Blockchain Beyond Cryptocurrency and NFTs: Use Cases in Manufacturing

What comes to the minds of most people when hearing the word ‘blockchain’ is a cryptocurrency or an NFT (Non-Fungible Token) to an extent. The fact is that businesses and governments across the globe are finding the huge potentials of blockchain for its application in various areas, including CBDC (Central Bank Digital Currency), to the benefit of their companies and citizens.

The emergence of blockchain in the manufacturing value chain

The emerging Industry 4.0 technologies such as IoT, AI, Data Analytics, Robotics, etc., have been transforming every aspect of human life, and manufacturing and supply chain have been no exceptions. Of late, blockchain has also started figuring prominently in the transformation strategies of businesses and policy frameworks of governments.?

To understand the 'why' behind this change, let's explore how the application of technology works across the manufacturing value chain. In simple terms, blockchain is "an expanding list of cryptographically signed, irrevocable transactional records shared by all participants in a network." The way transactions are recorded, verified, and visible publicly in the network is different from the existing record-keeping applications.

That blockchain - aka distributed ledger technology - with its core qualities of immutability, transparency, and data security makes transactions amicable, agreeable, and cost-efficient, for multi-party environments like the manufacturing ecosystem where multiple parties interact and transact with each other at every point of the value chain. Gartner estimates the business of blockchain to exceed $3.1 trillion by 2030.

Though a Gartner supply chain technology survey found that only 9% of respondents have invested in blockchain technology, it forecasts this to change, considering the strategic investments being made in developing innovative blockchain solutions for smart manufacturers. Not just that, Forbes has reported that leading industry analysts paint an optimistic picture about the adoption of blockchain – close to 30% of manufacturers (with more than $5 billion in revenue) would implement industry 4.0 projects leveraging blockchain by 2023.

Use cases of blockchain in manufacturing

Let us go over the major use cases of blockchain technology that could help businesses transform the manufacturing value chain in its journey towards Factories of the Future or Smart Manufacturing:

Supply chain tracking?

Tracking and traceability of transactions and records that involve product recall, regulatory compliance, customer experience, and distribution is of paramount importance for manufacturers. Blockchain together with IIoT can help manufacturers streamline the way they aggregate, maintain, and share data with partners and stakeholders across the supply chain ecosystem.

The IoT sensors collect data at every stage of the value chain – from equipment to raw material to the finished product – and store it on a blockchain network to facilitate all supply chain partners accessing that data at any time from a single source. The sensors are designed to capture and record information about environmental or physical factors that may affect the raw material, spare parts, and the final product and work-down probability of equipment, and trigger an alert so that the concerned team can take appropriate corrective action.

Warranty management

Efficient warranty management is critical for the manufacturer to prevent fraud and minimize costs, as well as for delivering a better customer experience. Blockchain technology can bridge the information and data gap between manufacturers, warranty providers, other players in the supply chain, and the consumers, in turn enabling the management of the warranty lifecycle well. Warranty management benefits from blockchain technology by ensuring no counterfeits get into the supply chain and hence, no claims are claimed fraudulently.

Smart contracts

Supply chain companies can use blockchain to implement smart contacts which can be explained as programmed instructions that are carried out if a set of agreed terms and conditions are met, like in a standard manual contract. Such smart contracts may help manufacturing companies eliminate or reduce high transaction costs, minimize paperwork, and improve turnaround time.

?To give a few examples for better understanding, it can be a smart contract between a retailer and manufacturer that can automate settling of invoices once payment terms are met or delivery is fulfilled, or by using the data collected from sensors, the smart contract can facilitate payment to suppliers on receiving delivery of supplies as reported by sensors, and many such smart contract-based transactions between various players in the supply chain.

Concluding note

While it is true that blockchain adoption has still to prove the tests of scalability and viability, it is evident that the integration of blockchain technology and IIoT will benefit manufacturing supply chains abundantly in the days to come. Companies can benefit from distributed ledger technology by way of instant approvals and settlements, enhanced efficiency, reduction in fraudulent activity, and a high level of transparency to all the stakeholders in the chain. Emerging Industry 4.0 players like EnergySaver are working on various Industry 4.0 technologies including IIoT and Blockchain towards playing a larger role in the development of Factories of the Future.?