In our last blog in this 2-part series on blockchains, we defined and illustrated blockchain in manufacturing and its rising notoriety. In this final segment, we dive deeper into its benefits and ROI.
Oversight and Accountability
Gary Brooks, Chief Marketing Officer of global manufacturing and supply chain technology company Syncron, in an interview with ZDNet said 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,” 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,” the executive added. “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.”
As data held within a blockchain is decentralized and shared across nodes, the technology can be used to create and maintain a shared and continually reconciled database.
“With a blockchain solution, manufacturers now have a living dossier of activity logs and more”
For example, a hospital that implants an artificial cardiac pacemaker into a patient which happens to contain faulty parts resulting in injury to a patient can use the blockchain to trace the manufacturer of the faulty parts more efficiently, confining and correcting the issue.
“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.”
When Chipotle had an E. coli outbreak in 2015, the food chain had serious trouble tracing the source of the bacteria through suppliers. As finding the source was incredibly difficult, Chipotle was unable to immediately stop the spread of contamination. Blockchain could have more rapidly contained and alleviated the trouble.
According to Brooks, blockchain could hold the key for similar issues to be resolved and eradicated quickly.
“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.”
Blockchain, just as in any new and developing technology endeavor, comes with a cost. Manufacturers will need to have their IT teams research the technology to both determine if the investment provides an adequate return and to gain the knowledge to deploy it successfully.
Under consideration will be whether to overhaul existing infrastructure and legacy systems. Manufacturers will have to consider modernizing existing IT process and the long related upgrade cycles that accompany new technology.
Then there is the nescience factor that accompanies any new technology. According to a Price Waterhouse survey, 45% of respondents cited lack of trust as a hurdle to blockchain adoption.
Many traditionalistic manufacturing CEOs, many of whom are set in their ways, are wary of new technology like blockchain and what the innovation can bring to the table that legacy systems cannot.
All things being equal, blockchain is an emerging and very important idea that CEOs or their predecessors will likely embrace, and is redefining the way companies do business. Manufacturers that adopt developing technology and business practices will tend to move beyond their competitors and will be the winners.
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