Five Questions With: Linda Pearson

Blockchain is a buzzword in business, and a valuable tool in transparency for manufacturers and others. Linda Pearson is principal at Sansiveri, Kimball & Co. LLP in Providence, a certified public accounting firm that provides business-advising services.

PBN: What is one of the biggest general misconceptions of blockchain?

PEARSON: That blockchain technology can only be used to track financial transactions. Blockchain is not limited to financial transactions – its purpose is to store data, any kind of data. With that in mind, it’s use can be limitless. For instance, in the manufacturing industry, it’s anticipated that blockchain will be used to track materials throughout the transportation and manufacturing cycles, documenting the who, what, where, when and how.

When trying to understand its possible impact, think of your navigation system. Who would have thought that a navigation system could be integrated with traffic data, optimizing routing and travel times? Well, it’s anticipated that manufacturers will be able to use blockchain technology in a similar manner – integrating supply and demand over multiple companies, [including] suppliers, customers, shippers, and across international borders.

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PBN: Is a large part of your company’s role now to educate clients or potential clients on this kind of technology, as well as advise them?

PEARSON: Our role continues to be focused on the needs of our clients, both the company and its owners. We believe that it is essential to our service delivery to understand the latest business trends, technological advances and industry opportunities and to have a continuous dialogue with our clients concerning emerging trends. Blockchain is one example of these emerging trends.

PBN: What is counterfeiting, and how can blockchain technology help manufacturers in this area?

PEARSON: Counterfeiting includes the manufacture or distribution of goods under someone else’s name and without their permission. According to the “Global Brand Counterfeiting Report 2018,” the amount of total counterfeiting globally was $1.2 trillion in 2017 and is expected to reach $1.82 trillion by 2020.

Blockchain technology is expected to reduce counterfeiting by providing traceability of all transactions … a complete record of the transactions, including identifying the manufacturer, distributor, freight company, customs information, retailer and ultimate customer. All transactions are time-stamped and cannot be manipulated or falsified. By providing a complete trail of the physical custody of goods, blockchain provides safeguards against counterfeiting.

PBN: Are there industries more open to or hesitant to adopt this technology than others?

PEARSON: Industries, by their own unique nature, will differ on how they will react to this new technology. For instance, blockchain has already had a significant effect on the banking industry – think bitcoin. The food industry has witnessed an increase in the use of blockchain technology, driven by the need to identify the source of food contamination to improve public safety. Walmart Inc. has required that some of its direct suppliers of food join its food-tracking blockchain. Industries that may hesitate to adopt this technology may include those who maintain highly confidential information, such as health care.

PBN: Can you give us an example of how a manufacturing supply chain works now compared to the way it could work with blockchain?

PEARSON: A typical manufacturing supply chain currently works with information being passed between two parties – the seller and buyer. In most cases, the buyer must identify its need for more goods, usually using a blend of manual and automated processes, and then place the purchase order with the seller. The seller then must evaluate its inventory on-hand and the manufacturing cycle time. Evaluating the availability of shipping generally isn’t involved until the goods are ready to be shipped.

Under the current process, the seller does not have real-time insight as to anticipating purchase orders. Only after the purchase order is received is management able to evaluate [its] manufacturing process of the goods needed to fulfill the order. … In addition, other parties involved, such as freight companies, are not involved until the order is ready for shipment. This is a reactive environment. Blockchain will be able to provide all parties related to the supply chain with access to the information, allowing each company to manage [its] business based on real-time information.

Another example is the ability to analyze details surrounding defective products that have been returned by a customer. With blockchain technology, all this information is tracked, providing management with the ability to trace each component part of a finished good back through the manufacturing process, being able to identify not only who worked on it but also the specific source of each component part … to minimize the production of defective products going forward.

Susan Shalhoub is a PBN contributing writer.