To simplify its complicated supply chain, Samsung has turned to blockchain.

A blockchain pilot program led by logistics subsidiary Samsung SDS is being rolled out to streamline its shipping, accounting and administrative logistics. The pilot, which will launch in January of 2019, will combine the company’s in-house blockchain technology with a blockchain solution from the European bank ABN AMTRO. Using this technology, the company will be able to clearly track the movements of its shipping containers, as well as cut down on the number of hands products must pass through on their journey.

This follows efforts from other manufacturers and retailers to break into blockchain, the anonymous, ledger-based technology that started servicing bitcoin. Its utility has since spread. Ajay Patel, a professor at Wake Forest University who studies the intersection of business and blockchain, said that as the cost of blockchain goes down, and as companies become more comfortable with it, its uses will “explode.”

Blockchain allows a company to accurately follow a product throughout its long supply chain and pinpoint a problem or a defect when it happens, Patel said.

IBM recently launched its Food Trust blockchain service, which traces food from farm to store. The company has partnered with Walmart to ensure the company’s produce quality. For instance, the technology can take the six or so days it now takes to identify the source of a contaminated mango and cut it down to 2.2 seconds via the blockchain, according to an IBM representative.

Samsung currently works with 29 different companies that handle the logistics of shipping a single container of Samsung G3 smartwatches from Asia to Europe. Blockchain aims to cut the number of parties down by digitizing the lists of goods being delivered, financing and the transportation of freight.

Patel cautioned that there are outstanding questions about ensuring companies that use blockchain play by the rules and don’t subvert governments via imports or by dodging taxes or tariffs. 

After the results of the pilot in February, Samsung will decide whether to expand the service — potentially becoming the latest major player in the emerging blockchain business.

“What’ll happen is the products with the highest value will be the first ones to move into blockchain, and as people get more comfortable using it, and those costs go down and the understanding increases, you’re going to start seeing more and more products move through blockchain,” said Patel.

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