On top of the numerous and unexpected challenges presented by Covid-19 over the past 18 months, the global manufacturing sector has a number of long-standing issues that continue to cause problems for the industry. These include its complex infrastructure and supply chains with an increasing number of players, and the need for both digitisation and continuous improvement in order to stay profitable. Now, though, blockchain use cases in manufacturing are emerging as a real solution for many of the challenges in the manufacturing industry.
So much so, that data from the IDC predicts that by 2025, 30% of manufacturers will use blockchain in new ways such as connecting with IoT technology to deliver reliable provenance, leading to a 90% increase in audit efficiency. As the manufacturing industry begins to realise the potential of blockchain, applications of the technology are revolutionising the sector by creating supplier ecosystems, providing better oversight of entire supply chains, removing fraud, and delivering improved oversight of internal processes.
Blockchain in Manufacturing Use Cases
Blockchain’s innate immutability, its decentralised infrastructure, and the fact that no one single party owns the data make blockchain the ideal technology for improving manufacturing processes.
A blockchain is a database that contains blocks, each of which holds information. It is this information or data block that has the what, when, where, who, how much, and the condition of a particular asset or shipment. Each block is cryptographically encrypted and connected to ones before and after it, securely linking them together. This prevents any block from being altered, delivering an immutable ledger that is trusted and secure. Using blockchain in manufacturing gives manufacturers the peace of mind to know that their processes are running as they should with transparency, oversight, and accurate data, facilitating a smooth running ecosystem.
Let’s consider the top 5 blockchain use cases in manufacturing:
1. Ensuring the Provenance of Materials
Counterfeiting and supply chain fraud are issues that have plagued the industry for years. With this problem continuing to cause issues, manufacturers are turning their attention to blockchain solutions to create a secure and immutable database of assets or products. Blockchain technology enables the creation of a shared digital ledger, which tackles the problems relating to the sharing, and the speed of sharing, information across the fragmented supplier ecosystem. Suppliers have access to a secure and permissioned database where no-one entity owns the data. This mitigates the risk of certain suppliers altering data fraudulently. Blockchain for manufacturing also removes the reliance on paper-based audit trails and the miscommunication that arises from this. Digital twins of physical assets can be created allowing physical goods to be represented on a shared digital ledger, allowing them to be tracked across the supply chain in real-time. This also enables those involved in the manufacturing industry to verify where their materials have come from while preventing counterfeit materials from entering the ecosystem. As blockchain in manufacturing is able to track and prove the origin of materials, an immutable audit trail is achieved while reducing the risk of fraud.
2. Machine-Led Maintenance
The manufacturing industry has come a significant way from outdated paper-based checks to track and fix issues. Nowadays, manufacturers are using IoT-enabled devices that give the industry a better understanding of what’s happening across the factory floor. With the aid of blockchain, manufacturers can go one step further by creating a secure network for IoT-enabled machinery. By doing so, it solves the issue of unreliable and bottlenecked IoT networks; networks that leave manufacturers vulnerable to attacks and downtime, which is costly for them. Data shows that manufacturers can lose as much as 20% of productivity, which can include up to 800 hours of downtime, resulting in millions of dollars of lost revenue. With the aid of blockchain technology in manufacturing, manufacturers receive more accurate and reliable data from their IoT-enabled machinery, allowing them to put together preventative measures. Through the use of smart contracts, these checks can be undertaken according to pre-set conditions, while ensuring that real-time diagnostic data is reliable and verifiable through immutable maintenance ledgers. Being able to address issues quickly before any unplanned downtime is beneficial to manufacturers as well.
3. Simplifying and Safeguarding Quality Checks
Another blockchain use case in manufacturing is simplifying and safeguarding quality checks. Without the aid of blockchain within the manufacturing industry, delivering full transparency requires costly support from other areas that operate IT platforms. In addition to providing customers with track and trace abilities, blockchain supplies quality control checks through immutable documentation. By doing so, it removes the need for inbound quality control to verify checks as multiple parties can access the available data. Not only that, but the need for audits by central authorities is reduced as those involved can use blockchain technology in manufacturing to gain full transparency into the required documents.
4. Warranty Fraud
Warranty fraud is costing the manufacturing business billions of dollars each year. So much so, that one study has projected this figure at around $2.61 billion every year. When companies face the issue of managing fake warranty claims to replace products they often incur more costs by depleting resources. However, through the use of blockchain, businesses can verify a product’s information whether that’s from a serial number to the ownership of it to whether the product actually has a warranty. Blockchain is needed for this as it delivers an immutable record that can’t be falsified or tampered with. In turn, manufacturers reduce the number of false claims from being processed, providing a better customer experience for customers with genuine claims.
5. Provably Sustainable Supply Chains
With supply chain fraud being such a problem for the manufacturing sector, blockchain in manufacturing can deliver positive results that improve supply chain issues. By connecting with everyone involved in the process: supply chain supplies, distributors, and retailers, everyone can access the information they need in real-time, while also being assured of its validity. By eliminating the possibility of confusion, inventory is better managed and planned. With manufacturers sitting between their suppliers and their customers, ensuring a smooth supply chain is important to a business’s success. And blockchain in the manufacturing industry is helping to achieve this. By doing so, it’s enabling better collaboration between all those involved with the supply chain where information is shared securely while making sure that no one entity has control over the data.
What are the Benefits of Blockchain in Manufacturing?
By delivering a private ledger that is secure, immutable, transparent, and distributed; blockchain in manufacturing is helping to improve processes and reduce costs while optimising the manufacturing ecosystem. Through the growing application of blockchain-based solutions, manufacturers are realising the potential that the technology can bring, such as immutability, transparency, and more efficient shared environments.
By using flexible and interoperable blockchain platforms, Protokol are building custom blockchain solutions for manufacturers. Solutions that give manufacturers unparalleled oversight of the supply chain, as well as enabling the pairing with IoT machinery to generate increased efficiency, cost reduction, improved machine maintenance, and more accurate data.
Contact Protokol for a free consultation where we’ll show you how you can use blockchain technology in your manufacturing ecosystem; or, learn more about blockchain in manufacturing.