Leveraging blockchain technology in the manufacturing sector can bring substantial improvements, says Capgemini Research Institute.

Use in Supply Chain Management

One of the most significant and most impactful use-cases of blockchain technology is in manufacturing. Supply chains form the foundation of every manufacturing business. The use of blockchain in the sector can increase visibility across multiple functions in the value chain like suppliers, strategic sourcing, procurement, and supplier quality.

The use of distributed ledger can also enable better tracking of operations and maintenance of machines on the shop floor, according to a study conducted by Capgemini Research Institute. The findings of the study were published in an article by Forbes earlier on Sunday.

Key Findings

  • It is estimated that a typical product recall costs $8 Million. With better tracking and traceability, product recalls can be averted. The study found that the number of food recalls in the US last year numbered 456 costing around $3.5 Billion.

“Blockchain’s general ledger structure provides a real-time audit trail for all transactions secured against modifications making it ideal for audit and compliance-intensive industries,” says the article.

  • The study revealed that track-and-traceability emerged as one of the drivers for adoption along with cost savings.
  • Based on interviews of industry experts, the study found 24 use-cases with differing complexity and state of adoption. Among these the five use-cases that the research predicts will see the most adoption are digital marketplaces, tracking critical supply chain parameters, tracking components quality, preventing counterfeit products, and tracking asset maintenance.
  • The study looked at the level of adoption across manufacturing, FMCG (Fast-Moving Consumer Goods) and Retail industries. While the state of adoption is still nascent across all these sectors, in manufacturing 6% of firms have at scale implementations compared to the 2% in FMCG and retail. FMCG leads in pilots with 15% having carried out pilots compared to 8% in manufacturing and 7% in retail.
  • Getting real-time data can avert rejected shipments. The article elaborates:

    In highly regulated industries including Aerospace & Defence (A&D), Consumer Packaged Goods (CPG), medical devices, and pharma, combining IoT (Internet of Things) and blockchain provides real-time data on container conditions, tamper-proof storage, each shipment’s locational history and if there have been changes in temperature and product condition.

  • Capgemini found that 13% of manufacturers are pace-setters and out of this 60% believe that blockchain has delivered encouraging results. These early adopters plan to increase their investment in blockchain by 30% in the next three years.
  • Lack of a clear ROI, immature technology and regulatory challenges are the three top barriers that pace-setters face in implementation.

Overall, the study reveals the vast benefits that manufacturing firms can derive by leveraging the distributed ledger technology, especially when implemented along with IoT.

Do you agree with the findings of the study? Let me know in the comments below.

Images courtesy of ShutterStock


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