What exactly is BLOCKCHAIN for industry?
The term BLOCKCHAIN has been cropping up increasingly on the Internet since 2017/2018. Initially it was referred to by the term BITCOIN. Today it is increasingly associated with industry.
What is a BLOCKCHAIN?
“Blockchain is a shared, non-changeable journal for recording the history of transactions. It supports a new generation of applications for mapping business transactions, providing more trust, predictability and transparency” (IBM).
Roughly speaking, blockchain is a database technology that is decentralised and available worldwide and that is absolutely counterfeit-proof and thus tamper-proof and available for all companies and authorities.
What will BLOCKCHAIN technology do?
“BLOCKCHAIN technology maximises transparency and minimises IT expenditure in the complete supply chain of production companies, from the farmer or electronics manufacturer to the consumer. BLOCKCHAIN technology is becoming the backbone for global logistics and for the Internet of things” (Jürgen Kohl, A+K).
This means the following: It is likely that production companies will have to store their information on raw materials, intermediate and finished products they produce as well as their transport, legal and commercial matters in a BLOCKCHAIN.
Why will this be required?
Today, there are many interfaces between the various production plants in a supply chain, be it for notifications of raw, partially finished or finished products, be it for freight and customs documents, for delivery notes, goods receipt documents, internal warehouse management, internal processing information, information on finished products, deliveries to the customer, the corresponding delivery documents, etc.
Initially, only the major OEMs will require that their direct suppliers (tier 1 suppliers) provide all information about the delivered goods in a BLOCKCHAIN. Its benefit will be the enormous reduction in IT workload for incoming goods, processing and outgoing goods.
Before long, tier 1 suppliers will demand the same from their sub-suppliers. This will save them from having to prepare and store the data from the sub-suppliers. And this scenario will continue all the way to the farmer.
As you can see, a BLOCKCHAIN offers enormous potential, especially in the global economy, but also in areas such as food production for the domestic market.
How does it work?
To ensure that all companies involved in the supply chain can store their information in a BLOCKCHAIN, it must be publicly accessible. However, it is obviously necessary that only those persons and companies who have been granted access by the owner of this database have access.
Currently, the largest provider of blockchain databases is IBM.
To enable your company to participate in a blockchain solution, your company will need some software. This software contributes information to your customer's blockchain in the cloud, e.g. the manufacturing documents of produced goods, delivery notes, test results, etc.
To give an example: Food production for a large grocer
The products of a grocer are extremely diverse. Let's take a closer look at the production of tropical fruits as an example.
In this example, let's assume that tropical fruits are grown in Central America. This is where the supply chain begins. The farmer there will harvest the fruit and place it in trays.
Each tray has a unique printed identification number. The farmer will photograph the tray with the fruit, scan the code and store both in a BLOCKCHAIN. This allows him to provide the information he can provide.
When the farmer sells this crop to a wholesaler, he agrees to link the information into the wholesaler's BLOCKCHAIN. This gives the wholesaler immediate access to the information on the fruit, even if it is still stored in Central America.
The wholesaler will commission a carrier to transport the fruit from Central America to Cologne. The transporter will transfer the fruit to an overseas container on site and will also store this information in the wholesaler's BLOCKCHAIN.
You can already imagine how the goods are transported around the world and the location of the overseas containers is only updated accordingly.
What is crucial is that the customer (the company) has access to all information at all times, regardless of where the goods are at any given time.
At some point, the goods will be on the grocer's display and we consumers will buy them.
Fraud involving false declarations of countries of origin, counterfeit dried milk for baby food, counterfeit electronic modules or counterfeit components for aircraft and vehicles can easily be traced, as every stage of the supply chain is documented in an unalterable and tamper-proof manner.
How does this benefit a production company?
Each company in the supply chain that enters its information into the BLOCKCHAIN automatically takes itself out of the line of fire of the legislators of the various countries, as it provides all information in a transparent manner from the outset.
It also becomes easier for a company to see whether it needs to talk to one of its sub-suppliers urgently.
It may even be possible in future for companies to dispense with all the work associated with freight documents for incoming and outgoing goods. However, this will certainly take some time.
How does this benefit the consumer?
More transparency and consequently more safety for all products they consume, whether it's food, clothing or vehicles.
How does this benefit the authorities?
The cost of customs clearance could be drastically reduced. The new technology may even have a disruptive effect and completely replace customs clearance in its current familiar form.
What kind of time line are we talking about?
It has already begun. In 2017/2018, the first major companies set up the first global processes on BLOCKCHAIN.
Walmart is a good example of this: Video: “Walmart's food safety solution”
We Europeans are always a little behind the US, but I think it's safe to assume that the big car and machinery manufacturers in particular will very quickly, and by that I mean in the next 2-3 years, recognise the potential and introduce this technology.
How can A+K help with the introduction of BLOCKCHAIN technology?
No matter whether it's an agricultural business or a manufacturing company, in any case the information must be stored in the BLOCKCHAIN at the appropriate process interfaces.
We support our customers in clarifying the requirements with their customers. We create the necessary interface software to the BLOCKCHAIN for our customers based on our modular software system. We put the software into operation at our customers' premises. If our customers so desire, we will gladly assist with service and support tailored to their requirements, even 24/7.