Blockchain’s Factory of Trust

Though blockchain is still in its relatively early stages, manufacturers are playing around with its secure recordkeeping capabilities to create new business propositions. Validating 3D-printed airplane parts is one example.

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If you’ve heard of blockchain, you might know it better for its relation to the digital currency Bitcoin. But the transaction validation method is gaining traction in manufacturing as well, helping to combat counterfeiting, authenticate shared files, track and trace products through the supply chain, and more.

If you haven’t heard of blockchain, it’s essentially a secure, unalterable method of recording and sharing transactions. Based on distributed ledger technology, it records information across a peer-to-peer network. Approved data is entered into the ledger as a collection of blocks and stored in a chronological chain that cannot be altered. Though originally developed for Bitcoin, the foundation of the technology can be applied to the manufacturing supply chain to create a similar system of trust.

“The value of blockchain is that there’s no delete or edit. In case there’s any kind of manipulation or changes to a file, you can compare it and make sure whether you have the original or not,” said Gil Perez, senior vice president of Internet of Things (IoT) and digital supply chain for SAP. “It’s immutable; that is a very important point.”

SAP, known primarily for its enterprise software, started working with blockchain about a year and a half ago, focusing on what implications it has for the supply chain. SAP launched half a dozen pilots with a variety of organizations.

“We’ve kind of played around with it,” Perez said. In May, SAP launched Leonardo, its digital innovation system that helps customers leverage future-facing technologies. Blockchain lies underneath that platform. “There are nine companies that are now collaborating with us around specific products.”

At SAP Leonardo Live last month in Chicago, Perez moderated a panel discussion to show off a couple of those collaborations, explaining the current state of blockchain and the road ahead. “We’ve seen unbelievable demand,” Perez said of SAP’s blockchain exploration. “On a daily basis, we’re getting demand from various companies wanting to engage.”

Moog is one example of a manufacturer that has been able to reinvent itself with the capabilities behind blockchain technologies.

Moog is an aerospace company based in East Aurora, N.Y., that makes systems centered around motion control and actuation. In late 2015, Moog acquired a majority ownership in metal additive manufacturing company Linear Mold and Engineering, and started thinking about what the acquisition could enable for its business. The big value proposition was the ability to create parts where they’re needed, when they’re needed.

“We can sell a part to a customer in Virginia that has a plane broken down in New Zealand,” said Jim Regenor, business unit director, transformative technologies for Moog. “They take it off the printer and put it in the airplane.”

There are plenty of parties around the world with 3D printers. And the digital files needed to build parts with those printers are also easy to share. What wasn’t so easy was the ability to ensure the security and validity of those files. “In the aircraft business, we have to have provenance,” Regenor said. “Blockchain allowed us to come up with the provenance.”

Moog identified blockchain as a means to counterfeit mitigation, providing the ability to track and trace a design through the full product lifecycle. This enables Moog to sell not only physical parts but also digital files to customers so that they can create the physical parts themselves, Regenor explained. “Blockchain creates an environment of trust within the supply chain,” he added. “We get a better view than we have today.”

Extending a relationship that goes back to 2001, SAP is working with NetApp to help secure the data collected, analyzed, archived and transferred from the edge to the cloud, from cloud to cloud, and between any number of other entities, commented Roland Wartenberg, senior director of strategic alliances at NetApp.

“Blockchain is a fairly new topic for everyone,” Wartenberg said, pointing to its usefulness in addressing government requirements around data security and compliance. “Blockchain is the next big thing to make it happen. It’s a new way of business processes in this digital transformation world.”

SAP finds itself in a position to evangelize blockchain, said Torsten Zube, vice president and head of blockchain for SAP. “Blockchain enables the possibility of a highly digital network and a very trustworthy chain,” he said. “We can get rid of documentations. Having a piece of paper that proves ownership—why do we need that?”

Though blockchain might not always be the right answer (a transaction chain with only a couple nodes, for example, will not have all the advantages), the technology has huge potential, Wartenberg commented. “The first time I bought a car [in the U.S.], it took four hours to get through the process. The contract was so long,” he said. “Imagine replacing it with a smart contract—maybe a fingerprint with your iPhone. It enables the dealer to offer new services that maybe aren’t even available yet. We have to rethink this whole process—how to replace this paper-based selling process.”

The impetus for blockchain really has to start from a business perspective, Wartenberg added. “That’s why SAP is so interested in this topic.”

Moog’s long-term vision is to enable its customers to decide when and where they want to convert a digital file to a physical part, Regenor said. “That’s the end goal, to create this ecosystem,” he said. “That’s the value-add to the customer—no warehousing, no transportation, no inventory, etc.”

Regenor sees even further capabilities enabled by blockchain technology—a fundamental shift in the whole concept of an industrial factory, in fact. Unlike Henry Ford, who didn’t trust others to make the brakes, axles, etc., for his cars, blockchain “allows you to take trust back outside the four walls,” he said. “It changes what the factory looks like. People can group together around projects. They can work on a project and then leave.”

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