Companies Recognize The Benefits Of Blockchain: Savings, Efficiency And Accuracy
Blockchain, the shared ledger technology system behind cryptocurrencies such as Bitcoin, has the potential to transform industries. From retail to pharmaceutical, these systems can increase efficiency, reduce costs and, in some cases, increase trust in transactions.
Some of the most transformative benefits might even be across industries, affecting many companies along a supply chain. In a world linked by technology, blockchain can simplify cross-border transactions, facilitate payments and shipping and allow real-time tracking of products and components. Lee Meyrick, co-lead of global specialties and CEO of global marine at Aon, states, “Supply chains have come a long way from a series of labor-intensive processes – today, it’s technology and information that facilitate world trade.”
Once a system like blockchain is in place, information exchange across companies can be game-changing. David Bowcott, global director of innovation and insight for Aon’s infrastructure practice, underscores the opportunity: “If we consider blockchain ‘networks’ as data platforms for entire industries, the collective data can improve overall decision-making and processes, while decreasing risk throughout an entire supply chain.”
As the understanding of blockchain and its applicability grows, more industries are finding ways to take advantage of potential benefits.
From counterfeit goods to product recalls, the retail industry is susceptible to a variety of risks. Many retailers have complex supply chains that blockchain technology can help simplify by ensuring the authenticity of goods, confirming that products meet safety requirements and verifying that both goods and raw materials are ethically sourced. Blockchain can also assist retailers in safely managing customer data, while helping them paint an accurate picture of customer needs and preferences. In addition, blockchain could also be applied to customer loyalty programs to increase accuracy and reduce fraud risks.
Logistics And Shipping
Moving goods around the world requires participation from various players: manufacturers, retailers, logistics firms and shipping companies. As these goods cross borders, blockchain can provide a secure chain of custody along the entire route and throughout the supply chain. Tracking shipments at each point of transfer makes it easy to identify precisely where any possible damage, loss or contamination occurred. Blockchain can also provide more accurate and efficient shipment tracking, increasing fleet efficiency and optimizing shipping routes.
Shipping company A.P. Moller – Maersk has introduced blockchain into its operations, working with IBM to create what’s been called the first blockchain-based electronic shipping platform.
Food And Beverage
From farm to fork, the food and beverage and agriculture industries work across complex supply chains. A misstep anywhere along the way can lead to unsafe products, costly recalls and ultimately damage a producer’s brand and reputation. Blockchain provides an efficient and more transparent view across the food supply chain, improving food safety by helping to quickly identify where contamination may have occurred.
Walmart and nine other major food companies have teamed with IBM to use blockchain in their food supply chains to do just that: determine the source of food contamination. Because the data is aggregated across all major players, when recalls are necessary, they can be targeted quickly.
“Traceability is the backbone of transparency and trust,” says Tami Griffin, U.S. Food System, Agribusiness and Beverage Practice leader at Aon. “With emerging tech-driven tracking systems, food processing companies will be able to identify safety issues in their plants and address them before products leave their walls, rather than after consumers have become ill.”
For example, temperature sensors can monitor products along their journey to consumers, alerting producers if product temperatures stray beyond a safe range – a common cause of contamination.
To combat various risks such as counterfeit, theft or even tainted drugs, the pharmaceutical industry is using blockchain to track the manufacturing and shipping of drugs they produce.
In part, the pharmaceutical industry’s interest in blockchain applications is driven by regulatory requirements in the U.S., the European Union and elsewhere requiring traceable serial numbers or unique identifiers that allow drugs to be tracked throughout the supply chain.
Recently, the U.S. Food and Drug Administration entered into a pilot program with four companies to use blockchain to allow real-time monitoring of pharmaceutical products in an attempt to improve the traceability and security of pharmaceuticals.
Putting an automobile together requires parts from around the globe and, like food recalls, a misstep anywhere in the supply chain can be dangerous for the customer. Blockchain can make the automotive supply chain more transparent and efficient by simplifying documentation and payments as well as identifying issues with specific parts as they arise.
Blockchain ensures that parts sold from an original equipment manufacturer are authentic. And, when recalls are necessary, blockchain has the ability to track parts from manufacturer to the individual vehicle, enabling more timely and targeted recalls.
To further improve safety after a first sale from retailer to customer, a major automaker recently announced plans to use blockchain to provide a trusted ledger of used car maintenance history.
The fragmented and siloed construction industry is experimenting with blockchain technology to improve collaboration and communication. An estimated 95 percent of building construction data gets lost when the project team hands over the keys to the property’s first owner.
“Blockchain technology brings a single source of truth to a game with many stakeholders where truth can sometimes be elusive,” says Bowcott.
Capturing all the design and construction data on an immutable ledger will bring tremendous value to the asset owner as they operate and maintain the asset post-construction.
Blockchain: A New Technology Transforming Traditional Processes
Despite the various risks associated with new technologies, businesses are recognizing the opportunities to apply blockchain. As they do so, the increased efficiency, transparency and accuracy of such systems can not only improve current processes – but transform them entirely.
“Blockchain represents a repository of high-quality data that can be used in many ways to significantly reduce risk,” says Bowcott. “This includes the strengthening of algorithms that predict risk, also known as ‘predictive analytics,’ which could fundamentally transform the risk management and insurance industry.”