There’s been a lot of talk lately about blockchain—specifically, how this advanced technology can help streamline transactions, make them more secure, and create a reliable ledger across the entire supply chain. Of particular interest to procurement professionals, blockchain is gaining significant traction in the manufacturing supply chain right now, according to a new Research and Markets report.
In “Blockchain in Manufacturing Market - Growth, Trends, and Forecast (2019-2024),” the firm says that blockchain in the manufacturing market will experience a compound annual growth rate (CAGR) of approximately 78% between 2019 and 2024. In the manufacturing industry, blockchain can substantially reduce costs and decrease lead times, thus allowing manufacturers to focus on areas of core competency that enhance profitability.
“Whether it’s suppliers, procurement, strategic sourcing, shop floor operations, or anything pertaining to manufacturing,” Research and Markets states, “blockchain triggers a completely new way of manufacturing. From sourcing, procurement, and dealer quality to operations such as machine-level monitoring, blockchain can pave the way for a new business model.”
Here are five ways the company says this is already happening in the manufacturing sector:
- Blockchain solutions in manufacturing enable real-time data analysis, easy deployment of solutions, and the monitoring of customer purchase behavior. By combining blockchain and IoT, companies can improve product safety; warranty management; track-and-traceability; and maintenance, repair, and operations (MRO).
- It also leads to new usage-based business models for smart, connected products. Blockchain helps to increase transparency, recognize issues within a supply chain, and streamline industrial processes. “These solutions are the major factors driving the adoption of technology in the manufacturing industry,” Research and Markets notes.
- Blockchain also enables logistics and supply chain, both of which are integral to the manufacturing industry. The more efficient the system, the more seamlessly manufacturing processes will run. Combined with the Internet of Things (IoT), blockchain helps streamline manufacturing supply chains, increase authenticity and transparency, improve compliance, and even reduce counterfeiting—the latter of which is especially crucial for electronics buyers.
- The technology can also help businesses improve supplier order accuracy, quality of the product, trace the origin, and track the journey of products across the supply chain. For procurement and other departments, other key wins include greater collaboration, streamlined inventory management, and improved asset utilization.
- Blockchain is also proving its worth as an effective risk management tool. About 75% of supply chain managers worry about supply chain disruptions—a number that’s especially relevant in manufacturing, where organizations rely on the availability of raw materials to be able to make their products. “By introducing blockchain, intermediaries can be eliminated and supply chain operations can be streamlined,” the research firm points out, noting that synchronization of transaction data across networks helps participants validate one another’s work.
Room for Growth
Because blockchain adoption is still in its infancy in the manufacturing sector, the number of vendors providing such technology remains limited. This presents opportunities for the frontrunners in the blockchain industry that want to continue the momentum that some large providers started.
In February, for example, Intel launched a commercial blockchain package based on the Hyperledger ecosystem, Research and Markets reports. And in May, Amazon Web Services (AWS) launched a managed blockchain service that’s already being used by companies like Nestle and Accenture.
“For many decades, the supply chain was a beast to be slain, one that consisted of dozens of moving parts, many different suppliers, and a series of interconnected relationships,” Sara Whister points out in “How Blockchain Technology is Transforming Manufacturing.” “This complexity made the supply chain difficult to manage and expensive to maintain, but blockchain technology has the potential to change all that.”