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Blueberries, Blockchains & Manufacturing Blockchain Made Simple: Part 2

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.

manufacturing supply chains and logistics

Supply chains in manufacturing are both critical and complex.

“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 ROI

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.

man in factory lathe chuck coolant nozzles safety glasses freepoint technologies

Manufacturing has always been at the forefront of technological adoption.

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.

FreePoint Technologies has been helping manufacturers optimize machine performance, gain greater visibility of production, increase capacity and streamline operations with unprecedented precision. See how we can impact your industrial manufacturing.

Blueberries, Blockchains & Manufacturing Blockchain Made Simple: Part 1

Intel, the Silicon Valley-based computer chip maker, has been working with Oregon blueberry farmers and fruit processers this year in an effort to refine its supply chain for cold chain uses. And when we say “cold chain,” we are talking about the low-temperature range variety and the series of actions and equipment applied to maintain products throughout a cold temperature-controlled supply chain.

Blueberries require a lot of care to maintain their quality

Blueberries are highly sensitive food products that demand the utmost care, and a blueberry supply chain is a high stakes business. One snag, one malfunction or one technical failure, can mean catastrophic losses.

“It’s easy for people to think of a produce truck as not really high value, but the value of a blueberry truck could be over $100,000,” Aaron Ensign, president of fruit distributor Curry & Co., told a ZDNet reporter. “So it’s a significant investment. And ensuring that you’re optimizing that value and that you’re protecting that value throughout the supply chain, is really critical.”

ZDNet reports that the cold chain market is expected to be worth $447.50 billion by 2025. Intel is no company to sit on the sidelines and watch the Internet of Things (IoT) pass it by. The chip maker is investing in things like sensors that can be deployed as far away as a blueberry patch in Brooks, Oregon or a shipping vessel on its way from Oregon to Indonesia, as well as blockchain platforms for building distributed ledger networks.

From its various distribution centers, Curry & Co. exports produce to about a dozen countries around the world, 52 weeks out of the year. The berries can be in shipment for weeks at a time. If their climate-controlled environment is compromised, no one may realize it until the shipment arrives at its destination, spoiled.

By contrast, Ensign said, “let’s say that we’re shipping a load of blueberries to Dallas. If we see in real-time that there’s been a disruption in temperature, we can then react to the situation. We can say, ‘Let’s put another load on the highway, and let’s divert that shipment to someone who’s going to process and perhaps freeze it, or make juice or something else.'”

It’s blockchain technologies that help to maintain accountability. If, for instance, a customer lets its shipment of berries sit out in hot temperatures for hours after its arrival, Curry & Co. can be sure it’s not at fault for the berries’ quality.

Quality assurance isn’t just an issue for individual farms or distribution companies, but for the state as a whole. Agriculture is a major part of the economy in Oregon, and the state produces more than 100 million pounds of blueberries a year.

“American farming is about trust, honor, and integrity,” Ensign said. “Any time we can incorporate technology” to build that trust, he said, “that’s huge.”

Blockchain Defined

Most people have heard of BITCOIN but many have not heard of the platform infrastructure on which the currency is built – “blockchains”.

from https://learn.g2.com/what-is-blockchain

Simply put, a blockchain is a public digital ledger or public record of online events which can be used to store and record transactions. As records along the chain are stored and distributed across all the different parties or nodes in the network, it is extremely difficult to falsify records, making the blockchain a more secure and transparent way to record transactions and service records. It can only be updated by consensus from a majority of the users in the system. Additionally, once entered, the history is permanent and can never be deleted, ever.…a blockchain is a highly-distributed, leaderless, jurisdictionless, identityless, nearly anonymous, decentralized architecture for managing ownership.

As a result, the blockchain possesses applications outside of cryptocurrency exchanges. Think manufacturing and supply chains. More on this later.

Andreesen on Blockchain

Marc Andreessen

Marc Andreesen, one of Silicon Valley’s most influential venture capital investors and Web browser pioneer thinks the blockchain is the most important invention since the internet itself.

“So the really new disruptive technologies come from the fringe,” Andreesen told the Washington Post. “No big technology company thought the Internet was going to be important, right up until basically 1995 or 1996.”

