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Blockchain in manufacturing

Why APAC manufacturers are recruiting experts in blockchain

According to Deloitte’s 2020 Global Blockchain Survey, 54 per cent of executives believe blockchain is over-hyped. Yet the same survey clearly shows that more companies in the Asia Pacific region are investing in this disruptive technology. Here, John Young, APAC regional sales manager for automation parts supplier, EU Automation, looks beyond the hype to assess the potential of blockchain in manufacturing.

Blockchain, the distributed ledger technology that underpins cryptocurrencies like Bitcoin, is now over a decade old. It’s long been regarded as a disruptive technology — something with the potential to fundamentally transform how industries operate, not simply add to existing ways of doing things. However, blockchain has also been dismissed as overhyped and unlikely to make its full impact felt for many years.

According to the most recent blockchain survey by Deloitte, while many share the view that blockchain is overhyped, it is clear the technology has now moved beyond the boundaries of experiment and is finding practical applications. Not all those applications are immediately successful and justify the effort invested, but the survey is clear that industry leaders no longer need persuading of its potential. The APAC region ranked highest among the regions where companies are recruiting employees with expertise in blockchain.

Blockchain made simple

Anyone who has encountered a discussion of blockchain before will be aware of the difficulties in explaining what it is, even for those who have some familiarity with its uses. At its most basic level, blockchain is distributed ledger — a database that is consensually shared by all participants or nodes on a network.

As a record of transactions, this type of database is fundamentally different from a bank because it is decentralised. You remove the intermediary or central authority that validates transactions and instead all the participants or nodes must consensually accept or validate any changes to the database. Each participant has a synchronised digital copy of this database.

This consensual process makes tampering with the blockchain very difficult, albeit not impossible. The name blockchain derives from the fact that it is essentially a digital chain of blocks. The blocks are added together sequentially, with each one having a unique cryptographic signature, guaranteeing a single immutable truth.

This immutability is one of the defining characteristics of blockchain and, for its advocates, a key selling point. It is therefore ideally suited to transactions where high levels of trust and traceability are required but relying on a central authority or other intermediaries would be too costly or complex.

Blockchain has become synonymous with Bitcoin, and the financial world is where it has had the most impact. Yet although the financial sector has led the way in its adoption – and its creation of media headlines – blockchain is finding applications in many different sectors. For example, it has been used to help distribute aid to Syrian refugees in Jordan.

Manufacturing possibilities

Manufacturing is one sector where blockchain is set to make an impact. It can improve supply chain visibility, reduce counterfeiting, and serve as an enabler of other key technologies like the Internet of Things (IoT) and 3D printing. According to the 2018 PwC Global Blockchain Survey, industrial manufacturing is already recognised as a sector that is leading the way in blockchain use.

A key area where blockchain can provide benefits is supply chain management. Consumers increasingly demand assurances about the provenance of products and the materials from which they are made. Blockchain can enhance supply chain visibility by providing an immutable record of every transaction in the supply chain. Armed with this information, participants in the database can see where a part originated and trust that the record they are seeing has not been tampered with.

For manufacturers, the potential benefits go further. This transparency and greater trust reduces the risk of counterfeiting, aids the diagnosis of defects and lowers inventory costs. It can also enhance the aftermarket value of assets, as potential buyers have a trustworthy record of all the parts and the history of their replacement or maintenance.

Imagine, for example, automation equipment in a laboratory. This equipment could contain myriad parts in different possible configurations. Keeping a record of each part, its origin, service history, and when it will become obsolete is a tricky business using traditional obsolescence management methods.

Having an immutable record of the provenance of every part, and a digital certificate that is updated every time a part is serviced or repaired could carry immense benefits. With blockchain, you could order replacement parts from an automation parts supplier like EU Automation when you needed them, rather than having to hold excess stock in inventory.

Paired with IoT, blockchain can also help detect the origin of defects in parts. For example, IoT sensors might be able to record the temperature that parts were stored in transit, and blockchain would provide an immutable record of this. The parties in the transaction would have fewer disputes over what went wrong, as the blockchain provides a universal truth.

In the last year, an increasing number of industry leaders were converted to the potential value of blockchain. Although the technology may have been overhyped, it is now clear it has left the realm of theoretical possibility and will be a key enabler of supply chain solutions for more and more industries in the coming months and years.

About EU Automation: EU Automation stocks and sells new, used, refurbished and obsolete industrial automation spares. Its global network of preferred partner warehouses, and wholly-owned distribution centres, enables it to offer a unique service within the automation industry, spanning the entire globe.  It provides worldwide express delivery on all products meaning it can supply any part, to any destination, at very short notice.

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