Blockchain, commonly associated with cryptocurrencies, is a digital ledger technology which can be used to store and record transactions. Records across the network are stored and shared among the participating nodes which makes it difficult to falsify records thus making a blockchain more secure & transparent way to record transactions and service records. This capability of blockchain can be used outside of cryptocurrency trading
Blockchain technology has the potential to transform how manufacturing industry operates. Few technology giants offer specific blockchain solutions around, supply chain refinement and data management, services for prototypes and production in manufacturing applications etc. While there are only a few applications present, blockchain technology in Manufacturing is likely to attract more interest in the future with smart contracting. This will not only reduce production costs, increase operational efficiency but also incorporate trust in the ecosystem partners. And through better visibility, it enables manufacturers to delight their end customers.
How can blockchain optimize supply chain and generate better brand equity?
Consider the example of an Auto OEM that sources various vehicle equipment such as Airbags, electronic controls and highly sensitive actuators which must work in tandem in case of critical crash situations. In a conventional supply chain model, only OEM has the visibility of different vendors which source these devices, and at the time of recall, the intimation requests are triggered through OEMs. However, with smart contracting – giving authority to view relevant data to the players in the ecosystem, OEMs can act with the data, and the end customer is assured of the quality of the systems used. In case of recall also it is easy to identify which, faulty part was sourced from which vendor, thereby driving higher operational efficiency and reduced latency in forward and reverse logistics.
Similarly, with 3D Printing, Manufacturers can efficiently break tradition supply chain models and create distributed on demand value chains. 3D printing empowers small manufacturers to create new products anywhere. The creators can share the files to a secluded printing facility. Blockchain can help set up such small independent value chain to make the production processes nimbler. The smart contracting application can ease out the transactions to assure integrity of product history, production process details, ownership and much more. It will also help to locate the most feasible printing facility and reduce the negotiation time regarding price, date of availability etc. At last the blockchain would capture the digital trail of the product, with details such as the type of raw material used, the source of raw material, production parameters, technical specifications, where it was manufactured, how it was stored and maintained etc.
Combining Smart Contracting and Blockchain can help in the following ways:
- Help small producers to monetize their products with least investments
- Reduce inventory costs by enabling companies to procure or print parts just in time
- Significantly decrease service time and increase customer service levels
- Reduce manual reconciliation of financial data such as payment terms, receivables.
Blockchain with smart contracting can open a plethora of opportunities for all the participants. Do share your opinions.