According to Bloomberg, Song Kwang-woo, the blockchain chief at Samsung SDS Co., the Samsung Group’s logistics and supply chain management arm, believes digital ledger technology can help streamline “global shipments worth tens of billions of dollars a year.” A simple upgrade in the system could “cut shipping costs by 20 percent.”
“Blockchain is a core platform to fuel our digital transformation,” said Song. “It will have an enormous impact on the supply chains of manufacturing industries.”
While many industries are exploring blockchain technology, Samsung is one of the first global manufacturers potentially implementing blockchain in their operations. Samsung SDS is responsible for Samsung’s entertainment’s potential shift towards digital ledger technologies.
Samsung can reduce time delays and costs with Blockchain Technology
Samsung is considered one of the world’s largest manufacturers of smartphones and semiconductors. With Samsung SDS looking to handle 488,000 tons of air cargo and 1 million 20-foot-equivalent (TEU) shipping units in 2018, the rollout of blockchain technology may help the company streamline operations and reduce any delay between product launches and shipment times.
According to Cheong Tae-su, professor of industrial engineering at Korea University in Seoul, reducing delay times can help Samsung respond to rival and new products, an essential feature in an increasingly competitive market.
“It cuts overhead and eliminates bottlenecks,” said Cheong. “It’s about maximizing supply efficiency and visibility, which translates into greater consumer confidence.”
While Samsung has not mentioned a specific timeline, if the South Korean tech giant can increase efficiency and provide greater transparency in the supply chain, it will set a benchmark and become a precedent for other global manufacturing, tech or supply chain companies looking to leverage the blockchain network.
Blockchain and Supply Chain Management
According to Gartner Inc., blockchain-related businesses will generate $176 billion of value by 2025. A large proportion of this value falls under the supply chain management and logistics industry which not only reduces the costs, but also saves time, and increases transparency throughout the whole supply chain.
In March 2018, Accenture also partnered with shipping giant DHL to explore blockchain’s potential to improve transparency and traceability in supply chains. In a report by the IDC, “blockchain technology spending [is] expected to increase more than tenfold globally between 2017 to 2021.”
Samsung is therefore not the only company looking to quickly join the Blockchain wagon. While “the experiments with blockchain in finance are well known…we believe logistics is an area where the new technology will have a truly profound impact,” said Matthias Heutger, Senior Vice President of DHL Customer Solutions and Innovation. “Implementing productive solutions however, will require further technological development and, critically, collaboration between all stakeholders.”
While large technology conglomerates like Samsung and IBM are exploring blockchain technology for their supply chains, new and emerging startups like VeChain, OriginTrail, and ShipChain are also looking to rollout blockchain solutions to assist with the logistics and supply chain management in a variety of industries.