How Blockchain Is Disrupting Manufacturing

After gaining traction with other industries, blockchain appealed to manufacturers as well with its promise to make processes and operations quick, secure, and transparent.

That movement toward blockchain was started out by logistic companies, the key beneficiaries of the supply chain improvement. Manufacturers are now following suit.

Blockchain Benefits for Manufacturers

Speaking about supply chain and document management, the blockchain-based software can overcome the inherent drawbacks of these processes.

Imagine a manufacturer of organic cookies, which collaborates with 40 ingredient suppliers and 5 distributors. What would be the major advantages of blockchain for such a company?

Fast and Paperless

Blockchain makes document management well-tracked, paperless, and speedy.

To deal with hundreds of contracts and invoices, usually, the manufacturer uses appropriate document management software or signs paper-based documents, or both.

Paper-based workflows are typically cost-inefficient and time-consuming, especially when someone wants to find a required document out of the pile. At the same time, digital documents can demonstrate problems with versioning because of imperfect tools to track changes and verify all signatures are in place.

By firmly maintaining all the versioning, blockchain can guarantee that a current draft is the latest one. Also, it allows tracking all the document alterations in seconds.

Transparent

Blockchain guarantees transparency in the supply chain.

Our cookies manufacturer can be named ‘organic’ only if it confirms the provenance of its ingredients. Without blockchain, the producer can’t guarantee that all its contractors obtained organic certification and whether it is active.

Blockchain contains all the necessary records and makes it transparent for all the process participants with an access to it. Thus, end consumers of the cookies can even see what exact wheat was used for the cookie production.

Traceable

Blockchain allows tracking all the records in seconds.

Imagine that products, which distributors have already delivered to a few retail chains, are flawed. The manufacturer must recall these products back. How to trace products from the same batch?

Blockchain allows immediate tracing of all the products wherever they are in the supply chain.

Secure

Blockchain decentralization ensures data security.

Even if classic enterprise software can guarantee some degree of transparency, traceability, and speed, data security is its weak spot. What if the person administering this software is bribed? What if someone cracks this software?

Blockchain is based on data decentralization when each computer in the chain stores all the records. It means that cracking one computer is useless while cracking all computers in a chain at once is almost impossible.

Global Companies Are Going to Use Blockchain

Manufacturers of the global scale became the first to apply blockchain to their processes. A lower popularity of the technology among smaller companies can be explained by their limited budgets and less technological awareness.

Since 2018, Nestle and Unilever started using blockchain in their supply chains. They were encouraged by Walmart’s example, that could reduce trace time for its food chain from almost a week-long process down to 2.2 seconds.

Procter and Gamble announced about its use of blockchain for record keeping after Maersk showed some success with it. By using blockchain-based paperless documents, Maersk reduced transportation costs by 20%.

Emerging Blockchain Platforms

To implement blockchain, manufacturers can adopt either ready-to-use software, or develop their own solutions. The third option would be to take out-of-the-box platforms, like those below, and build on top of them.

In 2018, Maersk and IBM announced the launch of its blockchain-based platform for supply chains enhancement. Currently, though, it serves only large-sized companies.

Software developers building custom blockchain solutions for smaller manufacturers can use genEOS, a decentralized ecosystem on blockchain 4.0. genEOS also provides a legal framework and now is going through token distribution until December 2018.

Takeaways

Blockchain is going to alter operational processes in manufacturing by making them more transparent, secure, traceable, and speedy.

Currently, the technology is available only for corporations, but with the development of ready-to-use blockchain platforms like genEOS, more SMEs will be able to benefit from it as well.