Traditional business methods are enough to handle basic manufacturing processes but can’t keep up with the pace at which markets and technology are advancing.
As more technology is brought into an organization, there’s often a need for a third party to validate transactions and transfers of assets. This leaves manufacturing organizations more susceptible to fraud, cyberattacks and costly errors.
Blockchain technology is revolutionizing the way organizations communicate, make transactions and handle their assets—so they can keep up with the pace of business while streamlining important processes.
What is Blockchain?
IBM defines blockchain as a “shared immutable ledger for recording the history of transactions.” For businesses, a blockchain also provides a permissioned network. In its guide “Blockchain for Dummies,” IBM goes on to explain the four main characteristics of a blockchain network:
- Consensus: for a transaction to be considered valid, all participants must agree upon it.
- Provenance: participants can see where an asset came from and the transfer of ownership over time
- Immutability: the blockchain can’t be tampered with. If there’s an error with a transaction, it must be corrected by issuing a new transaction, but the old transaction does not get replaced.
- Finality: the single blockchain network is a single source of truth to determine the ownership of an asset or find a transaction record
How Can Blockchain Transform Manufacturing?
Although blockchain is most often associated with cryptocurrency, it can be useful for any type of business. For manufacturing and EHS organizations, blockchain has the power to totally transform processes.
Increased Privacy and Security: Blockchains for business are permissioned networks. That means users can specify the level of detail they want to be available to other users. Permissions can be changed for special users, like auditors, to grant them temporary access to details on a one-off basis. Once completed, transactions cannot be altered; to make a change, a new transaction must be done to offset the old one. There is no way information can be tampered with, so you can be sure your transactions and assets are secure.
Improved Auditability: Blockchains are by nature a shared ledger, serving as a single source of truth. That makes it easier to audit transactions, because auditors can be certain that any information taken from the blockchain is valid and accurate. By granting temporary permission to auditors, they can go into the network and get any additional necessary information themselves, improving the audit procedure.
Optimized Operational Efficiency: Blockchain networks represent a full digitalization of assets. This streamlines the transfer of ownership of assets, so transactions happen more quickly. Transactions and transfers can now happen at a pace more aligned with that of doing business.
IBM predicts that blockchain will do for business what the internet did for information. Gary Brooks, Chief Marketing Officer of global manufacturing and supply company Syncron, said that blockchain networks will revolutionize the complex workings of supply chains through increased traceability and data certainty.
Although its true effects on manufacturing has yet to be determined, blockchain technology is proving to be the latest factor in the technological advancement of the field.