5 Important Ways in Which Blockchain is Revolutionizing the Manufacturing Industry

5 Important Ways in Which Blockchain is Revolutionizing the Manufacturing Industry

One of the key drivers of the global economy is the manufacturing industry. According to the World Bank, this industry itself accounts for nearly 17 % of the global GDP. Unfortunately, the industry has always been plagued with several problems including quality control and inefficiency. Apart from this, complex and disconnected supply chain has allowed fake and counterfeit products to make their way into the market, leading to lost consumer trust and brand reputation for businesses. Also, increasing customer expectations are placing more pressure on manufacturers for delivering quality products at nominal prices.

Blockchain, a distributed database has the potential to radically transform the manufacturing industry by offering visibility across every aspect of manufacturing. Right from sourcing, procurement and dealer quality to operations such as machine-level monitoring, Blockchain can pave the way for a completely new business model. Blockchain can be leveraged by manufacturing businesses for streamlining their supply chains that make up for their business foundation. The distributed ledger architecture of this versatile technology can help businesses improve supplier order accuracy, quality of product, trace the origin and track the journey of products across the supply chain. This will help manufacturers ensure quicker turnaround time, augment product quality and sell more.

Listed below are 5 ways in which Blockchain is transforming the manufacturing sector:

Benefits of Blockchain for manufacturing industry

Improving Track and Traceability:

Tracing the actual origin of a part (used for manufacturing a product) right from the point of production through the retail is difficult and cumbersome. This is because it includes multiple processes such as creating technical documentation, acquiring industry certifications and timestamps and quality checks, which are further plagued with errors. An iOT powered Blockchain based system helps in asset provenance thereby enhancing transparency and traceability for the participants of the value chain. The data gathered from the iOT sensors, when fed into the Blockchain besides allowing for a shared view also ensures that no gaps in asset handling has occurred as movement of goods across the supply chain is immutably recorded on Blockchain.

Eliminating Intermediaries:

Unlike the existing supply chain ecosystem that is administered by a centralized authority for verification of records, Blockchain provides a decentralized platform where data could be accessed by every participant of the supply chain. Since, provenance is proved, and data gets immutably recorded as a product moves across the supply chain, intermediaries could be removed as they increase complexity, provoke delays, and increase costs.

Tokenization of Processes:

Multiple financing of invoices has become a major contributor of increased supply chain finance costs due to the risks associated and the diligence required to reduce the risk. This primarily happens due to lack of transparency amongst the participants of the supply chain including manufacturer, supplier, insurer, finance providers etc. Blockchain can be leveraged for tokenization of invoices, which not just prevents multiple financing but also ensures cost savings. This happens because each invoice that is distributed across the network is timestamped with hashes and is provided with a unique identifier.

Efficient Procurement of Products:

Inefficient procurement of products account for huge financial losses. This happens due to inefficient and complex supply chain processes that expose an organization to risks and unwanted expenses. With a Blockchain powered solution in place, manufacturing companies can streamline and automate their supply chain, which speeds up the order and processing of payment for improved cash-flow and profitability.

Improved Payment System:

Yet another issue that plagues the current business ecosystem is the lack of transparency in processing of payments. Also, the presence of multiple parties involved in verifying and sending payment results in delayed payment to manufacturers. Blockchains’ smart contract functionality automates the payment process thereby ensuring quicker and guaranteed cash flow to the manufacturing suppliers.

Find out more on  Blockchain in Manufacturing Industry

Final words:

In a nutshell, we can infer that Blockchain is poised to revolutionize the otherwise scattered, slow moving, insecure, manual and paper-based system to a digital, secure, quick and automated network that can be operated on a single platform.

Over a period of time, we can expect Blockchain for process alteration, asset sharing, supply chain tracking, warranty management and more. Eventually, the end-game will be when Blockchain itself will retreat into the fabric of the complete manufacturing process thereby creating a scenario where supply chain can aptly be called as demand chain and the manufacturing processes becomes decentralized.