Logistics Minded

Blockchain Application to Manufacturing and Logistics

Blockchain can be defined as a distributed ledger technology that can record transactions between parties in a secure and permanent way. By ‘sharing’ databases between multiple parties, blockchain essentially removes the need for intermediaries who were previously required to verify, record and coordinate transactions. By facilitating the move from a centralized to a decentralized and distributed system, blockchain effectively liberates data previously kept in safeguarded silos.

BitcoinDespite its brief history – the concept of distributed computing is dated 1990 – blockchain is currently experiencing a rapid rise to prominence in corporate agendas as well as in the media. The concept is mostly known for its original application as the underlying technology of digital currencies, in particular bitcoin.

Blockchain in Manufacturing

According to the new market research report “Blockchain in Manufacturing Market by Application (Business Process Optimization, Logistics and Supply Chain Management, Counterfeit Management), End Use (Automotive, Energy & Power, Industrial, Pharmaceuticals), and Region – Global Forecast to 2025”, the blockchain in manufacturing market is expected to be worth USD 30.0 million by 2020 and USD 566.2 million by 2025, growing at a CAGR of 80.0% from 2020 to 2025. The key factors driving this growth include:

  • blockchain-as-a-Service (BaaS) solutions for enterprises;
  • simplifying business processes and affording transparency and immutability;
  • significant increase in venture capital investments and initial coin offerings (ICO);
  • increasing demand for real-time data analyses, enhanced visibility, and proactive maintenance;
  • increased emphasis on energy efficiency and cost of production;
  • convergence of operational technology (OT) and information technology (IT);
  • AI, IoT, blockchain and the future of manufacturing industry;
  • increase in global blockchain-related patent filings.

Blockchain in Logistics

Cargo containersIn January 2017, IBM and Maersk announced a joint venture to deploy a blockchain-based electronic shipping system that will digitize supply chains and track international cargo in real time.

The new platform could save the global shipping industry billions of dollars a year by replacing the current EDI- and paper-based systems, which can leave containers in receiving yards for weeks. The two companies demonstrated how blockchain can allow to track on-transit containers, and how supply chain stakeholders can benefit from accessing relevant actionable information.

There is a significant amount of trapped value in logistics, largely stemming from the fragmented and competitive nature of the industry. For example, in the US alone, it is estimated that there are over 500,000 individual trucking companies. With such a huge number of stakeholders involved in the supply chain, this often creates low transparency, unstandardized processes, data silos and diverse levels of technology adoption.

Many parts of the logistics value chain are also bound to manual processes mandated by regulatory authorities, like manual data entry and paper-based documentation to adhere to customs processes. It makes it difficult to track the provenance of goods and the status of shipments as they move along the supply chain, causing friction in global trade. Blockchain can potentially help to overcome these frictions and achieve substantial gains in logistics process efficiency. This technology can also enable data transparency and access among relevant supply chain stakeholders, creating a single source of truth. In addition, the trust that is required between stakeholders to share information is enhanced by the intrinsic security mechanisms of the blockchain technology.

Blockchain in Energy & Power

Another sector where this innovation will produce huge results is Energy & power. Increasing global energy demand encourages companies operating in the energy & power industry to adopt blockchain solutions that can help them enhance production with minimum maintenance and reduced downtime. LO3 Energy has developed Exergy, a permissioned data platform that creates localized energy marketplaces for transacting energy across existing grid infrastructure.

Electron is a London-based start-up harnessing the blockchain technology to design more efficient, resilient, and flexible systems for the energy industry. The company designs platforms and services that empower the industry to address challenges and maximize the potential of new technologies such as distributed renewable generation and storage, smart grid, and connected devices.

North America is expected to hold the largest share of the global blockchain in manufacturing market, wherein the US and Canada are expected to witness a significant adoption of blockchain in manufacturing services. These countries have sustainable and well-established economies, which allow them to strongly invest in R&D activities, thereby contributing to the development of new technologies.  Though the startup culture in the North American region is growing at a faster pace as compared to other developed countries, there is no doubt that, in the coming years, they will strive to fill the gap.


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