The decision of whether to be the first to adopt a new technology is a gamble, one that can reap significant rewards should it pay off. We explore whether manufacturers should embrace potentially game-changing technologies prior to their mainstream adoption.
The pace of technological change has never been so swift. When new technologies and systems are created, does it pay off for manufacturers to be early adopters?
We’ve seen it with the integration of automation and even more recently with the cloud. Manufacturers were rightfully cautious to start with, developing and testing systems that fit their firm, now tech like this forms integral parts of operations.
Early adopters are crucial for a product, platform or service to be proven out, refined, iterated and make the leap to the mass market, but this doesn’t necessarily mean big benefits for the initial adopter.
The financial stakes for embracing new tech early may be higher, but the rewards could be transformative. It’s a risky strategy.
Industrial Blockchain Exchange: To use blockchain or not?
At the Industrial Blockchain Exchange held in London (11 April), manufacturing and blockchain experts gathered to asses the benefits of rolling out blockchain or distributed ledger technology (DLT) in their firms.
The rationale of blockchain is simple, information is stored in blocks and this is cemented on a time-sequenced chain that cannot be modified.
For example, it can be applied to manufacturing in transferring contracts, digital assets like data and the movement of physical goods in the supply chain.
However, uptake in the manufacturing industry of this technology is, at present, minimal. This could be because blockchain is not even a decade old yet, and there are very few examples of its use in industry available, which makes its value hard to prove.
It has been very successful in other sectors like financial services, where digital (not physical, the quality of which can differ) goods can be transferred instantly.
Benefits of blockchain:
- History of transactions that cannot be modified
- Resistance to cyber attacks and internal fraud
- Direct access to data instantly
- Transparent coordination throughout the supply chain
- No accounting manipulation
- Timestamps of when product changed hands and by who
Case study: Jaguar Land Rover
Jaguar Land Rover announced today (29 April) it is testing distributed ledger technology that will allow drivers to earn money as a reward for sharing their data.
The automotive manufacturer is developing what it calls “smart wallet” technology to be installed in its cars. This would reward drivers with IOTA coins, meaning people and machines could transfer money and data without any transaction fees.
The advanced connected technology is being trialled at the new Jaguar Land Rover software engineering base in Shannon, Ireland, with no definitive timeline of its rollout.
Early adopters or cautious followers?
“Value propositions are hard to prove, blockchain businesses make the technology but they need to be tailored for individual business’ needs,” the Digital Catapult’s Robert Learney said during his keynote that kicked off the blockchain event.
“However, this requires getting all suppliers around one table and agreeing on a system and a way to move forward, it is hard for UK manufacturing to do this and get investment.”
Over the course of the day this resonated with the manufacturers, with many of them saying that with no concrete examples, an implementation plan and a true known cost of the technology, it would be virtually impossible to use or even test it, particularly in supply chains. But to get ahead of the competition, do you need to be first?
“For us it is about proving value, it is the time impact and it is do we need to adopt this first, can we wait and see how other manufacturers approach blockchain?
“But it is also, if something went wrong in our supply chain then it could probably save us a lot of money, so how do you measure that saving?” A procurement manager from an international firm told me.
“As soon as it is adopted across the industry, will it get cheaper and more tailored to our individual businesses? When the first iphone came out it was expensive, and then a year later the next one came out cheaper and a lot better, is that what we are dealing with, we just don’t know,” he adds.
The business case needs to mapped out first and the real tangible benefits understood. This remains a challenge as blockchain firms are often only a few years old and proving their competency to a much older industry poses obstacles.
In the case of digitalisation, adopters have been successful. If firms can identify the pinch points and bottlenecks that will be reduced or even eliminated by technology like blockchain in monetary terms, then surely it can be more easily integrated. However, the cost of doing something wrong could have an irreversible impact especially when dealing with something as important as manufacturing supply chains or even IP.