The whole world is buzzing about Blockchain, but what is it and how can your company utilize it? Find out here.
Emerging Tech for Manufacturing: Building Blocks of Blockchain
Along with the health and safety of its people, there may not be anything more important to a manufacturer than the security of its information. The technology used to share and protect data should be top quality. For many companies, blockchain ledger is required to create an audit trail for all transactions within a supply chain.
What is Blockchain?
Blockchain is a digital ledger shared across a participating network. Unlike traditional data storage, each transaction is stored as a block which is approved and linked chronologically with the transactions before and after it. Every person in the network may manipulate transactions (or “blocks”) within the ledger but each block must be analyzed and approved as accurate by the rest of the network before it is added to the chain of transactions (or “blockchain”). Once approved and added to the chain, no further adjustments can be made to the transaction and it becomes a permanent record accessible to all authorized to view it.
How do Manufacturers Use Blockchain?
The potential benefits of blockchain technology for manufacturing cannot be denied. Imagine being able to track your products from raw materials to final use in the event of potential contamination or a critical product recall — something that can cost companies on average more than $8 million.
Many manufacturers use blockchain beyond the traditional tracking of financial transactions and accounting records. Manufacturers can use the technology to store legal contracts, track product inventory and monitor movement along the supply chain.
A 2017 study by Gartner estimated that “business value-add of blockchain will grow to slightly more than $176 billion by 2025, and then it will exceed $3.1 trillion by 2030.” With blockchain expected to be a driving force for businesses well into the next decade, what can this technology offer to the traditional small and mid-sized manufacturer?
- Security — The decentralized nature of blockchain reduces many risks connected to centralized systems including the ability of a single hack to remain undetected (all other points in the network would see the change made in real time).
- Cost-Savings — Eliminating third-party providers in favor of a decentralized network can significantly reduce costs.
- Transparency — Every transaction is visible to participants of the network, making it difficult to hide anything.
- Efficiency — Transactions using blockchain take less time to complete than traditional tech. Rather than waiting hours or days, most transactions in the financial industry take minutes to complete.
- Innovation — Still a relatively new technology, the opportunities for innovation are high and your business can remain on the cutting edge well into the next decade as new uses are discovered.
Preparing to Use Blockchain
As support for blockchain increases, manufacturers should prepare for greater demand from customers and suppliers. Rather than risk being dropped by a vendor for not participating, here are some ways you can implement blockchain technology today.
- Train your employees on blockchain platforms like Ethereum, Hyperledger, IBM Blockchain, R3 Corda, Ripple, and Quorum so when customers pursue blockchain as a solution, you and your team aren’t starting a step behind the competition.
- Train your employees and hire new employees competent in blockchain-related soft skills like design thinking, agility and continuous delivery — you’ll be viewed as innovative for hunting for these talents ahead of the competition.
- Explore early-stage applications for blockchain like traceability, records management, supply chain automation and payment via cryptocurrencies so that you build experience with the technology even if you aren’t ready to jump in fully.
- Make blockchain part of regular customer conversations so you can hear what customers think about the technology — and where the opportunities are. You can also show your own forward-thinking approach to business solutions using blockchain technology.
- Embrace blockchain as another industry progression. Whether it was the assembly line, modern machining or the Internet, every new technology was at one point viewed as a detriment to manufacturing. Over time, technology moves manufacturing forward and the industry adapts. This could be true for blockchain as well.