As blockchain technology becomes more pervasive, what does it imply for your product packaging plans?
Slipping from the “Peak of Inflated Expectations” toward the “Trough of Disillusionment” on Gartner’s Hype Cycle for Emerging Technologies, 2018 – blockchain might have been oversold. Still, it appears all but inevitable to be widely adopted across many industries. That’s why the time is right for companies plotting their product packaging strategies to start asking themselves:
- Can we gain a competitive advantage as an early adopter of blockchain technology in product packaging?
- Does it make better business sense for us to hold off for a year or two – or even longer – before launching a blockchain project?
- Would the benefits we could gain from blockchain be worth the risks and investment?
To help businesses answer these questions, let’s start with a layman’s explanation of what blockchain is all about, and then delve into what it implies for any particular business.
Blockchain: Commoditizing Trust
At its core, blockchain is a network of decentralized, immutable and sequentially grouped “blocks” on which all the users/partners in the network can track, share and verify actions and transactions. Virtually anything of value can be tracked on the network – and whenever any action or transaction is executed, it is recorded as a block. The sequence of these blocks forms the blockchain.
What differentiates blockchain from previous systems? Transactions no longer need a centralized administrator. The system is public and transparent. Because every block is shared and consensually verified by all the users/partners in the network, no single user can con or corrupt the system.
Ultimately, blockchain creates a commoditization of trust – and that’s why it’s a game-changer. Traditionally, companies and consumers have relied on three major institutions to administer transactions: banks, governments, and large retailers. But in light of recent events – the ongoing scandals at Wells Fargo, the Greek debt crisis and the Target security breach to name just a few – many people, particularly millennials, no longer trust these organizations.
From this lack of faith, blockchain evolved. The most notable example is Bitcoin, a network of cryptocurrency (digital currency) that can be exchanged for other currencies, products, and services.
Because blockchain is decentralized and immutable, all the partners/users in the network can independently track and verify the data on a ledger without the need for banks, governments, retailers, or any other intermediaries. The system is protected by “hashes” on the blocks which must match. When they don’t, the chain is blocked.
What Blockchain Could Mean for your Business
Though blockchain is still a few years away from going mainstream, significant real-world examples already exist. De Beers is using blockchain to eliminate conflict minerals and child labor practices from its supply chain. IBM and Maersk have partnered to apply blockchain across the global supply chain. And proving that blockchain is not just a passing fad, Walmart — after teaming up with IBM and nine of the world’s top grocery and food producers to improve the safety of the global food supply chain by leveraging blockchain – is now exploring ways to use the technology to strengthen its mammoth delivery operations.
As these and other use cases demonstrate, companies involved in product packaging can not only streamline – and build integrity into – their supply chains with blockchain, but also cut costs. Blockchain achieves all that in two key ways:
- It cuts out the brokers and other intermediators in the supply chain whose service fees and administrative costs eat away at revenues.
- It verifies transactions, and as a result, products move more quickly from vendor to consumer.
As a result, medical device manufacturers, pharmaceutical companies, and other highly regulated organizations can use blockchain to improve regulatory compliance and the auditing trail. Food and retail businesses can use blockchain to improve customer awareness and transparency. For example, blockchain verifies that a purse that says “Made in the USA” actually is made there, and that food labeled “all natural,” “Vermont-raised” and/or “organic” are the real deal.
Go With the Flow
According to Gartner, the business value-add of blockchain will grow to slightly more than $176 billion by 2025, before skyrocketing to $3.1 trillion by 2030. In other words, blockchain means billions of dollars will be on the table for companies across all industries in the next decade. So, now more than ever before, it’s time to consider: How will – or should – your company go after a piece of the blockchain pie? That’s a tough question for sure. But this flow chart from the World Economic Forum should make it a little easier to answer.
To learn more about blockchain, watch this webinar from BLUE CPO Stephen Kaufman: Blockchain: Hype or Real Value?