Blockchain in Manufacturing: Enhancing Trust and Cutting Costs

Blockchain could become the megatrend of this century, similar to the internet in the early 1990s. It aims at decentralizing currently centralized systems, which will result in faster, cheaper, and more secure transactions. 

What is blockchain technology?

Blockchain is a database technology that stores information. On the contrary to traditional databases, blockchain does not store data in a centralized data server but distributes it across an extensive network of computers. 

As records are available to every user in the network – instead of only one single entity – it’s nearly impossible to manipulate or falsify data. This form of record-keeping makes blockchain a more transparent and secure way of recording transactions, which is why it could become a prime technology for the manufacturing industry.

Track-and-trace systems reduce product recall costs 

Think of product recalls. Alone in the food processing industry, product recalls have resulted in damages of almost $3.5 billion last year, according to the consulting firm Capgemini.

Every time that happens, a manufacturer must identify the faulty product and trace it throughout the entire supply chain, maybe even back to the source of its raw materials, to determine the supply chain bottleneck that has caused the production error. 

Blockchain’s distributed ledger structure allows manufacturers to set up real-time audit trails for every step of the manufacturing process. This way, a manufacturer can easily trace a product back to the source of each component, quickly and at a relatively low cost. 

Supply chain transparency increases consumer confidence 

On a blockchain, any data entry or ledger change needs to be approved by every party within the chain. This process might seem cumbersome, but it makes the database more secure as it becomes nearly impossible to manipulate stored information. 

At every step of the production process, the involved entity can upload data onto the blockchain. For example, an Indonesian fish farmer can confirm the time and location of his latest tuna catch and upload it onto a blockchain. The shipping company can confirm it has shipped the tuna to the manufacturer, who then confirms it has processed the tuna and sent it to a retailer. The final consumer can then scan a QR code on a tuna can with a smartphone app and view all steps of the supply chain, confirming his tuna comes from Indonesia. 

As none of the blockchain-stored data can be altered, both the manufacturer and the consumer have greater confidence in the quality of the product. 

According to Capgemini, 13% of the manufacturing sector is already implementing blockchain pilots in selected sites or even at-scale. Many others are in a proof of concept stage. Thus, it’s only a matter of time until blockchain-based processes will become the norm for manufacturing companies.

Export Portal has also implemented a blockchain-based system on its trade portal. Like in manufacturing, EP and its users also benefit from blockchain’s security and transparency features, as platform users can exchange information in real-time, without any security concerns. That’s what makes the technology so effective across almost every industry.