The prowess and potency of blockchain is making much headway from FinTech to applications in empowering supply chains in a slew of new industry verticals such as manufacturing, aerospace, defence, automotive, food, pharmaceuticals and medical devices among many others, affirms Stephen Edginton, VP Engineering at Epicor Software Corp—Editor.
Harnessing Blockchain
In finance, ‘blockchain’ emerged as a record-keeping technology used by Bitcoin. With authentication and security challenges for the finance industry in a digital world, this technology shows promise by delivering a fast and secure way to authenticate transactions.
Now, the focus is shifting to other industries. The expansion of trials is proving that blockchain in manufacturing industries has the potential to be endless with the ability to create new business models. The major use cases so far come from tracking movement of assets, trade finance, and transaction settlements.
One example is TradeLens, a blockchain-enabled digital shipping platform. It has major shipping players signed up for it, and they’re sharing data for easy flow of information between various trading hubs. The platform covers more than half the world’s shipping container cargo, and even customs agencies started using this system to verify and clear goods in a faster and digitalized manner.
Opportunities in Manufacturing
Blockchain technology has yet to enter the digital transformation plans of many manufacturers. Research firm Gartner predicts that 80% of the supply chain blockchain initiatives will remain at proof of concept (POC), or pilot stage, through 2022 (Gartner Insights).
The firm also says that blockchain will support the global movement and tracking of $2 trillion in goods and services globally (Gartner Insights). Blockchain has all the potential to change the way supply chain functions in a manufacturing ecosystem. Though it’s often reported that large enterprises are leading blockchain powered initiatives, it’s small and mid-size firms that are most likely to take the lead in the long run.
While the potential of blockchain isn’t fully realized, firms across industries are keen to invest in the technology realizing the benefits it can bring to process efficiency. Current use cases and POCs show how it will most likely make a difference in various manufacturing industry segments.
The expansion of trials is proving that blockchain in manufacturing industries has the potential to be endless with the ability to create new business models.
Aerospace and Defence
This is a highly regulated industry with superior compliance standards where a complex ecosystem and deep supply chain poses everyday challenges to industry players. A blockchain can make tracking transactions across global suppliers easy, thus paving the way for easier regulatory compliance and a better managed supply chain. It can also be used to gain insights on real-time inventory at supplier sites to avoid out of stock situations.
Automotive
Auto is one of the best well-matched industries and is expected to get a major boost from blockchain technologies. Major automakers like General Motors, BMW, Ford, Honda, Jaguar, Land Rover, and others are in the process of piloting this technology for various purposes including vehicle identification, vehicle ownership, and service history.
Blockchain will have a material impact on every aspect of this industry. This extends from procurement to manufacturing, distribution, and service functions. At this time, it is being widely tested to track auto parts and suppliers in case of product recalls, which cause billions in losses every year.
Food Manufacturing
Blockchain in food manufacturing is seen as a solution that could eliminate or avoid contaminated food entering the supply chain. Most of the initiatives in this domain are aimed at generating trust among consumers by providing guarantees on origin, quality, and raw materials.
One such project is IBM Food Trust Initiative, which along with its more than 200 members harvests data from food growers, manufacturers, and sellers to help consumers trace the origin of it (Ref: IBM, The Food on Your Holiday Table May Have Been Verified by Blockchain).
Pharma and Medical Devices
Blockchain makes it possible for medical devices or machines to securely share data with concerned parties without violating privacy and compliance. Today, connected health devices generate loads of sensitive data and blockchain takes care of all the major concerns surrounding it. It can securely store, record, access, and share data.
The technology can also play a key role in simplifying compliance processes for pharma and medical devices, where supply chain traceability takes an enormous amount of time and resources.
Small and Midsize Manufacturers
These companies are the backbone of the global economy, and they contribute to the major share of economic growth. However, the majority are financially constrained. They generally struggle to access credit based on their movable assets as collateral, and a sizable chunk of new businesses cease to exist in the first three years due to lack of financing.
This is where blockchain can help by transforming the way trade finance works. The system records and verifies every step in the supply chain, making it verifiable for all involved parties. This level of verifiability and accuracy can significantly improve invoice financing options for this well-deserved segment.
Smart contracts
Another function that blockchain can help is smart contracts. It can do away with expensive business documentation practices with automatic execution and enforcement of agreements. In a way, it can reduce the benefit gap between large enterprises and pave the way to more competitive trade.
These are just a few examples. There are many start-ups that are venturing into the market to expand the scope of blockchain to every possible industry. It’s not only these companies, but also governments that are beginning to recognize how they can benefit the economy. The expectations from the stakeholders are clear—simplify the existing complex production/trade processes and make them more efficient.
Its Fit and the Future
Blockchain is suitable for every industry that’s high value, high risk, and highly regulated. Its list of benefits is long—from preventing tampering and counterfeiting, to preventive maintenance by identifying when, where, and how failures occur.
Blockchain is a good fit for manufacturers who deal with complex supply chains and need systems to monitor the components from the original source to final product for authenticity and safety. It’s maturing slowly, and it may be five years from now before we see the POCs evolving into real-world use cases. Manufacturers need to keep an eye on developments and POCs that may be applicable to their segments. Watch for blockchain opportunities in your business.
BOX OUT:
Stephen Edginton is the Vice President, Engineering and Product Development at Epicor Software Corporation. In his role he is responsible for the Platform Engineering team, of around 100 people globally, with teams in Russia, India, Mexico, US and the UK.
He is instrumental in shaping the future vision and strategic roadmap with the executive leadership team, directing Epicor’s architecture covering angular based UX Framework, core frameworks, cloud native architecture, and research.
Before joining Epicor, Stephen co-founded the software development and consultancy company, Dot-Net-IT, helping global customers with digital transformations and challenges. Stephen provided core oversight and execution on the technical competency, growing the business, before being acquired in 2016 by Epicor.
Stephen has a Bachelor’s Degree in Computer Science and Software Engineering from the University of Birmingham.
