Blockchain isn’t exactly the most recent technology in today’s financial world, however, as time goes on, the more useful and innovative applications of this system are starting to show up. One of such applications was discovered by a recent study From Cointelegraph Consulting and Insolar.
According to the study’s findings, the blockchain-powered supply chains can effectively save Western European companies and businesses some $450 billion in logistics. The study has even dubbed this transition to digitized productions as an “industry 4.0”.
Cointelegraph Consulting is a leading digital media outlet that focuses on blockchain and other digital technology news, surveys, and studies. Insolar, on the other hand, is a Swill blockchain platform for entrepreneurs all around the world. The two companies have joined forces to research some of the most rampant issues in production chains and how they can be fixed.
The study claims that almost 60% of companies pay excessively to their supply chain vendors and 70% have transparency issues between the supplier-client chains. This makes tracking so much more difficult for the customers, as well as the companies themselves.
The blockchain we know
Now, this particular use of blockchain might be somewhat different from what people have generally heard about this technology. When Satoshi Nakamoto - whoever that person or a group of people might be, came up with an idea to create a peer-to-peer ledger system, they were talking about cryptocurrencies, and particularly - Bitcoin.
Bitcoin was put forward by a team of Fintech enthusiasts who were fed up with the shortcomings of conventional fiat currencies. The government-issued money was slow in transactions, susceptible to various cyber-attacks, and more importantly, was subject to politically-induced inflation for various purposes.
Cryptocurrencies are sweeping practically all of those shortcomings. And the world seems to have mixed feelings about it. On the one hand, private entities are overly happy about expanded possibilities such as instantaneous transactions, anonymity, and security. On the other hand, however, the governments are feeling threatened by this tendency of delegitimizing their monopoly over the currencies. Moreover, they want to put cryptocurrencies under their regulatory commands.
However, money isn’t the only aspect of the blockchain’s use. When the developers came up with an idea of blockchain, they meant that the whole system would be encrypted and secure and not just its cryptocurrency niche. The connected devices were the guarantors that every process that took place in this ledger would have the highest security possible.
Insufficiency of current technology
As the joint study suggests, the conventional tech solutions that the majority of companies opt for - including traditional online, or even offline, databases and enterprise resource planning - aren’t sufficient to solve extensive issues in their production chains. And there are many objectives, as well as subjective, reasons behind that.
When several companies cooperate to release one joint product, they need to take coordinated steps which also includes exchanging information about their specific products or services. And in today’s business world, every company that operates on a slightly similar platform is involved in a savage competition where every single piece of information can prove crucial to their integrity.
In light of such conditions, many companies hide some details that might be essential to the whole supply chain; they fear that the info they provide can undermine their patent or monopoly over a certain product. All of this happens because the traditional databases are transparent so that every member can access any information that’s stored there.
Anonymous, and at the same time, transparent production chains
And here’s where blockchain barges in and proves beneficial to the supply chains. When businesses embed their productions to this ledger, the whole system becomes encrypted and no other party can have access to the details other than the partners themselves. Even the two parties can decide, which parts of this transaction are visible for the other one. Therefore, they can freely include any detail that’s crucial to the whole chain and the system will do the rest.
One of the most beneficial aspects of blockchain-powered production chains is that the customers can better track the goods that they order. Not only can they see where their product is at the moment but they can also see, where and when it was made, what are its ingredients/hardware parts, and so on.
The aforementioned study mentions that blockchain-backed supply chains can save companies between 0.4% to 0.8%. Now, it might not seem that much but considering how vast the industry is, we’re talking about hundreds of billions here.
And the companies are already jumping on this opportunity as we speak. For instance, the American retail giant Walmart has openly praised the perks and benefits of the blockchain ledger, claiming that this technology makes it so much easier to withdraw faulty products from the market if it proves necessary.
In Norway, the salmon production companies are planting blockchain into their production chains so that the customers can know when the fish was born, in which pool it was born, what its size dimensions are, as well as how it was processed, etc.
The study then goes on to admit that blockchain isn’t proposed here to outright revolutionize the whole production industry. Quite the contrary - it’s supposed to work in tandem with existing technology and make an evolutionary, rather than revolutionary, impact.