“Bitcoin is a classic instance of that. Bitcoin didn’t come from Citibank; it didn’t come from the Federal Reserve; it didn’t come from Visa. It came from the fringe.”

Andreesen sums up blockchain as “distributed trust.”

WP (Washington Post): So the business opportunity posed by this “distributed trust network” — as an investor, what do you see that you could potentially —

Andreesen: Hundreds of thousands of applications and companies that could get built on top.

WP: Is this, like, a billions-of-dollars kind of industry?

Andreesen: Yeah.

WP: Trillions…?

Andreesen: Yeah!

Digital stocks. Digital equities. Digital fundraising for companies. Digital bonds. Digital contracts, digital keys, digital title, who owns what — digital title to your house, to your car… it’s all digital, and it’s all unique, and it can’t be cracked. You’ve got digital voting, digital contracts, digital signatures. You’ve got unique pieces of digital content. If you guys wanted to know exactly who had every piece of content you ever made, you can track that. It’s this long list. And then every aspect of financial services: insurance contracts, insurance derivatives, currency exchange, remittance — on and on and on. It gives you a chance to basically go after this very broad category of online business in a new way. And, by the way, if we had had this technology 20 years ago, we would’ve built it into the browser.

E-commerce would’ve gotten built on top of this, instead of getting built on top of the credit card network. We knew we were missing this; we just didn’t know what it was. There is no reason on earth for anybody to be on the Internet today to be typing in a credit card number to buy something. It’s insane, because — which is why you have all these security problems…. And these high fees, this high fraud rate. It doesn’t make sense online to have a payment mechanism that requires you to hand over your credentials to make a payment. That’s just an invitation to fraud and identity theft. It’s just stupid.

Distributed Trust

Andreesen: I have a lot of friends who are programmers. The programmers have always gone like, ‘Those [Bitcoin] guys are crazy.”

And then, almost 100 percent of the time, they sit down, read the paper, read the code — it takes them a couple of weeks — and they come out the other side. And they’re like: “Oh my god, this is it. This is the big breakthrough. This is the thing we’ve been waiting for. He solved all the problems. Whoever he is should get the Nobel prize — he’s a genius. This is the thing! This is the distributed trust network that the Internet always needed and never had.”

Blockchain and Manufacturing

So does blockchain integrate with manufacturing?

“Increasing visibility across every area of manufacturing starting with suppliers, strategic sourcing, procurement, and supplier quality to shop floor operations… blockchain can enable entirely new manufacturing business models.”

According to Forbes contributing writer Louis Columbus, blockchain very much fits into the manufacturing world in the near future.

“Blockchain’s greatest potential to deliver business value is in manufacturing. Increasing visibility across every area of manufacturing starting with suppliers, strategic sourcing, procurement, and supplier quality to shop floor operations including machine-level monitoring and service, blockchain can enable entirely new manufacturing business models. Supply chains are the foundation of every manufacturing business, capable of making use of blockchain’s distributed ledger structure and block-based approach to aggregating value-exchange transactions to improve supply chain efficiency first. By improving supplier order accuracy, product quality, and track-and-traceability, manufacturers will be able to meet delivery dates, improve product quality and sell more.”

  • The business value-add of blockchain will grow to slightly more than $176B by 2025, then exceed $3.1T by 2030 according to Gartner.
  • Typical product recalls cost $8M, and many could be averted with improved track-and-traceability enabled by blockchain.
  • Combining blockchain and IoT will revolutionize product safety, track-and-traceability, warranty management, Maintenance, Repair & Overhaul (MRO), and lead to new usage-based business models for smart, connected products.
  • By 2023, 30% of manufacturing companies with more than $5B in revenue will have implemented Industry 4.0 pilot projects using blockchain, up from less than 5% today according to Gartner.
  • 24% of industrial manufacturing CEOs are planning, piloting or implementing blockchain technology according to a survey by PricewaterhouseCoopers
  • 62% of PwC survey respondents have a blockchain project underway

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In part 2 of this series on blockchain coming up next, we take a deeper dive into blockchain benefits and ROI.