The cryptocurrency trading revolution exploded more than ten years ago and led to an almost unprecedented economic and financial earthquake. As a result, people are learning to change their approach to payment and investment systems, pushing up the price of many cryptocurrencies. Such a rapid change has not gone unnoticed on the boards of the world's major central banks. In fact, in an increasing number of countries, central banks are working on launching centralized digital currencies, known as CBDC. This…
Today, the manufacturing industry accounts for a more significant percentage of a country’s Gross Domestic Product (GDP). Data shows that manufacturers in the U.S alone generated $2.35 trillion by the fourth quarter of 2019.
This sector mainly involves converting materials into finished goods through mechanical, physical, or chemical procedures. Despite being a lucrative sector, the manufacturing industry faces various issues that mostly emerge from poor management and outdated technology.
These factors slow down the company’s activities, resulting in the use of costly management systems. On the flip side, a section of these industries is shifting its focus on alternative solutions such as blockchains to effectively govern and manage their dealings.
The Blockchain in the Manufacturing Industry
Blockchain technology refers to a distributed ledger network that displays and maintains the records of digital assets. Ideally, the network’s earliest use case was during the launch of Bitcoin, a cryptocurrency that relies on blockchain technology to manage its transaction operations.
Data is stored in encrypted blocks and arranged together chronologically through chains. Using blockchains, transacting parties in the crypto space can access every transactional information involving the digital asset.
This innovative technique goes beyond the scope of cryptocurrencies since most industries, such as the manufacturing sector, apply it in their day-to-day operations. Here’s an outlook on its application:
Improves Quality Check Systems
Presenting customers with documents that show the quality of products and their processes can be costly, mainly because this information is retrieved from centralized systems.
Once manufacturing firms automate quality checks on a blockchain network, every commodity they produce is tagged with a unique code. Furthermore, it keeps a detailed record of the product’s modifications, transactions, or quality checks in the distributed ledger. Adopting blockchains to support quality control also creates value for customers who look up to the manufacturing company for authentic products.
Participants in the supply chain department use blockchain technology to present tamper-proof auditing data. The network also enables a real-time auditing process of a company’s products.
As blockchains remove the need for intermediaries, business partners in the supply chain can freely negotiate and exchange vital pieces of information. Smart contracts are an additional advancement in the blockchain network because they automatically execute agreements set by the supply chain department and other companies. Therefore, smart contracts help counter any fraudulent intentions through a digital code sealed by an agreement.
Eliminate Counterfeit Products
Insights from the OECD and EU’s Intellectual Property Office show that the trade of fake goods accounts for 3.3% of the global trading economy. Counterfeit products generate profits for rogue organized groups leaving the legitimate manufacturing companies at losses. What’s more, consumers end up buying products that could compromise their health and safety.
Utilizing blockchain solutions guarantees a real-time tracking feature that monitors products shipping from the manufacturing industries to the consumers. That way, malicious third-party entities are kept at bay if they try to add their counterfeit products to the market.
Protect Valuable Data and Property
Manufacturing companies leverage blockchains to create a proof of ownership data on their property. Asides from that, the network is used by firms during the process of monetizing digital assets. Blockchains also play a part in safeguarding sensitive data which accumulates from the production line.
A data breach can quickly occur in the absence of blockchains and grant access to other parties such as competitors or cybercriminals. However, with blockchain solutions, every sensitive information regarding the company is safely secured through the decentralized architecture. Furthermore, it secures the near-constant communication between companies detailing their plans and operations.
Parties in the blockchain network also contribute heavily to the security feature since they make decisions based on data entry or implementing specific changes to the distributed ledger.
Support IoT Devices
Internet of Things represents network-enabled devices that aim at gathering and delivering information faster. Manufacturing entities use this technology to execute remote monitoring of machines, asset maintenance, and independent evaluations of machines.
Blockchains can support IoT devices by enabling a secure data exchange between users. The ledger accomplishes this application by frequently authenticating and keeping a close eye on the IoT devices.
Monitoring Maintenance Systems
Maintenance procedures are essential for a manufacturing firm as it keeps its machinery and equipment in good condition to make quality products. Some of the activities that occur during the maintenance programs include regular or routine repairing, cleaning, or replacing parts.
Despite maintenance being a crucial procedure for companies, it attracts downtime scenarios that, in most cases, are challenging to compute. Blockchains mitigate this issue by offering a single-source ledger where manufacturing industries can consult and receive real-time updates.
In essence, the decentralized technology brings a system where users have access to the performance of the appointed contractors who are evaluated based on the maintenance progress.
Examples of Manufacturing Industries Adopting Blockchain
Currently, a vast number of manufacturing entities adopt blockchain technology into their operations. The Toyota Group is among popular industries that set out to test the possibilities of blockchains. Through its six participants, Toyota introduced a cross-group virtual organization known as the Toyota Blockchain Lab.
The automobile company projected to create a system where people can connect, access, and exchange information or services safely. In 2018, Samsung Electronics Company announced its intention to use blockchains on its global supply network. According to a statement by Samsung’s blockchain chief, using blockchains can reduce shipping costs by 20%.
Employing blockchain technology in the industry’s dealings helps build a trusted and transparent ecosystem for big-and small-time enterprises. Its added security features guarantee the safe storage of data, machinery, and processes performed in the company.
Considering blockchains remove the need for intermediaries, users can initiate negotiations and strike deals executed by smart contracts.
As the technology space continues to grow, more manufacturing entities may look up to blockchains as their breakthrough for data management.