Blockchain mania has reached an all-time high. In December, Long Island Iced Tea, a New York-based soft drink company, saw its stock price soar 200% overnight by simply changing its name to Long Blockchain Corp! Given the hype, boards are now asking how companies can take advantage of blockchain to support day-to-day activities. The revolutionary technology allows information to be shared in a decentralized, reliable, and secure manner, but only creates real value when applied to the correct situations.
Companies can properly take advantage of blockchain when transactions occur between three or more parties that require access to updated, decentralized information. Some practical examples include:
The most common use of blockchain is to ensure timely and accurate tracking of procurement items throughout their lifecycles from source through logistics to final destination. The best example is complex international logistics, where goods often trade hands hundreds of times in dozens of different countries.
IBM and Maersk have recently joined forces to create a decentralized, blockchain-backed record keeping system that can track the status and location of international shipments in real-time. The two companies also intend to incorporate the use of smart contracts—if-then programs that automatically execute once certain conditions have been met. This will reduce inefficiency created from paperwork that is prevalent in this line of work.
Asset-intensive industries require accurate, timely performance information from a variety of internal and external parties to ensure maximum uptime. Blockchain is typically used to share updated maintenance information across asset fleets.
A global compression company uses blockchain to share engine performance and maintenance information so personnel have updated manuals and like-engine failure data regardless of location. This helps reduce downtime by more than 10%. An FPSO company is also using blockchain to ensure all contractors at shipyards have updated blueprint and engineering change order information during new-build or refurb. This has reduced the amount of rework by more than 15%.
Upstream oil and gas producers often enter joint venture agreements, where multiple companies engage in exploration projects together to reduce costs and mitigate risk. These agreements are intricate and include the duration, scope of work, and working interest for each party. While typically only one entity handles day-to-day operations, all other parties want to remain informed on the well’s status and performance as it directly affects their bottom line.
By storing records of all activity on the blockchain, stakeholders in the project can feel assured they are receiving accurate, real-time information. Key metrics such as daily production volumes, cost estimates, and project timelines are uniformly accessible to all in real time. The solution can also integrate with all parties’ operational and accounting systems, ensuring precise reporting and eliminating the need for reconciliations.
At the end of the day, blockchain is the real deal. But much like the dotcom bubble of the late 90s, too many people are jumping on the bandwagon without fully understanding how to best utilize the underlying technology.
Further reading: Blockchain Defined: 5 Myths or Facts
