The blockchain in the manufacturing market is expected to register a CAGR of approximately 78% over the forecast period. In the manufacturing industry, blockchain capabilities make it all set to disrupt the adoption in the near future. It has the potential to reduce cost substantially, decrease lead times so that manufacturers can focus on other core competent areas to enhance profitability. Whether it is suppliers, procurement, strategic sourcing, shop floor operations or anything pertaining to manufacturing blockchain triggers a completely new way of doing the manufacturing business. Right from sourcing, procurement and dealer quality to operations such as machine-level monitoring, blockchain can pave the way for a new business model and has the potential to emerge as a disruptive solution to these functions in manufacturing..
- Further, blockchain solutions in manufacturing industry enable real-time data analysis, easy deployment of solutions, monitoring customer purchase behavior, for instance, combining blockchain and IoT can revolutionize product safety, warranty management, track-and-traceability, Maintenance, Repair & Overhaul (MRO), and lead to new usage-based business models for smart, connected products. It also helps to increase transparency, recognize issues within a supply chain, and streamline industrial processes. These solutions are the major factors driving the adoption of technology in the manufacturing industry.
- For instance, a manufacturer can use the blockchain technology to trace the supplier of the faulty parts more efficiently, containing the issue and reducing time and labor costs. According to study findings of Capgemini, typical product recalls cost USD 8 Million, and many could be averted with improved track-and-traceability enabled by blockchain, for instance, 456 food recalls alone in the US in 2018, cost nearly USD 3.5 billion. With the convergence of IIoT and cloud services, major manufacturers are increasingly relying on digital platforms. Hence, digital marketplaces, tracking critical supply chain parameters, tracking components quality, preventing counterfeit products, and tracking asset maintenance are the five areas blockchain will see the highest adoption.
- However, the absence of systematic legislation and regulatory bodies governing the blockchain technology is expected to hinder the adoption of the technology in the sector. This restraint may be majorly due to the threat of loss of confidential and vital information regarding major operational processes of the enterprise.
Scope of the Report
Blockchain technology is a digitalized public ledger, which was initially used only for cryptocurrency transactions. The blockchain is now used in various sectors of the manufacturing industry, such as automotive, aerospace & defense, pharmaceutical, consumer electronics, textile, food & beverages, etc. Multiple processes, such as transactions, transportation, and stock management, are noted and organized sequentially without maintaining any records or files.
Key Market Trends
Logistics and Supply Chain Management Expected to Account for the Largest Market Share
- The logistics and supply chain forms an integral part of the manufacturing industry. Hence a highly efficient system will ensure that the manufacturing processes run seamlessly. The manufacturing businesses can leverage the blockchain technology by combining IoT and blockchain technology to streamline their supply chains, increase authenticity, transparency, compliance to product and contractual requirements while reducing counterfeiting.
- For instance, in 2017, two companies, IBM and Maersk, tested the application of blockchain in logistics. The experiment depicted how blockchain can be used to track on-transit containers. With blockchain, the supply chain stakeholders benefit from accessing relevant, actionable information. Traceability and transparency are some of the most important foundations of logistics. Further, blockchain can optimize business transactions and trading relationships with robustly secure, global business networks.
- The technology can help businesses improve supplier order accuracy, quality of the product, trace the origin, and track the journey of products across the supply chain. The results are a greater collaboration, streamlined inventory management, improved asset utilization, and more.
- Studies put that around 70% to 80% of supply chain managers worry about supply chain disruptions, particularly high in manufacturing, having an outsize reliance on materials. For instance, in between 2014 and 2017, supply chain waste and abuse fraud risk spiked from 25.2% to 35%. By introducing blockchain, intermediaries can be eliminated to streamline supply chain operations. Synchronization of transaction data across networks is also possible, which enable the participants to validate each other's work.
North America is Expected to Dominate the Market
- The manufacturing sector is a significant contributor to the global GDP and is particularly true in North America. The region is expected to hold the largest market share of the blockchain in the manufacturing market. The countries significantly adopting the blockchain in manufacturing services are the US and Canada, owing to the presence of major market players, such as IBM, Intel, Oracle, etc. Manufacturers were responsible for USD 2.33 trillion to the US economy in Q1 of 2018, the equivalent of 11.7% of the nation's economic output and with 12.75 million jobs sustained by the US manufacturing sector, it has significant potential for growth.
- Also, the region has sustainable and well-established economies, which allow them to have robust investments in R&D activities, thereby contributing to the development of new technologies. For instance, automotive manufacturers, such as Ford, BMW, General Motors, and Renault, collaborated to form a blockchain alliance named Mobility Open Blockchain Initiative (MOBI). IBM and Accenture provide MOBI's hardware.
- Furthermore, the growth potential can also be attributed to the early adoption of technological advancements, such as IoT, big data, DevOps, and mobility. Hence, manufacturers are keen to integrate blockchain technologies into their processes. Moreover, the startup culture in North America is growing at a faster pace as compared to other regions. The advent of SMEs and increasing digitalization in manufacturing have also aided the growth of the North American market.
The blockchain in the manufacturing market is consolidated owing to the presence of limited established and recognized vendors across the industry domain. Also, the blockchain technology is not yet widely adopted in the manufacturing industry, hence not many vendors are available to provide the technology for the manufacturing industry, since, the market is in the nascent stage, the manufacturers are continuously investing in the new technology to capture the maximum market share.
- May 2019 - Amazon Web Services (AWS), the e-commerce giant's cloud computing arm, has launched its Managed Blockchain service for wider use among enterprise clients. AT&T, Nestle, Accenture, and others are already using the service.
- February 2019 - Intel has launched a commercial blockchain package based on the Hyperledger ecosystem. Intel is a member of the Hyperledger collaboration which is hosted by the Linux Foundation along with IBM and other major financial institutions. The new product is designed for businesses that want to launch their own blockchain fast and effectively.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
- Report customization as per the client's requirements
- 3 months of analyst support