How Blockchain in Transforming Manufacturing Industry [2024]

How Today’s Large Scale Industries Leverage Blockchain to Scale Their Manufacturing Process

As a foundation for distributed ledgers, blockchain is an innovative technology in the current era that is packed with a wide range of use cases. Despite its initial speculations and concerns, industries are starting to adopt blockchain to leverage the technology’s transparency and underlying security.

Companies that deal with finance, legal services, design; basically, any businesses that deal with a large volume of transactions on a day-to-day basis are gradually investing in blockchain technology. In this article, we’ll look at some of the instances of how today’s manufacturing firms use blockchain’s potential benefits to support their global supply chain network.

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Early Stages of Adapting Blockchain

Large-scale manufacturing and supply chain is one of the most complex processes to understand from an end-customer perspective. With over billions of new products being manufactured, processed, shipped, and delivered daily, there are a ton of intermediaries that come into the picture, such as retailers, distributors, logistics providers, storage facilities, and so on.

In such an ecosystem, keeping track of crucial changes and the order journey becomes tedious and lacks transparency from a supplier/manufacturer’s point-of-view. In early 2008, when blockchain was introduced to the world as an underlying security layer for bitcoin transactions, many industry-leading manufactures and businesses witnessed the endless opportunities this technology could deliver.

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With that in mind, companies adopted blockchain in different levels of their manufacturing process to keep track of each and every change and provide a layer of transparency to upper management & customers. 

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Blockchain in Manufacturing – Use Cases

The following real-time examples should give you a broader understanding of how large-scale industries use blockchain in manufacturing and its different stages.

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1. Maintaining Assets in a Large Scale Industry 

For example, consider an aircraft manufacturing firm (such as Boeing) that delivers industry-leading aircraft for commercial buyers (i.e., Indigo Airlines). A manufacturing company such a complex and crucial product needs to maintain several technical manuals used by the buyers, technicians for any repairs, operations, and plenty of other intermediaries.

Such technical documentation needs to be regularly updated with detailed version history and information regarding who makes the changes and who access them. Not to mention, in most countries, certain aspects of aircraft manufacturing are government regulated, which could also mean that documentations are only accessible to restricted members of the manufacturer and buyer. 

2. Document Version Tracking

 Infosys is one of the Indian technology services providers who understood these challenges faced by their clients and adapted to blockchain in solving the transparency and trust issues for some of the world’s leading manufacturers. In the previously-stated example, blockchain can come in handy for maintaining several versions of technical publications.

Since the blockchain framework is a block-based distributed and indestructible network, even the smallest changes in a document can be tracked and made available to restricted users. The subscribers of that blockchain (i.e., the buyers) can access the relevant information and the documents via predefined tokens, thus securing the framework’s contents from the rest of the population. 

When bitcoin was introduced, technology enthusiasts thought blockchain was just a new logic that provided an additional security layer to bitcoin payment transactions. In an article published by the Harvard Business Review in 2017, they mentioned that tech companies such as IBM very soon realized the advent of a wide range of use cases presented by this unique technology.

Soon, companies started to experiment blockchain in manufacturing and different aspects of services, such as version control, Internet of Things (IoT), money laundering, and fraud detection in banking & finance, sharing critical information as medical data to patients, and so on. 

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Quality Assurance and Warranty Management

Blockchain-based solutions can revolutionize quality assurance and warranty management processes in manufacturing. By recording product information, including quality inspections, maintenance records, and warranty details, on an immutable blockchain, manufacturers can streamline warranty claims, reduce fraud, and ensure compliance. Consumers can verify the authenticity of products and access relevant information, enhancing their trust in the manufacturer’s commitment to quality.

Factors enabling a company to leverage Blockchain in Manufacturing

One common instance that is often overlooked in small-scale or startup manufacturers is how much the various parties that deal with making moving & delivering a product heavily depend on transparency. For instance, as explained earlier in the article, a manufacturing and supply chain process deals with a lot of intermediaries, such as suppliers, packers, and movers, etc.

Consider a product certificate, determining the state of quality check done at each hub has gone missing in transit. This might not be a critical issue for that logistics service; however, on a larger scale, the manufacturer and supplier loses credibility in the process. Additionally, there are several negative consequences, especially in the manufacturing industry, such as environmental impact, unethical manufacturing practices that compel transparency between the manufacturer, the customer, and everyone involved in between.

An unfortunate example is the 1996 Nike child labour scandal that exposed the company’s unethical practice of employing children in Pakistan’s manufacturing soccer balls. The businesses and customers who depend on these manufacturers should be provided with transparency to understand that the product they use daily is not made by endangering another human being. 

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Blockchain enabling Manufacturers to gain their customer’s trust

There are some areas where blockchain in manufacturing can be of great help in gaining customer’s trust. For example, verifying the integrity claim (such as FSSAI) by manufacturers is often considered an expensive process in large-scale industries and requires proper scrutiny.

