The Blockchain and Manufacturing: A Perfect Match
Manufacturing is a key driver of the global economy. The sector alone accounts for nearly 17% of global GDP, according to the World Bank.
Unfortunately, manufacturing has always been rife with inefficiency and quality-control problems. Fake products are able to make their way to market because the current system lacks a way to track what’s real and what’s not.
In fact, the counterfeit goods market adds up to half trillion per year, based on data from the International Trademark Association.
Supply chains are unnecessarily complex and disconnected, so it isn’t as easy to monitor as it should be. Meanwhile, customer expectations are increasing, which places even more pressure on manufacturers to deliver products at the price consumers want.
The many problems we see today in manufacturing — from counterfeiting and poor quality to inefficient processes and a lack of trust in production — are all due to the fact that manufacturers still operate as if we were all living in the 20th century.
Thankfully, blockchain technology can provide a solution to all the problems the manufacturing industry faces and help usher it into the 21st century.
The blockchain can improve verifiability and transparency in manufacturing
Do you remember the Chipotle E. Coli outbreak of 2015? To this day, no one knows what ingredient or meat caused the outbreak. That’s due to issues with tracing the source of the bacteria. Chipotle’s supply chain was just too complex and disconnected.
Had Chipotle’s supply chain been on a blockchain, the company could have easily pinpointed where the contamination originated from. That’s because the blockchain is an immutable distributed ledger that enables real-time tracking of parts and supplies from origin to manufacturer to retailer.
By unifying the supply chain on a decentralized blockchain platform, suppliers, manufacturers, and retailers can record anytime something changes hands or is bought and sold.
So whether you’re a corporation or a small business, putting the supply chain on the blockchain can and will have enormously beneficial consequences. Not only does it increase overall transparency, it also makes recognizing (and solving or stopping) supply chain issues a whole lot easier.
What’s an immutable, distributed ledger, again?
An easy way to understand how blockchain technology could so completly revolutionize both manufacturing and supply chains is by comparing it to a living dossier of activity logs. These digital logs — which are automatically updated everytime a meaningful transaction occurs — allows anyone to easily observe and trace the flow of parts and goods between companies.
This 24/7 eagle’s eye view provides manufacturers a never-before-seen level of control and compliance. They’ll be able to see and address problems in real time, as well as eliminate the ability for copying or theft.
For instance, in a computer manufacterer’s supply chain, various components are sourced from suppliers all over the world. Running the supply chain on a blockchain-based platform would enable the entire network to identify a faulty part immediately, or prevent an unscrupulous player from pushing the part through to the next step in the supply chain.
In short, a blockchain-based solution — like the Loyakk Vega blockchain-powered enterprise relationship platform, built for companies operating on a large scale within a global network of suppliers and partners — can ease the burden of trust manufacturers face.
With the right blockchain platform, manufacterers and shippers can ensure quality products at the right price that are protected from tampering and unfair competition.
Helping manufacturers meet the demands of the modern customer
In today’s Amazon and Alibaba-led world, the modern consumer demands choices, quality, and affordability. They also want whatever they order to arrive as quickly as possible. Blockchain technologies have the potential to deliver on all of those demanding expectations.
In addition to improving security with increased transparency and visibility across the extended manufacturing ecosystem, a blockchain-based platform can cut out the middleman by enabling a direct connection between manufacturers and suppliers. It eliminates the need for other intermediaries like lawyers and banks.
The ability to eliminate middlemen is largely thanks to smart contracts, which rely on immutable code that ensures certain terms and conditions are met in an agreement between two or more parties. The smart contract will only send a payment or asset to a party once they meet those terms and conditions. This ensures that all parties adhere to the agreement. This, in turn, guarantees the highest level of accountability, which manufacturers desperately need.
A blockchain-based solution can also streamline processes by simplifying data management and reducing the time it takes to complete certain tasks. For example, as experts note, a blockchain-based solution enables the creation of a thorough end-to-end audit trail. Traditional audits are not only very expensive, they’re also very time-consuming and inefficient. Streamlining quality assurance checks will go a long way towards improving accountability and trust along the supply chain.
What happens when the supply chain is put on the blockchain? Everyone will benefit, from maker to consumer. Higher quality products will be able to be produced at a lower price.
Blockchain and the future of manufacturing
Many industry experts claim that 3D printing is the future of manufacturing. And they’re absolutely right. The mass printing of rapid prototypes and customizable products is completely gamechanging for manufacturing as a whole.
But manufacturers have serious concerns about security. In a manufacturing marketplace of fail-fast prototypes and constantly re-optimized products, how do you protect all of your intellectual property and prevent someone from simply stealing a great idea?
The blockchain puts an end to this concern through the use of smart contracts, which will automatically negotiate terms and conditions, protect the design by giving creators full control over important files, and guarantee that the additive manufacturing process meets requirements for design quality and materials.
Innovators won’t have to worry about factory personnel stealing an idea or production quality not being up to snuff. By encrypting and maintaining digital product memories on the blockchain and overseeing product production through smart contracts, 3D printing and additive manufacturing can be carried out efficiently and securely.
Bright days are ahead for manufacturers
There are a lot of new technologies redefining the way companies do business. But the blockchain is the one that can bring trust, quality, security, provenance and governance to the manufacturing process.
As blockchain technology continues to advance and becomes more defined, the supply chain and service supply chain in particular could begin seeing truer forms of transparency, accountability, and efficiency.
The sooner manufacturers adopt blockchain technologies, like Loyakk’s Vega platform, the sooner they can benefit from a much better way of doing business.
