Breaking down blockchain for the manufacturing industry

Posted on 1 May 2019 by Maddy White

Blockchain is a method of logging data in blocks, a digital ledger of transaction, agreements and contracts linked in a time-sequenced chain. The opportunities of blockchain could be huge for manufacturing, but so are the obstacles.

Blockchain offers big opportunities and obstacles for manufacturing – image courtesy of Depositphotos.

The first ever Industrial Blockchain Exchange (11 April) held in London saw manufacturers and blockchain experts from across the UK come together to explore the technology.

Breaking down the hype

There is certainly a hype surrounding blockchain or distributed ledger technology (DLT), one that might put off firms from investing in and developing it. It is a new technology, with most blockchain companies only a few years old.

“The point of the digital ledger is so that every copy can talk to all of the other ledgers no matter where they are. Records are available immediately and in total synchrony, it is actually quite simple,” said Robert Learney from the Digital Catapult in his opening keynote.

With blockchain, it is a case of build the technology first and then mould it to businesses, or access firms and stakeholders first and develop it to align to operations.

Many manufacturers, however, have complicated supply chains so having access to all of the necessary people involved at the same time and then agreeing on a solution is a major challenge.

But what blockchain can offer, a definitive and instant timeline of all transactions firms are involved with that cannot be manipulated, could be worth its challenges in years to come.

Robert Learney during his keynote at Industrial Blockchain Exchange.
Robert Learney during his keynote at Industrial Blockchain Exchange.

Read about the keynote delivered by Robert Learney who breaks down blockchain further.

Implementing a blockchain solution

“You need to start small, implement it in contracts or something internal, then constantly test the system and measure it, until it works efficiently and you can begin to use it in something more complex like supply chains,” noted Bitfury’s Marc Taverner during his keynote.

“If you want to test it in your manufacturing business, I would suggest to take the word ‘blockchain’ out and just call it distributed ledger technology. When you test it you build a bank of data that you can measure, and so you can establish what you are achieving, or not achieving.”

Learn more about implementing blockchain in your business here.

Maximise your IoT security

A question high on the agenda of manufacturers was can blockchain help maximise IoT security?

“What blockchain does is align separate players, you need to understand your own business, and so it is just a form of data-sharing. But, it is about the granularity of what you want to share,” Robert Learney who hosted the table said.

“Our key concern is the aggregation of data, if people get enough of it they can work out what we are making and that cannot happen,” a senior engineer at a global defence firm said.

Not all information needs to be revealed and that could be crucial in protecting important data. If a supplier or a customer has a question, which for security reasons the business can’t answer, the question of ‘has that criteria been fulfilled?’ could be answered instead on the chain. This is known as zero knowledge proof and could be essential.

Read more about maximising IoT security and the discussions heard here.

Supply Chain

Container ship at sea carrying containers with flag of China - import export zero tariffs - supply chain - image courtesy of Depositphotos.
One of the most relevant applications of blockchain to manufacturing is in the supply chain – image courtesy of Depositphotos.

One of the most relevant applications of blockchain to manufacturing is in the supply chain. Blockchain could enable firms to transfer goods with a timestamp, and for payment to be sent through the chain in real-time.

This would enable visibility of supply chains, reduced cash flow issues and offer full traceability of assets. However, supply chains in manufacturing are very complex and manufacturers will not want to expose all of their data regarding them.

Zero knowledge proof could enable only a certain amount of information about transactions to be revealed for partners on the chain, and this could be key for manufacturers whose data and IP often underpins their businesses.

But, the blockchain infrastructure must be set up first, and partners need to agree about the blockchain system to use and its integration plan. It is proven that the technology works, industries like manufacturing now need a large amount of upfront input to get blockchain off the ground.

Key benefits of a blockchain rollout for the supply chain:

  • Resistance to cyber attacks and internal fraud
  • An integrated common data space
  • Direct access to data
  • Transparent coordination throughout the supply chain
  • No accounting manipulation
  • Timestamps of when product changed hands and by who

One delegate from a defence firm said, “The problem is when you change suppliers in a huge business, you need to certify everything, it takes time and it costs a lot of money. You have to prove every supplier is accountable for your business.”

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.

Read more about the application of blockchain within supply chains here.