Samsung Electronics Co. Ltd. (005930.KS) is considering using a blockchain ledger system to manage and keep track of its global shipments worth tens of billions of dollars a year.
Song Kwang-woo, vice president of Samsung SDS Co., the South Korea-based group’s IT subsidiary, told Bloomberg that the world’s biggest semiconductor and smartphone manufacturer is currently working on developing a blockchain platform that could help to slash shipping costs by 20%.
“It will have an enormous impact on the supply chains of manufacturing industries,” said Song. “Blockchain is a core platform to fuel our digital transformation.”
Many companies have previously talked about using blockchain ledgers to save costs and boost the efficiency of their businesses. However, to date, few have followed up on these pledges. The technology has been billed as a way to transform how transactions are recorded, verified and shared, prompting Gartner Inc. to predict that blockchain-related businesses will create $176 billion of value by 2025.
Bloomberg’s report suggests that Samsung is likely to handle 488,000 tons of air cargo and 1 million 20-foot-equivalent (TEU) shipping units in 2018, distributing products ranging from smartphone devices, including the Galaxy S9 and the upcoming Note 9, to OLED displays used by Apple’s iPhoneX. Supporters of blockchain technology argue that it can play an important role in the shipping industry by reducing the time it takes to coordinate with port authorities and send paperwork back and forth.
Cheong Tae-su, a professor of industrial engineering at Korea University in Seoul, told Bloomberg that speeding up the shipping process could potentially help Samsung to reduce the time lag between product launches and actual deliveries, enabling the company to better respond to rival products and evolving consumer demands in important emerging markets such as China.
“It cuts overhead and eliminates bottlenecks,” Cheong said. “It’s about maximizing supply efficiency and visibility, which translates into greater consumer confidence.” (See also: Morgan Stanley Sets Stock Picks for the "Data Era".)
Samsung first started experimenting with blockchain technology over a year ago. In May 2017, the company launched a pilot system for Korea’s shipping industry. The pilot, which aimed to process “all exports and imports” in real-time, was concluded in late 2017. (See also: Why Google is Building its Own Blockchain?)