Samsung looks at blockchain to cut off supply-chain costs

Smartphone and semiconductor giant Samsung is looking at using blockchain technology to manage its multi-billion dollar global supply network, according to Bloomberg.

The world’s biggest maker of smartphones and semiconductors may use the technology behind cryptocurrencies to manage its vast global supply network.

Samsung Electronics Co. is considering a blockchain ledger system to keep track of global shipments worth tens of billion of dollars a year, according to Song Kwang-woo, the blockchain chief at Samsung SDS Co., the group’s logistical and information and technology arm. The system could cut shipping costs by 20 percent, according to SDS.

Governments and companies across the world have been turning to the blockchain to facilitate all manner of operations from international money transfers to managing energy usage to monitoring fish stocks. Samsung Electronics is one of the first major technology companies to consider using the blockchain as part of its daily operations.

SDS is working on the system for Samsung Electronics, the conglomerate’s crown jewel.

“It will have an enormous impact on the supply chains of manufacturing industries,” said Song, who’s also a vice president at SDS. “Blockchain is a core platform to fuel our digital transformation.”

Using the same technology behind crypto-currencies, blockchain is expected to transform the way transactions are recorded, verified and shared. Research firm Gartner Inc predicts that blockchain-based businesses will create $176 billion of value by 2025 and exceed $3.1 trillion by 2030.

Blockchain proponents in the shipping industry say the technology reduces the time needed to send paperwork back and forth and to coordinate with port authorities. Documentation costs for container shipments are more than twice as big as those for transportation, according to International Business Machines Corp., which is working with A.P. Moeller-Maersk A/S to track cargo movements and automate shipping paperwork.

SDS expects to handle 488,000 tons of air cargo and 1 million 20-foot-equivalent (TEU) shipping units this year. That would include organic light-emitting diode displays and Galaxy S9 phones made by Samsung Electronics. A blockchain system may help the company reduce the time lag between product launches and actual shipments, making it easier to respond to rival products and shifting consumer appetites in emerging markets like China, according to Cheong Tae-su, professor of industrial engineering at Korea University in Seoul.

“It cuts overhead and eliminates bottlenecks,” Cheong said. “It’s about maximizing supply efficiency and visibility, which translates into greater consumer confidence.”

There are no specific details regarding the tech giant’s implementation of the blockchain, however, the move signifies a growing trend for larger organizations to embrace this fledgling technology that has seen astronomical growth over the past 12 months.