Companies are manufacturing food products that go through various rounds of quality and integrity check and use blockchain to maintain an identical copy of each node (changes) in the framework. This enables product inspection and auditing in real-time, hence decreasing the time and cost consumed. Such a level of transparency makes network activities and other operations highly visible to the relevant authorities, thus automatically establishing trust. 

Asset tracking is one of the other important entities in any manufacturing process. Keeping track of the moving products and their associated components, such as the product’s paperwork can become a tedious nightmare if there is no proper tracking mechanism in place.

Manufacturers are starting to use blockchain to keep track of their precious goods and also to avoid shipping illegal or stolen goods as part of their production. Leveraging this technology, the company has created an indestructible sense of ownership as and when the product is made and moved out of the manufacturing warehouse. 

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Enhanced Supply Chain Visibility and Traceability

Blockchain’s distributed ledger technology enables manufacturers to achieve end-to-end visibility and traceability throughout the supply chain. By recording every transaction and interaction on an immutable blockchain, manufacturers can securely track the movement of raw materials, components, and finished products. This enhanced visibility facilitates proactive quality control, reduces the risk of counterfeit products, and helps identify bottlenecks for improved efficiency.

Smart Contracts for Streamlined Operations

Smart contracts, self-executing agreements based on predefined conditions, offer significant potential for streamlining manufacturing operations. These contracts can automate processes such as procurement, order fulfillment, and payment settlements, reducing manual errors and enhancing operational efficiency. Manufacturers can leverage smart contracts to establish trust and execute transparent transactions with suppliers, distributors, and customers, resulting in cost savings and accelerated time-to-market.

Smart Contracts for Streamlined Operations

Smart contracts, self-executing agreements based on predefined conditions, offer significant potential for streamlining manufacturing operations. These contracts can automate processes such as procurement, order fulfillment, and payment settlements, reducing manual errors and enhancing operational efficiency. Manufacturers can leverage smart contracts to establish trust and execute transparent transactions with suppliers, distributors, and customers, resulting in cost savings and accelerated time-to-market.

Use of Blockchain in Maintaining Financial Assets

Financial entities are another area in manufacturing that requires the lion’s share of manpower and effort. Companies that produce heavy machinery like automobiles, power grids tend to repair their production equipment more often. Since the machines are basically running 24×7, they are susceptible to wear and tear and need to be replaced or repaired for uninterrupted quality production.

For instance, in early 2018, Tesla bought millions of dollars worth of AI-based robotic arms for the sole purpose of fast-tracking the electric car manufacturing process and making it available for the end-consumer as soon as possible. Tracking these purchases and investments is a major challenge.

Even though companies tend to have a strong finance team that oversees those spendings, it is important to maintain those records. This is an area where blockchain in manufacturing comes into the picture and can be handy in maintaining blocks of information regarding each purchase, accessible by the top management and auditors for industry regulation.

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Integration with Emerging Technologies

By continuously monitoring the performance of machines through IoT sensors, the data can be analyzed by AI and ML algorithms to detect patterns indicating potential malfunctions or breakdowns. This proactive approach allows manufacturers to schedule maintenance activities in advance, minimizing unplanned downtime and maximizing productivity.

Integrating blockchain with IoT, AI, and ML in manufacturing means using smart sensors to collect data, storing that data securely on a blockchain, and then letting smart algorithms analyze the data to find ways to improve operations. This combination helps manufacturers make better decisions, optimize the process of production, and ensure that everything runs smoothly.

Overall, the integration of blockchain with emerging technologies presents exciting opportunities for the manufacturing industry. It empowers manufacturers with valuable insights, efficient processes, and increased productivity, ultimately leading to better products and happier customers.

Collaborative Manufacturing Networks

Blockchain in manufacturing industry enables the creation of decentralized, collaborative manufacturing networks. Manufacturers, suppliers, and service providers can securely share data, including designs, specifications, and production schedules, on a blockchain. This collaborative approach fosters real-time communication, facilitates seamless coordination, and promotes innovation among stakeholders. Manufacturers can leverage this network to optimize production capacity, reduce lead times, and explore new business models.

Sustainable Supply Chain Management

With increasing emphasis on sustainability, blockchain for manufacturing offers manufacturers an effective tool for sustainable supply chain management. By integrating environmental, social, and governance (ESG) data into the blockchain, manufacturers can track and verify sustainable practices at each stage of the supply chain. This transparency helps meet regulatory requirements, enhance brand reputation, and enable consumers to make informed choices based on verifiable sustainability credentials.

Opportunities in Blockchain and Manufacturing

Blockchain in manufacturing is no longer a new concept since it is already being used to make our day-to-day consuming products. Understanding the technology’s importance and its long term susceptibility, not only manufacturers but most of the companies, large-scale industries with a decently funded R&D department is continuously looking for ways to adopt blockchain into their operations.

The scope for this technology will only tend to expand in the forthcoming years since consumers are starting to demand more transparency from the manufacturers. 

The adoption of blockchain in manufacturing continues to evolve, offering innovative solutions to address industry challenges and drive operational excellence. From supply chain visibility and traceability to streamlined operations through smart contracts, blockchain provides a foundation for secure, transparent, and efficient manufacturing processes.

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