How blockchain technology could revolutionize supply chains
The core mission of Supply Chain 4.0 is to improve business performance in substantial and lasting ways. This will be accomplished through a complementary combination of digital applications and operational adjustments. Adopting these new technologies and embracing digitization offers business owners a number of compelling performance benefits.
One McKinsey study found that, of all the business areas that can be augmented or streamlined with technology, digitizing the supply chain offers the single largest potential earnings increase. In the realm of manufacturing and logistics, the apparent value of digitization has given rise to on-demand manufacturing, which greatly mitigates the need for demand forecasting, high-volume production, or maintaining raw material inventories. Instead, on-demand, or digital, manufacturing leverages the flexibility and real-time capabilities of cloud and web services to produce parts faster, only in the quantities required, and without the need for potentially expensive warehousing.
A number of emerging technologies, including autonomous mobile robots (AMRs), AI/machine learning, and IoT-enabled solutions are already being deployed to streamline fulfillment services, mitigate the effects of global labor shortages, reduce labor costs, and ultimately improve productivity. Among the most promising of these new technologies is blockchain.
What is blockchain?
Made famous by the cryptocurrency Bitcoin, blockchain is a distributed ledger. Rather than relying on a centralized mechanism or entity to track transactions, blockchain uses a decentralized network of computers working in tandem to create and maintain a shared registry of all transactions. This ledger verifies transactions via a communal algorithm, thereby providing greater transparency, security, and traceability of transactions for those who are a part of the network.
Blockchain gets its name from blocks (transactions confirmed by the communal algorithm) which are added to the ledger, thereby creating a chain. However, a blockchain’s structure means that new transactions are automatically encrypted and linked to previous transactions, which, over time, creates an unbroken string of numbers and transactions that cannot be modified. As such, blockchain is an extremely secure form of record-keeping that cannot be easily falsified or hacked.
The increasingly widespread deployment of connected devices in conjunction with blockchain has raised a number of important security concerns. Today’s software companies are already working to incorporate more end-to-end encryption into IoT sensors, enabling them to securely and efficiently communicate with monitoring equipment while reducing the risk of cyberthreat and protecting consumers’ data.
How blockchain can transform manufacturing supply chains
Modern supply chains are more like complex distributed networks than linear lines of procurement and distribution — which can make simple tasks like record-keeping a time-consuming, error-prone, and inefficient task.
Luckily, the decentralized nature of blockchain mirrors the structure of the supply chain, which ultimately enables increased transparency across each company’s network of providers and suppliers. The digital ledger integrates information from each business’ partners and clients, which allows companies to easily see the total volume moving through their networks, no matter who initiated the purchase activity.
Achieving this degree of visibility does not require that individual companies share their operational data in order to participate, and ultimately enables many businesses to better prevent fraud. The healthcare sector, for instance, is eager to use blockchain to not only increase the security of patient records, but also for innovative applications, such as tagging medical packaging to track life-saving drugs and supplies, and to confirm their viability.
This integrated, bird’s-eye view of the supply chain allows manufacturers to more easily ensure that their material suppliers are in compliance with quality and regulatory standards. Blockchains can also provide insight into the provenance of materials — a process that’s both highly regulated and costly to manage, especially for globalized industries like consumer packaged goods, food & beverage, and pharmaceuticals. Blockchains not only verify and secure the data in the production log of each supply chain, they can help companies ensure that they’re doing business with the right partners.
Greater data security, increased transparency, and better traceability can not only help companies save time and expenses, they can even help savvy businesses owners restructure their operations for greater efficiency.
A blockchain-powered future
Gartner predicts that the value-add that blockchain provides the supply chain will reach $176 billion in the next five years, and may surpass $3.1 trillion by 2030. While blockchain is unlikely to upend how business is conducted in manufacturing any time soon, the technology is developing at a rapid pace — to the point that it may eventually transform even how the internet operates.
Companies looking to future-proof their business and operational models would do well to consider blockchain technology as a tool to augment their operations, record-keeping, and compliance programs.
To derive maximum value from emerging technologies like blockchain, manufacturers and product teams would do well to partner with a manufacturing expert on the cutting-edge of Supply Chain 4.0. That expert is Fast Radius. We’re a team of technologists, engineers, and designers who strive to deliver superior quality and service at every phase of the manufacturing lifecycle. Contact us today to find out how our streamlined processes can help save on costs, improve component design, and minimize lead times to get parts to market faster.