Blockchain for the manufacturing supply chain

Feb. 13, 2018
There is real gold to be mined with blockchain.

Blockchain is immature. It has yet to prove itself in the supply chain, says Trevor Stansbury. But the CEO of Supply Dynamics also notes that blockchain—the living list of linked and secured records—has the potential to disrupt manufacturing and reward early adopters.

As he unveils a white paper on blockchain for the manufacturing supply chain, we chatted with Trevor to learn more. Take a look…

Smart Industry: How does blockchain in the manufacturing space differ from other applications? Are there greater / fewer opportunities here?

Trevor: The potential benefits of blockchain in manufacturing are just as compelling as they are in other industries—immutability, elimination of non-value-added intermediaries, traceability, etc. However, the barriers to implementation are probably greater. A major difference between blockchain applications in the manufacturing supply chain and other more commonly cited applications in other industries (i.e. bitcoin) is the material nature of the goods being tracked, the number of tiers in the chain and the preponderance of unstructured data. Financial transactions are digital and fairly standardized, while manufactured goods are tangible with little consensus around the naming conventions, units of measure and data taxonomies. This adds considerable complexity to any potential blockchain application.

Smart Industry: Manufacturers might be intimidated by blockchain. Can it be implemented / exploited quickly?

Trevor: The blockchain can seem overwhelming, but it’s really just a more efficient way of rapidly, securely and efficiently recording and exchanging data. Once you understand that, some of the intimidation factor goes away. I don’t foresee a rapid, wholesale transformation in manufacturing like the ones people are predicting in the financial, real-estate, banking and music industries, but there are some aspects of manufacturing where adoption will be easier. Take for example, the monitoring of machine-tool performance and other IoT applications for sensing, measuring and reporting plant or product performance. That kind of application of blockchain will progress at an accelerated clip. Generally speaking, manufacturing-related data often resides in disparate systems, across multiple independent players, in different formats. That’s a challenge. The key to exploiting blockchain is to get your arms around part-attribute data. Until it’s in a structured, usable format, all the benefits of blockchain and AI will remain elusive.

Smart Industry: Which of the opportunities in your white paper most excites you?

Trevor: Like any supply chain leader, cost savings and continuity of supply are always at the top my list. At Supply Dynamics we are involved with the application of a variety of cutting-edge technologies aimed at achieving these goals. I’ll predict that in our lifetimes we will see the frictionless, closed loop, end-to-end supply chain become a reality and blockchain will play an important role in that, especially when paired with machine learning, natural language processing (NLP), additive manufacturing and other IoT devices. It’s an exciting time to be in manufacturing.

Smart Industry: Which constraint is the most daunting for manufacturers?

Trevor: Constraints differ based on the manufacturer, which is why we suggest a scaled approach. Start small, iterate, prove success and expand. When it comes to applying technology to the manufacturing supply chain, tacking the unstructured data challenge is an essential first step. It forms the foundation from which any truly successful manufacturing transformation will rise. I also believe the days of lengthy and expensive technology implementations (ERP or otherwise) are behind us. Utilize secure, cloud-based tools that don’t require heavy integration with your back-end systems yet still work seamlessly with them. Most importantly, since most manufacturing environments are distributed, create a vision that encompasses all tiers of the manufacturing supply chain, inclusive of all factories, contract manufacturers, raw material distributors and mills. That’s where there is real gold to be mined.