Blockchain was front and center in the discussion during this year’s transport logistic China, the leading Asian trade show in the logistics industry. Jettainer, which provides unit load device (ULD) containers for 26 airlines, partnered with Shanghai’s Tongji University, and initiated three days of brainstorming to develop new applications of blockchain for the global supply chain industry. Blockchain is destined to revolutionize the supply chain by optimizing the steps in the logistics process, predicts Jettainer. The company is already incorporating blockchain into its transformation of shipping containers into “smart ULDs,” which deploy digital sensors to detect problems during the shipping process so they can be corrected immediately in transit.
Jettainer illustrates how blockchain is already transforming the supply chain. Nearly half of large companies are already using blockchain, and 84 percent anticipate using it within five years, an Accenture survey reports. Here’s a look a three ways blockchain is being applied to supply chain issues in different industries.
Finance
Blockchain has made its impact felt first in the finance industry through its application to bitcoin. Blockchain’s series of linked, encrypted records was first developed to secure digital bitcoin transfers by preventing digital tokens from being copied and spent twice. But blockchain is also being used in the financial industry to improve supply chain finance (SCF), the financial infrastructure that supports today’s extended supply chains.
SCF optimizes working capital cash flow for businesses. In SCF processes, financial institutions allow suppliers to sell their invoices or receivables to them at a discount, on the strength of the credit rating of the supplier’s buyers, in exchange for immediate access to the funds the supplier has coming. A potential issue that can impede SCF processes is when a supply chain becomes complex enough to obscure transparency along the steps in the process (for instance, when secondary and tertiary suppliers and buyers come into play), creating lack of trust that can potentially delay credit release. Because blockchain can provide a transparent digital ledger accessible to all parties involved in the supply chain, it can solve this problem, says Nucleus Software. The increased efficiency blockchain delivers can save financial institutions and their customers billions a year in banking and insurance costs.
Manufacturing
Blockchain is delivering the manufacturing industry the same transparency and efficiency benefits as the financial industry, along with other benefits specific to manufacturing, Supply Dynamics says. One difference that separates the manufacturing industry is the need to track physical goods and processes, explains Supply Dynamics. Embedded Internet of Things sensors can provide data to help monitor factors such as machine-tool performance and plant performance. By deploying blockchain, manufacturers can integrate this type of data into a transparent overview of manufacturing processes and performance.
For instance, seal device manufacturer Apple Rubber provides a wide range of industries with Viton o-rings and other seals made from customized materials such as fluorocarbons. In many cases, Apple Rubber may be designing products for companies who are in turn manufacturing parts and products for other buyers further down the supply chain. Deploying blockchain would enable end users in this type of complex supply chain to have a transparent view of what’s going on at earlier stages in the manufacturing process, improving the efficiency of processes such as inventory management and cash-flow management.
Healthcare
The benefits of blockchain for manufacturing carry over into healthcare, which relies on manufacturers for medical supplies. In addition, blockchain represents other benefits for healthcare providers, says IBM, which found that 16 percent of healthcare executives expected to have a blockchain solution in place by the end of 2017.
One way blockchain is benefiting healthcare providers is by securing the flow of information. For instance, accurate diagnosis often depends on sharing data between doctors and between institutions. This data-sharing raises the risk of sensitive data becoming compromised. Blockchain’s transparency can help ensure that data is only being shared with authorized users in the information supply chain. Similarly, blockchain can be used to secure the integrity of healthcare payment processes.
Blockchain’s ability to transparently monitor steps in the supply chain process can potentially benefit a wide range of industries, including industries that deal primarily in digital information such as finance as well as ones that deal in physical goods such as manufacturing. By improving the efficiency of supply chain finance, making it possible for end users to monitor progress at earlier stages in the supply chain, and securing the integrity of data transfers, blockchain is revolutionizing supply chains across multiple industries and making processes more efficient for a wide variety of businesses.