Block technology is getting serious attention from major corporations and the business press and will likely have an enormous impact on manufacturing.
Blockchain Fundamentals
Blockchain can be described as a worldwide digital technology for recording and verifying documentation and transactions. It is designed to speed the settlement of internet transactions while reducing the risk of tampering. However, blockchain is more than a way to exchange money or mine Bitcoins. To be clear, when we talk about blockchain, we are not talking about bitcoin. We are talking about the underlying digital foundation that supports applications such as bitcoin. Bitcoin and blockchain are not the same things. The applications and value of blockchain extend far beyond bitcoin.
Bitcoin is actually built on the foundation of blockchain, which serves as bitcoin’s shared ledger.
Think of blockchain as an operating system, such as Microsoft Windows or MacOS, and bitcoin as only one of the many applications that can be run on that operating system. Blockchain provides the means for recording bitcoin transactions — the shared ledger — but this shared ledger can be used to record any transaction and track the movement of any asset whether tangible—a house, a car, cash, land—or intangible—intellectual property, such as patents, copyrights, certifications or branding. Blockchain provides the means to record and store bitcoin transactions, but blockchain has many uses beyond bitcoin. Bitcoin is only the first use case for blockchain. (Manav Gupta—Blockchain for Dummies)
Blockchain technologies present opportunities for disruptive innovation and will be the invisible foundational layer for conducting transactions over the internet. With a security-packed open blockchain network layer, also called a shared, immutable ledger, people and organizations across all industries can create new, potentially cost-efficient ways to execute trades and transact business.
Blockchain Benefits
Today, even simple trades involve third parties and intermediaries. The time between transaction and settlement can be long. It can take days before funds are verified and money is exchanged. However, with blockchain:
- Payments and transactions can be exchanged almost instantly.
- Supply chains can be managed in real-time.
- Real estate records and vehicle registrations can be indelibly recorded.
- Manufacturers can share production logs with original equipment manufacturers (OEMs) and regulators to reduce product recalls
The same way the internet changed how we share information, a blockchain enabled internet can be used to track and trade almost anything of value while mitigating the risk of tampering due to fraud or cyber attack. Transactions are secure, authenticated, and verifiable.
Blockchain Makes Business Better
Gary Brooks, Chief Marketing Officer of global manufacturing and supply chain technology company Syncron explains in a ZDNet interview that blockchain is of particular interest to the manufacturing industry due to its benefits regarding verification and transparency.
“Manufacturers’ supply chains are sophisticated, complex organizations with a number of nuances that can make transparency and accountability challenging — especially when it comes to the logistics of building and shipping new equipment and service parts,” Mr. Brooks said. “This is particularly true as manufacturers shift from a transactional, break-fix model of after sale service — where a service part is replaced after it has already failed — to a subscription-based model that focuses on maximizing product uptime.”
“In this case, manufacturers leverage IoT and predictive analytics in their service parts supply chain to proactively repair equipment before it ever breaks down,” Brooks explained. “Blockchain can provide an increased level of visibility into this process, as it would allow an entire global service supply chain to see when and where parts are moving to ensure the repair is made just in time.”
Whether you are a global enterprise or SMB, company, businesses can use this to increase transparency, recognize issues within a supply chain, and streamline industrial processes.
“With a blockchain solution, manufacturers now have a living dossier of activity logs and more so they can keep tabs on the flow of goods between companies,” Brooks said. “This provides an extra level of transparency and control — and will enable large manufacturers to compete and win against the competition.”
“For manufacturers specifically, blockchain could help mitigate similar risks,” the executive noted. “Multiple parts and pieces comprise large pieces of equipment, and with networks and suppliers around the world, blockchain provides a way to see every part in the supply chain in real-time — and identify problems before they become widespread.”
The blockchain technology is gaining traction, not just with supply chains and manufacturing, but across many concerns like Healthcare, Government, Insurance, the Internet of Things (IoT), Trade Finance, Commercial Financing, and Cross-Border Transactions.
More and more, customers seem to demand that manufacturers provide quick, reliable service and it is this customer expectation that will be one of the catalysts for blockchain adoption. It becomes ever more apparent that manufacturers need to invest in new technologies like blockchain, and for those who do, will be the winners.