Blockchain for manufacturing: what are the opportunities?

Blockchain. It’s one of the hottest topics in the tech world, and a buzzword that’s been popping up quite a bit over the last year or so.

Blockchain has the potential to “radically simplify many business processes, by reducing risk and boosting transparency”, according to Alex Tapscott, co-founder of the Blockchain Research Institute.

Businesses seemingly agree. Business leaders across a whole range of sectors, from finance, to trade, healthcare, energy - and manufacturing - are starting to think about how it could be useful for their organisations.

Research by Deloitte found that 42 per cent of executives in the consumer products and manufacturing industry plan to invest $5m or more in blockchain technology this year. So there’s clearly something in blockchain for manufacturing. And in this blog, we highlight three potential opportunities.

But first… what exactly is it?

Blockchain in a nutshell

Blockchain was originally conceived as a means of underpinning the Bitcoin cryptocurrency, as the supporting architecture to allow Bitcoin users to transact. But it’s the broader application of blockchain technology that has the potential to excite manufacturing companies.

An article by The Manufacturer explains it in simple terms: “A blockchain is essentially a database stored in multiple locations that maintains continually increasing records, or ‘blocks’ which are timestamped and linked to the previous block in a way that cannot be undone.”

Essentially, it’s a method of recording data - anything that needs to be recorded and verified as having happened. Once a piece of data has been recorded, it can’t be changed, only added to, and is updated for all on the network simultaneously.

Creating a smarter supply chain

Currently, supply chains span multiple stages and multiple geographical locations, making it difficult to trace events or investigate solutions. But according to industry experts and media sources, blockchain presents an exciting opportunity to create smarter, more secure supply chains.

Blockchain opens up a completely new way of tracking product journeys, providing a solid audit trail and real-time visibility for verified supply chain partners. What materials have arrived where, who handled them, how they were transported, and where they came from could all be recorded as ‘blocks’ on the blockchain.

The benefits for the supply chain are clear. Ultimately, blockchain enables manufacturers to track and trace a product’s journey with confidence, providing assurance that each item used on the production line has a traceable source and is genuine. And, that products reach their destination without interference.

The security implications are huge. Complete transparency means any disturbances can be spotted in real time, therefore reducing the risk of theft, fraud, counterfeit, and cyberattacks - all of which are a very real threat to the current supply chain infrastructure.

For anti-counterfeit in particular, blockchain could offer a very welcome new solution. Current solutions are becoming easier to outsmart. By using blockchain, supply chain partners can scan a product for authenticity at each stage of the product journey. For instance by checking it against key attributes, and against a unique ID given to each product.

In addition, it has the potential to make operations more efficient, thereby reducing costs at the same time. The current supply chain involves a lot of documentation and paperwork, and blockchain offers opportunities to automate these complex and time-consuming operations.

Making distributed manufacturing easier

In a recent whitepaper, the Technical Associates Group highlighted the potential for blockchain to ease the deployment of distributed manufacturing. This is a form of decentralised manufacturing, where a network of geographically dispersed facilities are co-ordinated using information technology. In the whitepaper they assert that it could “greatly ease the deployment of distributed 3D manufacturing, as it could enable low cost, distributed and assured integrity for contracts, product histories, production processes, and more.”

An article by Automation World illuminates how global technical solutions provider Wipro have created a blockchain system for 3D manufacturing. Blockchain technology is used to share the 3D model file, and verify the printing vendor and printing machines. And provides an automatic audit trail so users can track and trace the status of the item.

Driving IoT in manufacturing

The Technical Associates Group’s whitepaper also presents the idea that blockchain can play a significant role in driving the Internet of Things (IoT) in manufacturing. They note that the opportunities IoT offers for manufacturing are currently hampered by the technical complexity of connecting, securing, and overseeing a large number of devices. And argue that blockchain has the potential to solve this problem by helping IoT move away from reliance on a central cloud server to identify and authenticate individual devices.

It’s clear that blockchain for manufacturing could provide some very real, and useful, opportunities to solve some of the headaches of the supply chain, and drive forward new advances in ways of working. All of which will benefit manufacturing companies, their suppliers, and ultimately - end customers. Use of blockchain in the industry is still in it’s early stages, and we’ll be keeping a close eye to see how it develops in the coming months and years. So subscribe to our blog to get ongoing updates in this area.

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Written by Neil Sharp

Neil has over 25 years’ experience in Electronics Manufacturing Services and Component Distribution. During his career, Neil has held a range of leadership positions in sales, marketing, and customer service. Neil is currently part of the ESCATEC Senior Management Team and is responsible for setting and delivering the overall Group Marketing strategy. Neil heads up the marketing department and is responsible for both the strategy and the implementation of innovative marketing campaigns designed to deliver high quality content to those seeking outsourcing solutions.