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Blockchain functions through updates that are provided by multiple users that are present in networks. Through a consensus mechanism and cryptography, each user is able to update a distributed ledger in a highly secure manner. This removes the requirement for a central authority.

Due to the inter-relationship of each block in a chain, it is extremely challenging for a hacker to breach any of the individual blocks that comprise the chain and breaching all links in the chain simultaneously would be nearly impossible.  In private blockchains, security can be further heightened by allowing participants to define access rights rules, in order to make it more difficult to access the data of the ledger without the proper access rights. Moreover, certain blockchain technologies have a “smart contracts” capability so that defined rules can be executed on the data of the ledger, in a similar secured way.

Thus, due to the high trust levels of the system, the time and cost associated with lengthy back and forth business operations is decreased and the ability to track movements across the various stages of a product lifecycle will become significantly more accurate, thereby improving the efficiency of the entire supply chain. For example, defective products can be quickly tracked and traced so revenue losses and reputational damage can be reduced.

Advantages To The Food And Beverage Industry

In the U.S., food recalls and food-borne illnesses represent an annual cost of $77 billion. This takes into account discarded products, loss of revenue, damage to corporate reputations and healthcare costs. Thus, improved traceability systems can greatly reduce these costs.

In the event that a finished food product is being transferred to a logistics company from a Food & Beverage (F&B) manufacturer, who then transports it to a warehousing vendor, the initial F&B manufacturer will need to be able to trace the product to ensure that it arrives to its final destination on time and does not get damaged along the way. When blockchain is taken into this context, the above mentioned verifications can all be dealt with through the “smart contracts” function of blockchain. IoT technologies such as sensors can also be mounted on transportation devices such as pallets and packages, so that variables such as temperature and vibration levels can be monitored and the environmental data can be stored in the blockchain. This allows stakeholders to have a real-time visibility into the stipulations of that contract and whether any conditions has been breached. Thus, making blockchain a powerful tool for ensuring traceability, security, transparency and real-time access to contracts that impact the upstream and downstream supply chain.

It also allows F&B manufacturers to be more precise tracking their goods and allows for the simplification of supply contract executions. In the event of a disruption, an enhanced accurate on what needs to be removed and what can be kept in the food distribution pipeline.

More Work To Be Done

Although blockchain is in the experimental and pilot stages, Schneider Electric is working to incorporate the technology in plant automation, manufacturing and process control in order to enhance traceability across product life cycles. This includes partnerships with blockchain technology specialists like Microsoft and IBM.

To learn more about recent Schneider Electric and Microsoft proof-of-concept efforts, click here.

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