Blockchain is making the transition from an underlying technology for cryptocurrencies to business and industrial applications. ARC Advisory Group examined 24 pilot programs in the industrial segments and categorized the primary business benefits. Trust selling, supply chain visibility, and automating manual business processes are at the top of industrial applications using blockchain.
ARC recommends that technology users should join a blockchain pilot program for their industry, if available. Technology suppliers should examine how well their respective software integrates with a blockchain application, particularly for ease-of-use and robustness.
Industrial Blockchain Pilot Programs
Blockchain technology has found industrial applications with clear business benefits. Independent entities with common interests and pain points have improved their operational performance by sharing trusted, immutable data with rapid visibility. Many of the proof-of-concept (PoC) trials and pilot programs are achieving the goals of the participants, which justifies their continued investment.
Ranking the Goals of Blockchain PoCs
ARC has examined 24 pilot programs in the aerospace, automotive, chemical, food & beverage, logistics, mining, oil & gas, pharmaceutical, and power industries. By examining each PoC, we were able to determine the primary goal in terms of business value.
Grow Revenue with Trust Selling
Being able to provide proof of materials’ origin can improve the value and margin of the end product. This benefit is driven by regulatory compliance or end user interests.
In the food & beverage industry, blockchain provides proof that the food has wholesome sources, so it can be sold at a premium price. Blockchain is used in the mining industry for rare earth minerals to prove conflict-free and ethical sourcing. Diamonds can be identified as authentic and not a synthetic. In the aerospace industry, it’s important to know that parts are not counterfeit. The automotive industry is considering “digital birth certificates” that provide a trusted history for a vehicle.
Supply Chain Visibility
The well-publicized PoCs involve track and trace in the food supply chain. The supply chain from farm to table has come under more detailed scrutiny by the US FDA and other regulatory bodies due to improved access to healthcare data and analytics. Recently, food borne illnesses in one person per million were detected and drove a recall – a good thing for the general population. But, for businesses, the average direct cost of a food recall is $10 million. Companies have responded by adopting blockchain for track and trace to identify the true source of contamination. Then, the recall can be focused on only the bad products to significantly reduce the recall’s cost and improve response time.
In the pharmaceutical industry, blockchain helps to purge counterfeits and manage returns which are a growing cost that now exceeds $15 billion annually worldwide.
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Keywords: Blockchain, Supply Chain, Trust Selling, ARC Advisory Group.