digital documents with digital signatures, nobody knows whether a certain draft is the last edition and whether all the responsible people have already approved it.

Blockchain can guarantee working on the last edition by containing all the previous drafts that turn document management into a paperless, well-tracked and transparent process.

Transparency of Transactions

The manufacturer affirms organic ingredients for its production, but how to assure the end consumer that it’s true? Just labeling a bottle wouldn’t be enough to prove product provenance. Blockchain allows manufacturers not only to guarantee that all their contractors have organic certification but also to trace what exact ingredients went into particular beer bottles.

Blockchain can make product provenance transparent for all the supply chain members.

Product Traceability Improvement

One day, our manufacturer supplied some bottles from their batch A to the distributor X, and the X delivered the products to ten retailers. One of the retailers claimed that the batch had defects. How much time do the manufacturer and the distributor X need to recall the faulty bottles? Blockchain allows doing this in seconds.

Blockchain can speed up product traceability for manufacturing companies.

Security Enhancement

Any non-blockchain database, which has a sysadmin overlooking it and which is located on a certain server, can be cracked, including through a malevolent sysadmin. Blockchain is a decentralized technology which is distributed across all the computers using it. It means that no one can forcibly make any changes to the records, or crack the software because it’s impossible to make it at once on all the computers in a chain.

Decentralized blockchain can guarantee data security.

International Corporations Stake on Blockchain

Global manufacturers only start using blockchain technologies.

In 2018, Nestle and Unilever announced their intention to use blockchain-based technology in their supply chains. They made such a decision after a successful pilot program conducted by Walmart, which recorded reduction of trace time for a food chain from 6 days 18 hours and 26 minutes to 2.2 seconds.

In its turn, Procter and Gamble introduced blockchain-based record keeping to its supply chain after Maersk had noticed that paperless trading can reduce actual physical transportation costs by one fifth.

Solutions in Use

Manufacturers interested in implementing blockchain in their processes already have a range of ready-made platforms to build their solutions with.

One of the most complex solutions on the market to date was developed by Maersk and IBM. In 2018, they formed a joint venture which is aimed to digitize supply chains. At the moment, though, the platform serves only global corporations.

On a more accessible scale, software developers can now build custom blockchain solutions for manufacturing companies on top of genEOS, a decentralized ecosystem based on blockchain 4.0. The platform goes together with a legal framework and is paired with transparent token distribution (to close in December 2018).

Takeaways

Although manufacturing is still heavy with inefficiencies and paperwork, blockchain technology is about to change this. Currently, global corporations are implementing blockchain-based solutions in their processes to reduce paperwork, speed up information exchange, and supply chain traceability. By this, they also expect to make them more transparent and secure.

Yet, the technology is available not only for corporations but for SMEs too with some ready-to-use blockchain platforms like genEOS.