A Letter from the Editor
Over the last several months, we interviewed 20 sources around the world to decipher what blockchain is all about and how it is likely to impact manufacturing.
These days mirror the late 1990s when the Internet evolved to widespread use. The topic bedeviled many at the time, but others—in banking and entertainment, for example—who quickly learned the new lingo and jumped at the chance to explore the potential of the World Wide Web benefitted greatly.
Our 15-page special report, “In blockchain we trust” (coming in the May issue of Smart Manufacturing and available on SME.org), takes pains to help you become fluent in blockchain—so that you can get in on the ground floor of what is sure to be a sea change in the way manufacturers interact with suppliers, for starters.
A quick primer: Blockchain is a decentralized register made up of endless, connected cryptographic blocks. Data is stored, time stamped—and automatically distributed to many servers at once. Security is a key value. Blockchain is tamper evident: Any change is immediately apparent to all involved. Where multiple entities are involved, as on a multiple-tier manufacturing supply chain, blockchain creates a record of every transaction. If someone adds to the data, the widely distributed ledger shows when and where that addition happened.
Blockchain, which some call the “ledger of ledgers,” propelled the cryptocurrency Bitcoin to success.
“As we started to look at blockchain, we realized its potential to go way beyond Bitcoin,” IBM’s Krishna Ratakonda said. “Blockchain acts as a common source of truth, processing, organizing and connecting data in a way that was not possible before. People have started to sit up and notice.”
ITAMCO’s Joel Neidig marveled at the size of the market for blockchain. “Every technology leader—IBM, Microsoft, Amazon—is going to be into it. Blockchain will eventually become a technology like the Internet,” which is now indispensable for business.
How the connectivity and the software behind blockchain is applied is “where the solutions will happen,” he added. “The key is developing those first use cases and filling those out.”
On that front, we detail work on blockchain happening inside Akeoplus, IBM, MxD (formerly called DMDII), Intel, ITAMCO, KPMG, L’Oréal, Microsoft, Dow Chemical, nScrypt, Rockwell Automation, SAP and Siemens.
SAP is one of the most aggressive firms we interviewed. It piloted blockchain with 15 pharmaceutical firms, SAP’s Hans Thalbauer said.
The No. 1 use case for blockchain is all around track-and- trace: knowing where a product is and how it is holding up, he asserted.
In the six-month pilot that ended in May 2018, SAP did one billion transactions on blockchain, SAP’s Gil Perez said.
One lesson the SAP team learned: For drug companies, speed was less critical on the production side and more critical when unused drugs were being returned.
“The pharma use case we are addressing is prescription drugs’ ‘sellable return’,” Perez said. “As such, on the production side it didn’t matter if it takes another two seconds or 10 seconds to write the data to blockchain.
“Yet the performance is critical when the returned drugs are moving on a conveyer belt,” he added. “The system needs to make a split-second decision on how to sort the drugs after reading and verifying the information from the blockchain.”
SAP also recently partnered with Intel to experiment with blockchain.
“In the high-tech industry, it’s again the track-and-trace scenario: They are tracking their products, making sure that the components going into the finished product are serialized and can be matched and mapped,” Thalbauer said.