Go to main content

4 benefits of blockchain in manufacturing

If you find yourself scratching your head at the idea of blockchain technology, rest assured that you're not alone. Blockchain is one of the newest and hottest innovations currently disrupting the modern way of doing business.

In fact, worldwide spending on blockchain solutions topped a record-high of $6.6 billion in 2021. According to Statista, that number is expected to surpass $19 billion in 2024 – and for great reason. The blockchain offers a wide range of significant benefits to every stage of the supply chain, manufacturing included.

Before exploring diving into the advantages, let's first answer an important question:

What is blockchain technology?
Here's the short answer: The blockchain is – almost quite literally – a chain of blocks. In reality, however, those blocks are entirely digital. In other words, according to IBM's definition, the blockchain is a decentralized public ledger that records transactions and assets within a business network. Every transaction (or block) is indisputably recorded as one of many that in sum create the blockchain.

To help you, understand the blockchain and its practical applications to the manufacturing industry, let's explore its primary benefits:

1: Supply chain visibility
Remember, the blockchain is an indisputable record. In turn, members of a business blockchain can rest assured that the information shared on that network is accurate and timely. That means manufacturers can increase transparency at every stage of the industrial value chain, thus allowing them to monitor processes with a closer lens. Best of all, the blockchain is a single source of truth to all participants – producers, distributors and partners alike.

2: Asset tracking and inventory management
Because the blockchain records the movement of every valuable asset and transaction, it's an effective way to keep tabs on critical information. Using this permanent record, manufacturers can track the coming and going of orders, materials and shipments as they move along the supply chain. In turn, they can adequately prepare in the event of a delay, stockout or disruption.

3: Data security
Confidential information, like invoices or contracts, is frequently exchanged at any given stage of the supply chain. That's why manufacturers need a reliable, secure solution. Blockchains facilitate the communication of sensitive data with cutting-edge encryption techniques. Better yet, every block is a copy of the documents that are chronologically attached to one another, meaning hackers can't possibly access or alter one without first changing hundreds of others.

4: Automated payments
No longer do manufacturers need to rely on traditional banking methods. With the blockchain, payments can be sent and received anywhere around the world without the need for a bank as the middleman. That means transfers are facilitated directly between the payer and payee – all performed quickly and, if desired, automatically. Best of all, for much the same reason why data is secured by the blockchain, these payment methods are entirely secure.

Explore Employbridge