Ever since the industrial revolution in the 18th and 19th century, manufacturing technology has seen incredible developments, an increase in supply chains is one of the outcomes of this sort of rapid change. Supply chains have grown complex and direct manual labour has seen a decline in the past few years. Hard work took the sidelines and smart work took over the mantle, the result of which was blockchain stepping into the battlefield of manufacturing.
Today, we have a need for supply chain management, business outsourcing, and also for corporate social responsibility and sustainability. Our main motive is to produce better quality goods and services in a sustainable manner in mind and less exploitation of available resources. For that, one must constantly think and innovate, keeping in mind the rapid technological developments taking place each day.
For example, a much-discussed phase of blockchain-based supply chain management system is that tamper-proof distributed ledgers can decidedly improve the traceability of goods and establish the provenance of goods from initiation to execution. The important details such as tracking of the sourcing of raw materials, countries of production, transit methods, duration and environmental factors can all be updated instantly with the help of a transparent and trustworthy blockchain.
Second, pirated goods, which contribute to the heap of problems across the world economy. Pirated Goods account for nearly half a trillion dollars per year, according to Organisation of Economic Co-operation and Development (OECD).In the automotive industry alone, counterfeiting costs go up to 12 Billion dollars, impacting almost 2,00,000 jobs each year. Also in the pharmaceutical department, counterfeit drugs lead to deaths and drug overdoses.
Blockchain may become vital as an enabling component in moves to enhance automation along supply chains. They can directly help in the automation of agreements since the data is updated through blockchain in a transparent, error-free manner. This can give rise to “Smart Contracts”, in which all pre-agreed obligations can be confirmed and executed in a programmable manner.
Under a Smart Contract, all the agreements and formalities will be carried out without the need of an inefficient/efficient, time-consuming middle-man. And since blockchain-based transactions will be carried out only after the necessary requisites are met by both the signatories of the agreement, there is a lesser risk of relying upon other parties for completion.
For example, the shipping company Maersk is currently testing a blockchain-based approach through a partnership with the tech giant IBM to put all documents involved in bulk shipping into a single template based on workflow; this workflow is then triggered when a producer submits the packing list for whatever commodity or good is being delivered to the shipper.
Another interesting advantage of blockchains lies in how businesses can manage precious data. In today’s 4th Industrial Revolution, where data is invaluable, it will decidedly increase the need to be exchanged inefficient and collaborative ways.
Much of it will be generated by automated devices, ensuring that the IoT will need an accompanying “Ledger of Things” to keep track of machine-to-machine exchanges of information of high importance. In other words, it will need a blockchain.
When information is protected through this secure, multiparty system, “data collateralization” is made possible, giving lenders and big companies the confidence to inject financing and other forms of liquidity into supply chains. This could, in turn, help smaller suppliers overcome their persistent working capital challenges.
Blockchain could also enhance predictive analysis, by which various firms collect data, model it, and generate statistics. Using those statistics, these firms then make data-driven business decisions. Blockchains record data at each point of the process and hence are able to provide more accurate data when modelling of data is carried out. This helps to determine statistical patterns such as customer behaviour to risk exposure.
Businesses are tensed over their traditional, time-taking methodologies which lag behind in optimum efficiency display. This makes competitive life much more tough for them in the market. Blockchain, being a decentralised, consensus-based approach, would have the manufacturing industry to be more of an automated industry with less risk of manual errors and better efficiency. Blockchain has been constantly proving to the masses that its incorporation in almost each and every industry has promised nothing but an equitable world.