Manufacturers’ supply chains are sophisticated and complex with a number of nuances that can make transparency and accountability challenging. This lack of visibility into, sometimes manual and often time-sensitive, shared processes from supplier to buyer creates numerous operational inefficiencies and discrepancies. The larger the enterprise, the more the challenges compound, leaving a wealth of insights and information on the table that could otherwise be used to increase efficiencies and drive down costs. In international trade alone, of the $1.8T in costs incurred annually, 20% is due to trade documentation and 10% is lost to inefficiencies. Reducing these cost barriers to international trade increases volume by 15%. Cutting-edge technology solutions designed to increase accountability, reduce costs and ensure accurate data and documentation reporting can mitigate many of these current problems.
Blockchain, in the past most commonly associated with cryptocurrencies such as bitcoin, is a digital ledger technology which can be used to store and record transactions. As records along the chain are stored and distributed across nodes in the network, it is very difficult to falsify records, making the blockchain a more secure and transparent way to record transactional data. In short, a blockchain-based application that utilizes an immutable, shared record of truth provides a unified, transparent system of record. This innovation is set to radically transform nearly every industry within the next 5-10 years.
Today, most of the worlds largest corporations have shown an active interest in implementing blockchain-based solutions. Some companies have already been working on pilots and proof of concepts for years. A recent survey by Gartner said that over 80% of companies were investing at least $500,000 into blockchain in 2019 alone. While almost half of those plan to invest a minimum of $5 million.Market leaders are embracing blockchain innovation very quickly, establishing themselves as the standard bearer for their respective industry. While some companies use this as a way to maintain a dominant market position, other companies are using it to disrupt their industry leaders in hopes to gain market share.
Blockchain technology has emerged in the world of trucking and logistics as a solution to some of the major inefficiencies that have plagued the industry for decades.According to Blockchain in Trucking Alliance (BiTA), disputes over transportation payments lock up approximately $140 billion every day. Moreover, it takes up to 42 days to reach a full settlement of an average invoice. According to a 2013 study by the World Economic Forum, a simple refrigerated shipment passed through 30+ different organizations, requiring 200+ separate communications. Any hiccup in these steps could cause the container to be held up or lost. With blockchain, all of these steps can be recorded securely and immutably in real time and, new blockchain-enabled platforms will allow easy coordination of documents on a shared distributed ledger, making physical paperwork largely unnecessary. According to the study, reducing the friction around information-sharing, border administration and physical paperwork when it comes to international trade “could increase GDP by nearly 5% and trade by 15%”—a boost that amounts to trillions of dollars.
Food traceability is a hot topic for consumers, and Nestlé is one of the founding members of IBM’s Food Trust blockchain platform along with Dole, Driscoll’s, Golden State Foods, Kroger, McCormick and Company, McLane Company, Tyson Foods, Unilever and Walmart. The platform focuses on food traceability to not only ensure customers that products and ingredients are ethically and sustainably sourced, but provides the traceability that is required to ensure food safety. It particularly helps with product recalls, enabling them to be more targeted and reducing waste.
This month, Vancouver based MineHub, which has developed a blockchain platform for automating the metals supply chain, announced its partnership with commodity trading technology firm Amphora for streamlining the digitization of the metals and mining industry. Just last week, blockchain provenance firm Everledger announced it raised $20 million in a Series A funding to further develop and expand its platform for the provenance and traceability of diamonds to include other supply chain sectors such as gemstones, fine wine, luxury goods, and e-waste management. Additionally, such blockchain systems can be applied to help eradicate so-called “blood diamonds” that are mined through forced labor. Digital tags linked to the company’s blockchain network tracking mineral shipments can’t be stolen or auctioned off on the black market to the highest bidder like a traditional paper certificate. Such immutable data can reduce the need to debate claims about the origin of any particular product, eliminate fakes and forgeries, and also undermine operations powered by forced labor.
Beyond enterprise, customs for shipping is one of the most active areas of blockchain adoption. In August, the U.S. Commercial Customs Operations Advisory Committee (COAC), which includes chairs from FedEx, Walmart, and Expeditors International, revealed that the U.S. government is working on blockchain projects for international trade.
Blockchain technology is rapidly entering the manufacturing sector, with many other stakeholders around the world having already launched pilot programs with the intention of migrating an environment of informational siloes using legacy technologies to a comprehensive and interactive ecosystem. If you would like to learn more about how blockchain technology is transforming the face of manufacturing, join the Bay Area Manufacturers Association and BlockSpaces for a Blockchain and Manufacturing informational networking event on October 17th. Details and tickets available here.
BlockSpaces is a blockchain technology end-to-end innovation studio that bridges the gap between enterprise, talent and startups to accelerate early-stage development and market adoption of modern business solutions. BlockSpaces provides education, support services, and full stack blockchain development from ideation to pilot and beyond.
The Bay Area Manufacturers Association’s primary purpose is to support manufacturers and promote economic development through manufacturing in the Tampa Bay Region. BAMA provides an environment that allows their members an opportunity to reach out into the community. BAMA provides a forum to exchange ideas or share “best practice” information, network with colleagues, learn about manufacturing related topics through our educational programs and tours, and supports Scholarship and STEM programs.