The term 'blockchain' is little more than a decade old; related tech businesses are less than half that. Should manufacturers be embracing such a new, unfounded technology?
Blockchain is a method of record-keeping databases that store blocks of information on a chain, it is a digital ledger of transactions that are continuously synchronised.
UK manufacturers and blockchain experts came together at the Industrial Blockchain Exchange to discuss the technology tipped to secure, cement and simplify supply chains: blockchain.
Following an opening keynote (delivered by the Digital Catapult’s Robert Learney) and the morning roundtables, here are my thoughts from the day’s closing roundtable discussion.
Tracing complex supply chains
My final roundtable explored the most obvious blockchain application for manufacturers: supply chain visibility.
The table was hosted by Ed Brying of RS Components, and quickly focused on security.
“Privacy for manufacturing is extremely important. Traditionally, a small amount of data is put on the chain and a large amount is kept off the chain,” said one blockchain expert.
“With zero knowledge proof you can put everything on the chain. You have an asset, you sell it to someone else, you can keep that sum hidden but everyone knows that the transaction has happened and it was the right amount, that is what the technology proves.”
As assets, digital or physical, are transferred, payment can happen through the chain in real-time, which means no more cash flow issues for manufacturers.
However, one of the differences between the success of blockchain in the financial services sector and manufacturing is the physical nature of components, materials and end-products.
The group around the table agreed that their businesses certainly aren’t as efficient as they could be, but they are functioning “okay”.
This means that it is very difficult to get investment for such new technology like blockchain, particularly as there are no detailed plans for its implementation. “It is a really good solution but we need a huge problem,” one delegate said.
“The problem is when you change suppliers in a huge business, you need to certify everything especially for defence, it takes time and it costs a lot of money. You have to prove every supplier is accountable for your business,” one delegate from a global defence firm said.
A blockchain expert explained that the technology could enable an industry like defence, to sign up to a “market” on blockchain. If one company has certified a supplier and you trust that company, you could check it on the blockchain market and tick it off as approved because you are all following the same guidelines.
“Of course you have to trust the person who has done the due diligence, but if everyone has signed up to the market then certification rules could be the same across the board. But how do you cost that? And how do you get all of your competitors around a table to agree to this?”
It was acknowledged that not a single party could undermine the technology of an industry-wide solution, but the biggest problem is getting all firms in a supply chain together to agree.
“It is either build the technology first and sell it to industry to then be integrated across the supply chain, or it is get everyone together and learn what you want to build.”