Whom do you trust? When it comes to global supply chains, the response to this question can be especially difficult, time-consuming and costly. Trusted suppliers must be thoughtfully selected, managed, monitored and certified for quality, reliability and consistency.
While third-party inspectors can alleviate some of these obstacles, manufacturers are on the hook for satisfying regulatory audits and legal compliance — and ultimately fulfilling the trust that end-customers place in their brand.
The Blockchain remedy
Providing these assurances in today’s manufacturing world, imposes a hidden (and growing) “trust tax” on worldwide supply chain participants. All told, these cumbersome activities reduce productivity and efficiency at the expense of rising operating costs.
Blockchain technology — a software-based distributed ledger system — offers a potential remedy as it can significantly reduce the rising “trust tax” of the manufacturing value chain. The new technologies could prove particularly useful for newly formed, distributed manufacturing models.
Business model innovation
In addition to lower costs and increased agility, Cognizant believe blockchain manufacturing will create entirely new business. Traditional value chains will be deconstructed as more players will be able to flexibly plug in and out of the manufacturing process, such as “borrowing” parts of a factory on short notice for only as much production capacity as they need at a given time.
Further, niche players such as micro-factories or small 3-D print service providers will be able to expand their markets and serve more customers.
Overcome the challenges
Blockchain technology, thinking and skill sets are still in development. Early adopters will likely face issues related to security, legacy systems, and corporate culture — among others. It’s essential to begin experimenting now by funding targeted proofs of concept to explore where and how blockchain thinking can deliver transformative benefits.