Will Blockchain Solve the Pain Points of Manufacturing?
We're finally in a position to see the real-world value of blockchain to those not investors.
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We're finally in a position to unpeel the layers of hype and scams and see what lies beneath when it comes to the real world value of blockchain, particularly to those not investors. Blockchain use cases in the industry are slowly moving from pilots to partnerships. Blockchain darling IoTA recently announced a partnership with Jaguar-Land Rover to install "smart wallet" technology into Jaguar-Land Rover vehicles for the purpose of tracking driver mobility data. Bumble Bee Foods is using the SAP Cloud Platform Blockchain service to trace the journey of yellowfin tuna from the Indonesian ocean to the dinner table. Starting in September of this year, Walmart and its Sam’s Club division will require suppliers of fresh, leafy greens to implement real-time, end-to-end traceability of products back to the farm using a digital ledger developed by IBM.
Another company with a compelling use case for blockchain tech is SyncFab. The Silicon Valley-based company aims to harness technologies and connect with the IoT and the IIoT to optimize transactions between purchasers and manufacturers using high-quality data that would streamline supply chain processes. What is interesting to note is the audience they target are fragmented SME suppliers who comprise the lion share of the manufacturing supply chain for large OEMs like Airbus and BMW, and that audience is totally new to blockchain and crypto. Yet, it is critical to what is increasingly touted as it's #1 use case by Deloitte and others so converting and educating that audience is the key to unlocking its potentially greatest value.
SyncFab began as an online Design-For-Manufacturability platform evolving to a business-to-business supply-chain and IoT Machine Learning Data mobilization platform matching industrial parts purchasers with a growing network of machine shops and advanced manufacturing facilities. I spoke to CEO and co-founder Jeremy Goodwin who explained the problems they are trying to solve:
Traditionally, manufacturers have to hire procurement brokers and agents to search for specific parts and pay out fees. As Jeremy explains:
"Manufacturing is driven by details and specifications, making clear and precise communication vital between purchasers, manufacturers, suppliers, and logistical partners along the supply chain. Miscommunication can lead to delays within the production process, drastically increasing costs when mistakes happen."
Syncfab has created a platform called the Smart Manufacturing Blockchain. The platform compares various manufacturer’s order histories, machine capabilities, and previous product designs to a purchaser’s project criteria.
Smart contracts between trusted parties build a network of purchasers and manufacturers by sharing their past performance, reliability, and on-time delivery. The use of tokens then enables P2P payments and the (soon) the means to authenticate and buy, directly linking purchasers to the manufacturer, expediting procurement and production without brokers or banks.
The other issue that Syncfab is able to solve is certification. Jeremy explained:
"Every part that goes into a car, every part that goes into a plane involves certifications. Where it was made, all the specifications that were engineered that go into that part in terms of the materials being used, making sure that it's mineral conflict certified, ensuring that it's aviation industry certified, making sure that it's ISO quality certified, and where it was needed at a particular time for a particular supplier etc."
This extensive documentation needs to be stored securely and the certifications need to be verified and stored in a secure place accessible to those authorized. A smart contract makes this information trackable and traceable for each particular part.
A Problem and a Solution, But Where Are the Users?
While we all know blockchain promises a lot, how easy is it to convince people to change their ways, especially those who are already behind on their digital transformation efforts? Jeremy notes that the benefit of their platform is that:
"We actually don't require them to make any changes to their current behavior whatsoever. Basically, just by running the business, we're just grandfathering them into this new regime that we've launched in that we continue to build and develop it. So, we're doing all the heavy lifting and the hard work for them by basically just bringing business to their existing supplier base."
SyncFab’s customers already include top 50 industrial manufacturers in the Northern California area. SyncFab collaborates with federal and municipal government initiatives in public-private partnerships to advance civic innovation and economic development. In 2016, SyncFab was recognized as a member of the White House-appointed and Department of Energy-sponsored Clean Energy Smart Manufacturing Innovation Initiative within the Department of Commerce's National Network of Manufacturing Innovation.
Give the blockchain space is so fractious and the manufacturing space so traditional, I was curious what advice Jeremy would give to a startup wanting to enter the space. He advises:
"Do your homework. Make sure you're working with the proper team and you understand the technology that you're working with. Be prepared budget wise because it's not cheap. The manufacturing industry is all about cost savings and product increasing productivity at the end of the day so that we can drive these shorter life cycles and have more rapid product development. And so, either work with someone who already has an existing solution or just make sure your finances are in order."
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