Expect to see blockchain technology take off in 2017 and into 2018, as this virtual way of tagging items becomes more mainstream. IBM announced in March 2017 that it has enterprise-ready blockchain services ready to go to security companies, financial corporations and trading companies. How does blockchain affect your manufacturing supply lines? See what it can do for international trade.
What is Blockchain Technology?
IBM began experimenting with blockchain technology in February 2016 by deploying it to a select few companies. A year later, the tech giant announced it was ready to implement a wider reach. Blockchain encompasses a cloud-based ledger system that monitors specific codes with computer software. These unique codes exist only with one physical object, which means they cannot be replicated or faked. Because each blockchain is unique, software that reads the code can verify something as authentic.
How Does This Affect Supply Chains?
Supply chains become more efficient using this advanced encryption method. Since blockchain technology exists in the cloud, anyone with access to the ledger can see the blockchains associated with the physical object. The object can be something as small as a postage stamp, or as large as a shipping container headed to Seattle from China on a cargo freighter. Hardware that reads blockchain codes can authenticate shipments by verifying when it left port, what inspections it passed and what happened to the cargo container en route.
Blockchains obviate long delays and lines at customs inspection stations. Instead of staffers scrambling around to verify each individual cargo container and manifests, entire ships can start offloading cargo as soon as the ship docks in port. This saves time and increases efficiency. Supplies that may face days of delays can suddenly being offloading instantly and they head to the factory.
What's an Example of How This Works?
Blockchain technology reduces paperwork and increases trust among participants in the system. Shipping giant Maersk began experimenting with paperwork reduction using blockchain authentication. A stack of paperwork for a single cargo ship can measure as much as 10 inches tall. Blockchains authenticate all of that paperwork in seconds, including where raw materials originated, the factory where products were made and what companies authorized the shipments.
Blockchains increase cybersecurity as a way to encrypt transactions between tablet computers in house or between computer systems half a world away. Blockchains authenticate complex product labels, shipping instructions and compliance with international laws. This encryption gives manufacturers and consumers ways to see where something is along the supply chain as well as all of the vital information attached to a shipment.
What's the Timetable of Adoption?
Blockchains still face a few obstacles on the way to worldwide adoption. Nations must agree to a set of standards within the cloud-based ledger system. Once technology experts proclaim blockchains as hack-proof, expect to see more and more companies come on board. Partners and shareholders must invest in machine-to-machine technology to make this work. Otherwise, the interconnected, mobile, cloud-based systems are already there and waiting for blockchains.
Experts believe blockchain technology could become commonplace by the early 2020s. Costs should come down as more companies invest in the system and demand increases. Watch out for this trend as you seek to save money on your supply chain with regards to international trade.
Photo courtesy of Ron Mader at Flickr.com
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