Interest in the transformative potential of blockchain has never been greater. Though the highest-profile uses for the technology so far have been in the financial services sector, executives across industries and around the world are asking themselves whether it can make a difference for their businesses. Indeed, when we surveyed 600 executives across 15 territories about what companies are doing, 84% said they have at least some involvement with blockchain.
Let’s clear up one of the most common misconceptions about this technology. (And if you need a primer on how it works, click here.) The price of cryptocurrencies like bitcoin may have become a common feature on financial news channels’ scrolling tickers, but moving money is just one blockchain use case. Industrial companies will find that it has the potential to transform their businesses as well.
Our survey also showed that the industrial products and manufacturing sector is seen as being out in front of many others when it comes to blockchain. Twelve percent of respondents identified it as a leader in the space, tied for second most with energy and utilities and trailing only financial services. That’s a clear sign that there’s a good opportunity for further growth.
Blockchain is being explored to offer solutions to long-standing industry pain points, including:
Blockchain-powered solutions can improve all these processes and more — it’s also possible to conceive of asset tracking, regulatory compliance and engineering and design use cases that could add significant value for manufacturers. But realizing the benefits of blockchain takes careful and strategic planning.
It’s important to remember that not every need is well addressed using blockchain technology. It can be very effective when different parties have to share and update data, time is of the essence and trust between parties is needed but intermediaries add too much complexity. But if none — or only one or two — of those types of challenges are present, then other solutions may be a better fit.
Effectively leveraging blockchain also requires an ecosystem of participants. Those could be companies in your supply chain, end users of the products you manufacture or peers in your industry who agree to work together to solve a common problem facing all. Each stakeholder should have a clear idea of how they will participate and what they will gain. That means that certain decisions about how your blockchain is structured — for instance, whether it will be public or private, permissioned (allowing only certain parties to use it and setting up rules around how) or permissionless, “owned” by one company or governed by a consortium, and so on — will need to be made carefully.
Industrial companies exploring blockchain solutions will also need to make sure they have the right people at the table at all stages of the project. This includes cybersecurity, regulatory, risk and audit professionals who can help identify potential stumbling blocks in their areas of expertise. What’s more, many companies may find that they need to make increased investments in data collection, storage and analysis infrastructure to get the most out of blockchain. Cross-functional teams are critical to ensuring key needs don’t go unmet.
And it’s important to start small. Think about a blockchain solution that touches a single system, rather than your entire manufacturing process. And consider an ecosystem that includes just a few key constituencies rather than your entire supply chain or workforce. Scalability and interoperability are key to successful blockchain implementations.
There’s plenty of room for manufacturers to become blockchain leaders — if they start small, plan deliberately and work collaboratively, both within their own organizations and sectorwide. The use cases highlighted in our paper show that there is potential value in blockchain — it will just take the right leaders for industrial companies to begin to realize it.