Blockchain and innovation go hand in hand. Although public opinion considers blockchain and cryptocurrency as dangerous technologies for humanity’s future, the truth is that blockchain is slowly being introduced in many sectors as it provides data security, faster-streamlined processes as well as more transparency.
Blockchain was first introduced in the crypto industry by the creator of Bitcoin, Satoshi Nakamoto. Although many things changed from that point, along with the BTC price, blockchain was continuously changed and developed for specific business challenges. From being the officially distributed ledger behind crypto transactions to becoming a mainstream solution for a variety of use cases from industries like finance, health and education, blockchain has come to be a reliable strategy for implementing better products and services.
The manufacturing sector is no exception to using this tool. It’s widely known that manufacturing is struggling with managing big data, rising costs of labor as well as a lack of innovation. Blockchain can help solve these issues, and here’s how.
Blockchain helps improve traceability
Traceability is not only following the course of a product but an entire process of collecting and managing information from the acceptance of raw materials to the product shipment. It is one of the most important operations because it can minimize costly product recalls as well as remove unsafe products to protect the end user’s safety.
But the traditional traceable options on the market hinder the whole product life process, which creates many problems. For example, the most common challenges of a manufacturing company include understanding the amount of data that needs to be collected and the way it should be managed.
With blockchain, these problems can be solved quickly. Blockchain is a decentralized ledger, which means that everything is recorded on the network and can’t be modified or deleted. This way, manufacturers can efficiently store and share information on a product’s material origin or shipping status.
Blockchain ensures proper inventory management
Managing is another common challenge in manufacturing industries because it’s a complex process that requires multiple parties to collaborate. Consequently, these entities make considerable mistakes leading to inaccurate data reports, limited data visibility and supply chain problems.
Keeping inventory in good condition is also challenging in most regions that lack technological advancements and use traditional systems. The inefficiencies related to the lack of proper management can derail the whole manufacturing process. Still, with blockchain, supplies can be tracked at every manufacturing stage, which provides more stability and transparency.
Given blockchain’s decentralized nature, companies share vital information with partners to manage better cooperation and trace the source of defective supplies. At the same time, materials that have exceeded their quality assurance standards date can also be traced more easily. Using an extensive network of suppliers and vendors as well helps improve data security in the global supply chain.
Blockchain secures data management
Since data breaches occur more often than ever due to a lack of proper security solutions, many companies fear they’ll be hackers’ next target. Unfortunately, few of them provide suitable security options for their processes, which exposes their data.
But blockchain is widely known as the best solution for enhanced data security. That’s because this technology comes with end-to-end encryption, which allows companies to store their data on a network of computers. Spreading data collection in such a way makes it more difficult for hackers to reach and access confidential information.
At the same time, since it’s a distributed ledger, data on the blockchain can’t be altered or manipulated without authorization. Data can also be anonymized and prevent access, which is what manufacturing businesses can approach to ensure they’re protecting vital information.
Blockchain leverages utomated payments
Smart contracts are the main processes that make blockchains reliable for programming almost anything. These programs help execute any operation upon completing predefined conditions. Once both parties of the agreement give their acceptance, the smart contract can’t be altered, changed or even slowed down.
Using smart contracts to provide automated payments is a great move considering late payments due to inaccurate data or missing PO numbers. Smart contracts can help minimize wasting time on solving these issues as well as automate agreements easily and fairly.
Relying on third parties is no longer efficient; this limitation can be improved through
blockchain. At the same time, smart contracts can eliminate human errors often occurring during manufacturing processes. Therefore, companies could focus on optimizing other critical processes rather than dealing with poor payment options. Plus, using blockchain provides more payment options for vendors. For example, they could pay with cryptocurrencies like Bitcoin or Ethereum.
Blockchain can improve HR management
Of course, besides processes and techniques, employees matter the most in a manufacturing company. While this enters the HR domain, being able to monitor employees’ efforts more efficiently can help businesses understand where people encounter difficulties and what processes they should change to make the company solve problems faster and easier.
It’s common in most technologically-advanced businesses that HR has a more data-driven approach regarding employee engagement. That’s because blockchain provides the ecosystem for managing all employee data in a way that can offer insightful information about employees who need to be incentivized more on behalf of their efforts and those who need support in finishing their tasks. Given that different departments have more or less complex things to do, it’s best to have a complete image of what everyone excels at or needs guidance.
At the same time, blockchain can boost productivity by automating data-heavy processes, such as payroll, which is often the cause of human errors. Finally, blockchain can help ensure data safety through fraud prevention and cybersecurity in HR for both employees and contractors, which is essential for streamlining manufacturing processes.
Blockchain technology is among companies’ best and increasingly used strategies to provide faster and easier development procedures. Given that manufacturing struggles with traceability, data security and automated payments, blockchain must be introduced in more company systems and appropriately used so that products can reach their final destination and businesses can track their stages better and more manageably.