Blockchain Technology Drives Operational Excellence in The Chemical Industry

• Blockchain Council
• December 18, 2023

In numerous industries, including the chemical industry, companies aim to increase performance through operational excellence (and technological innovation). More specifically, they seek to guarantee customer expectations are met on a daily basis by striving for efficacy throughout the organizational setting. Paper tracking is still common across the chemical industry, so it’s hard, if not impossible, to mine and examine data for improvement opportunities. Moreover, hiring and retaining operators with experience and expertise is a continuous challenge, which only adds to the problem. Operational processes must be equipped and geared up to deliver on the promise, so it’s necessary to invest in solutions for better efficiency and effectiveness with minimum process time. 

Mastering Blockchain Technology Is of The Essence for Future-Proofing the Supply Chain 

Achieving operational excellence involves a constant evaluation of the supply chain to adapt it to current market conditions. For a long time, supply chain leaders have focused their attention on cutting costs and complexity, which makes it challenging to achieve higher performance. If anything, the focus should be on operational excellence, ensuring behavior changes within the organization. In this respect, it’s necessary to have a firm understanding of blockchain technology, as it enables end-to-end visibility, dynamic operations, and process integration in supply chain management. Blockchain has the potential to reshape individual chemical companies as well as the industry overall. 

The applications of blockchain technology include but aren’t limited to data sharing, transactions, record-keeping, and privacy preservation. Smart contracts can be deployed for market clearing, identity management, access control, and so forth. Blockchain technology has witnessed widespread use over the past years in industries such as banking, healthcare, insurance, and government, where it enhances efficiency and transparency. With the proliferation of blockchain, an ever-increasing number of consensus mechanisms are being introduced to achieve agreement, trust, and security across the network. One notable example is the Proof of Stake algorithm. 

In The Spotlight: How Does Blockchain Technology Work? 

A blockchain is a type of database implemented on top of a peer-to-peer network where the information is stored in a distributed way under the control of no authority. New data entries are validated by a consensus algorithm. The nodes on the blockchain network guarantee the integrity and consistency of the database; smart contracts can serve as trustworthy and autonomous nodes. A typical blockchain integrates a public and private key pair mechanism: the public key is used to send cryptocurrency to a wallet, and the private key functions as a password to the wallet. The first ever blockchain innovation was Bitcoin, which is now used by millions of people for payments, including remittances.  

In the case of blockchain, trust is replaced by knowledge, as the network reveals all the facts about goods, payment transactions, or transport, so curiosity is satisfied beyond a reasonable doubt. If the chemical industry adopts blockchain technology in its supply chain, others will follow suit. As we can all remember, the chemical industry is at the heart of many supply chains. It’s imperative to objectively judge the impact of blockchain on chemical companies as a case study – in other words, to learn as much as possible about the topic and identify prospective use cases. Attention must be paid to the fact that the insights gained can’t be used to establish the cause-and-effect relationship between variables. 

What Are Some Good Examples of Use Cases of Blockchain Technology in The Chemical Industry? 

There’s a lot of excitement about the potential of blockchain technology in the chemical industry, with many strongly believing it will have a considerable impact on value chains, productivity, and channels to market. Therefore, it’s essential to separate fact from opinion to make smarter decisions. Let’s take a step back for a moment and review the changes that are underpinning the chemical industry. These are some of the applications of blockchain technology: 

Checking The Sources of Raw Materials

Chemical companies use different types of raw materials, such as salts, metals, and fossil fuels, to name a few. Waste is avoided or recovered whenever possible. The industry as a whole depends on free trade, but some restrictions impair market access, like tariffs and export quotas. A chemical manufacturer orders raw materials from a supplier, a legitimate and established business. Verifying identity helps prevent fraud, so it’s imperative to confirm the supplier’s public blockchain address, with a focus on date and time stamps, transaction amounts, and hashes. To order chemicals from the supplier, you must remit a certain amount of cryptocurrency; the consensus mechanism validates the transaction and labels it with a number. 

Validating Skills Assessments

The chemical industry is oriented towards the training of specialists who must achieve knowledge in performing, managing, or supervising toxic materials. With demand increasing rapidly, companies are looking for new hires to find qualified candidates to fill crucial roles, but those skills must be certified. It’s possible to build a skill verification system using blockchain technology and deploy it on the Polygon network. If an attack were to take place, the data could be restored and used. Nonetheless, there’s no reason to worry because blockchains are very secure, so it’s feasible to create effective identities in the network. 

Tracking & Tracing Processed Chemicals 

Using blockchain technology in the chemical industry contributes to improving and simplifying coordination, not to mention information processes, between manufacturers and customers. Besides ensuring compliance with distribution guidelines, a chemical manufacturer can monitor production lots and batches, creating real-time inventories available to personnel at no cost. One of the biggest advantages of using blockchain is that it can help eliminate errors and inaccuracies, so there’s no need for a third party to verify transactions. Multiple actors in the supply chain can add information, processed materials can be traced to distribution, and recalls can be executed more efficiently. 

Conclusion 

Chemical companies must acknowledge they’re walking on a fine line and maintain operational excellence by acting fast and correcting course if needed. Applying a solution that’s backed by blockchain technology from beginning to end builds resilience, boosts agility, and strengthens sustainability.