Applying Blockchain to Manufacturing: 3 key benefits and 3 key legal considerations

Blockchain is a word that’s never far from the headlines. If you’re not entirely sure what blockchain is, it is a decentralized, digital ledger that businesses and individuals can use to record transactions across any number of computers.

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Applying Blockchain to Manufacturing: 3 key benefits and 3 key legal considerations

One of the reasons blockchain is growing in popularity so quickly is that none of the records within a blockchain can be altered retrospectively (at least without altering all of the ‘blocks’ involved).  This, experts believe, makes blockchain more robust and irrefutable than anything that preceded it.

However within a manufacturing context, blockchain could offer even more benefits than simply increasing the transparency and security of a commercial transaction (or aiding litigation should a transaction lead to a commercial dispute), these benefits include:

  1. Allowing all participants (wherever they sit in the supply chain) the opportunity to monitor progress in ‘real time’. This could help make sure any issues that could affect their part of the supply chain are picked up quickly so a solution can be found so those issues don’t delay or even halt the manufacturing process.  Over time this should ensure more efficient and more profitable manufacturing in the future.
  2. Providing a digital alternative to the often less than efficient manual or part-manual systems many supply chains still employ. The fact this would all be fully automated, centralised and verified whilst staying visible to everyone involved should cut down the man hours required to manage the process which again will speed up turnaround/production times and cut labour costs.
  3. Giving all of the different contributors the ability to spot where their partners or suppliers could be more efficient in terms of logistics, distribution and delivery. Again these improvements could very well cut down on the time and cost of the overall manufacturing process.

However, as with any new technology, implementing blockchain will also present certain challenges.

Obviously any manufacturing business wishing to adopt blockchain will have to make sure everyone in the supply chain not only buys into the concept but has the ability to use it.  Without that the adoption process could well cause more harm than good.

Having given the topic significant consideration our specialist manufacturing team also believe there are 3 key legal considerations any manufacturing business looking to test out blockchain should consider:

  1. Blockchain applications are likely to fall within the scope of the GDPR especially if they involve UK and EU entities. As GDPR was created for centralised rather than decentralised networks, any business thinking about employing blockchain will have to make absolutely sure they comply with the new data protection requirements or they will face heavy penalties.
  2. All third party intellectual property rights must be properly protected and measures put in place in case those rights are infringed.
  3. There can be no potential participants could be challenged on price-fixing or unfair competition. While blockchain does promote complete transparency, users need to remain aware that transparency can never extend to commercially sensitive information.  Similarly if a particular blockchain looks like it is becoming dominant in its market, it will need to be able to show there is nothing in its operation that could be accused of leading to an abuse of its market power or position.

If you are looking to take the next step with your manufacturing business and would like to talk to lawyers who truly understand the manufacturing sector, email our specialist manufacturing team at manufacturing@keebles.com

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