For months and even years, the electronics industry has been trying to raise awareness and agree upon definitions on block chain. At the same time, use cases remain rare but that may be on the cusp of changing as a few early adopters blaze the trail.
Foxconn, a large electronics contracts manufacturers who is well known for being an Apple supplier, last year launched a blockchain-based supply chain finance platform called Chained Finance to secure funding for small and medium enterprises (SMEs) in China. In the trial, the company disbursed $6.5 million worth of loans was disbursed to its suppliers without banks.
“By using the Chained Finance platform, every payment, every supply chain transaction can be more transparent, manageable, and easily authenticated,” said Jack Lee, CEO of FnConn, a Foxconn subsidiary, said. “Chained Finance will provide timely, efficient support to far more suppliers of all sizes. It will also help ensure the timely delivery of products to end customers and improve efficiencies across the entire supply chain.”
The benefits are clear: transparency, security, traceability and more. The technology promises to help organizations address some of the biggest challenges in the supply chain, ranging from counterfeit components to the complexity of product recalls. There are a number of promising business cases for blockchain in the supply chain today, said Rebecca Gott, distinguished engineer at IBM, during a presentation at the Electronic Component Industry Association (ECIA) Executive Conference last month. The list includes projects where blockchain:
- Enables compliance with applicable laws and regulations or with a customer’s requirements;
- Eliminates a major problem (such as counterfeit materials in the supply chain);
- Saves time in a complex business transaction or process;
- Saves money in complex business transaction or process by reducing time spent, reducing labor, or eliminating steps or costs;
- Eliminates a middle man or a non-value added process step resulting in time and cost savings;
- Enables a new process that would be impossible or impractical without some aspect of the shared secure ledger.
Today, only 3% of organizations are implementing blockchain on a large scale, according to recent research from the Capgemini Research Institute. However, almost nine out of ten organizations report that they are experimenting with blockchain and have reached the proof-of-concept stage. One out of ten are squarely involved in experimentation, with at least one pilot stage.
“The key drivers for investment range from cost efficiency to revenue growth,” the report said. “Four out of five of the organizations implementing blockchain say that blockchain’s ability to trace products and provide better transparency is driving their investment.”
The infographic below, from Capgemini, outlines more of the survey results. Take a look and then let us know how you plan to use blockchain in your supply chain.
— Hailey Lynne McKeefry, Editor in Chief, EBN