Today, blockchain is a hot topic which was once only all about bitcoins and cryptocurrencies. But, do you know that blockchain technology has the great possibility to change the whole manufacturing industry? There is no need to be afraid of fake goods or frauds anymore if businesses use blockchain. From improved transparency to faster payment processes, blockchain has a lot of benefits. So, what is the importance of blockchain for businesses? How can blockchain revamp the manufacturing industry? Can it build trust between the manufacturers and end users?
Importance of Blockchain In Manufacturing Industry
Blockchain technology is finally here to disrupt the manufacturing industry. But, it can revolutionize the whole face of industries. This is because of its immense potential to reduce cost by a large extent and decrease the time for all processes.
In fact, blockchain applications will enable manufacturers to generate greater visibility in their manufacturing process too. Moreover, it simplifies the whole procedure of handling the production of products in industries.
Further, blockchain is a decentralized ledger system with the ability to carry out transactions in a safe and secure manner. Besides, the remarkable speed with which transactions are completed is also another benefit of the blockchain technology.
Also, it reduces all the unwanted costs that generally manufacturing industries have been facing for so many years. The list of benefits of the blockchain technology goes on and on. However, we can look at some of the ways how it can revamp the manufacturing industry.
- Increased operational efficiency
- Better customer service
- Increased revenue growth
- Reduced thefts/Fewer security incidents
- Faster transaction settlement
- Improved visibility
- Improved compliance with government import or export regulations
- Improved compliance with government security regulations
It is clear that blockchain has the capacity to make the lives of businessmen and industrialists better. So, let us know in detail how blockchain technology can assist the manufacturing industry.
How Can Blockchain Transform The Manufacturing Industry?
As blockchain technology has many benefits, it will assist the manufacturing process in many ways. With its decentralized setup and more secure methods, it is the need of the hour for industrialists to adopt it. So, let’s take a detailed look at how blockchain can be a blessing for the manufacturing industry.
Better Supply Chain Visibility
Blockchain technology is a boon for manufacturers as it can work very well for supply chains. Moreover, supply chains generally work across many organizations and countries. So, it can become difficult to check individual events and find solutions for each one of them.
But, the new blockchain technology is here to create a smarter and more secure supply chain. Some of the ways in which blockchain can revamp the supply chain management systems are as follows:
Quick access to information
Blockchain with artificial intelligence (AI) or the IoT can improve supply chain systems. Besides, there is no need to store data on paper. Blockchain can help in acquiring information on a product’s location and origin too. Also, one can identify the defective or missing parts and choose the best materials.
Blockchain has the immense potential to build trust among companies too. Smart contracts help in automatic payment processes which trigger payments as products ships. This eliminates the issue of lost invoices.
For customers who buy in volume with many manufacturers, blockchain is a boon. They can also know of the stages of processing. This provides visibility and verifiable data about a lot thing. These include what customers buy, where they buy, and what they pay.
Improved Traceability and Transparency
Manufacturers are often afraid of product non-compliance because it leads to loss of money. Thus, if you want to avoid unwanted costs and interruptions in the supply chain, there must be a facility for fast recalling of products. This is where blockchain transforms the manufacturing sector. It can not only support traceability but also records management in manufacturing.
Blockchain technology assists in traceability for manufacturers in many ways. Let’s take a look.
Improved compliance and reduced risk
Traceability reduces business risk because it helps in tracking manufactured goods. It also ensures compliance with current and future regulations.
A supply chain using blockchain can support better transparency with partners and suppliers. In fact, it can improve the product shipment traceability to customers.
Checking food and beverages
In food and beverage manufacturing, one can use traceability to track compliance. For instance, businesses need to follow the ‘Food Safety Modernization Act’ in the United States. So, you can trace transported food via the whole supply chain across various stages. These stages include initial shipment, factory, distributor, and retail store. In fact, the updating of digital status at each checkpoint uses blockchain.
Advantages of Smart Contracts
With the emergence of blockchain technology, smart contracts have also gained popularity. Well, what are smart contracts? These are actually a bunch of coded logic or procedures that are a part of the entries in the ledger. Yet, smart contracts have the potential to transform the whole manufacturing sector. How? Let’s see.
No need for human interaction
As soon as companies fulfil the conditions of a smart contract, the business operations can start automatically. This eliminates the need for humans to be present to sign or agree with any business contracts.
One of the most important benefits of smart contracts is that it reduces transaction costs. It also helps in increasing transparency by cutting out the middleman. This increases digital efficiency too.
Blockchain-enhanced smart contracts will help in reducing the settlement time with a quicker transfer of assets too. In fact, it can also reduce the default risk if any counterparty is not agreeing to pay.
Digital Product Memory
As a matter of fact, most of the customers know very little about the products they consume daily. Besides, there exist poor working conditions and environmental standards for many products. Also, many third-party organisations like the Soil Association and FSSAI certify the products.
Sometimes, a sale of fake goods can also lead to a loss of customers for many manufacturing companies. But, blockchain can help in reducing these issues to a huge extent through the concept of digital product memory.
Digital Passport for all products
Blockchain startup companies like ‘Provenance Ltd.’ are focusing on capturing the whole supply chain. This can help in knowing the traceability of certifications about products.
However, the main goal is to assign a “digital passport” for each product. This will prove their authenticity and also help to learn its origin. Thus, there will be no sale of fake goods and it will also save a lot of materials due to less wastage.
Supply chains consist of different participants. Using blockchain technology, companies can use different software solutions to access it for extracting any information for any participant. Also, they can use blockchain to confirm any step of the production process. In fact, customers can scan the products afterwards via QR-Code or NFC too. They can also access information from blockchain to check all individual steps of the production process.
Better securing of luxury goods
Startups like the ‘Everledger‘ target on increasing the trust of customers in products. This startup uses blockchain to register diamonds. Thereby the can secure the whole transaction history and ownership too.
Blockchain technology is definitely a different way of doing things. Yet, manufacturers must adopt this new enterprise innovation. Instead of running Android and iOS apps, organizations must focus on the blockchain. This can bring businesses much value. It will also help in getting rid of common manufacturing problems and help in building trust in the industrial sector. Moreover, there is a long way to go before manufacturers undergo a digital business transformation. In fact, businesses must adopt blockchain technology as soon as possible.