Listen to this: According to a report by Zion Market Research, global blockchain in the electronics manufacturing market “will reach USD 307 Million By 2024.” It’s a tremendous number showing vast potential for blockchain applications in this niche segment. How is it possible?
Blockchain is more than a buzzword. It’s a real and growing technology. Applications span the spectrum. If you’re new, you can learn the basics of blockchain technology quite quickly — but in short: blockchain is digital proof. Proof of something happening in the digital world at a certain time.
The electronics manufacturing industry can use this type of proof in a number of profitable ways. Let’s examine a few of the more prominent use cases.
1) Supply Chain
Proof on a blockchain consists of an immutable record that events happened at a certain time. Electronics manufacturers can use this record of events to make their supply chain more efficient and effectively preserving records of suppliers and the parts they supply.
A recent article in ZDnet explains:
“As records along the chain are stored and distributed across nodes in the network, it is very difficult to falsify records, making the blockchain a more secure and transparent way to record transactions and service records. This, in turn, gives blockchain applications outside of cryptocurrency exchanges.”
Take, as an example, the Chipotle E. coli outbreak in 2015. Their food chain had serious trouble tracing the source of the bacteria through all their suppliers. Since finding the source of contamination became difficult, Chipotle could not immediately stop the spread of contamination.
Similarly, a manufacturer of electronics relies on dozens if not hundreds of vendors for parts. If a new device keeps getting returned due to burnout of a component — it is crucial to find out which supplier sold that component. By using blockchain, similar issues can be resolved and eradicated quickly.
Gary Brooks, Chief Marketing Officer of global manufacturing and supply chain technology company Syncron goes on to say:
“For manufacturers specifically, blockchain could help mitigate similar risks,” the executive noted. “Multiple parts and pieces comprise large pieces of equipment, and with networks and suppliers around the world, blockchain provides a way to see every part in the supply chain in real-time — and identify problems before they become widespread.”
2) Smart Contracts
Smart Contracts were first envisioned and implemented by Vitalik Buterin — co-founder of the Ethereum blockchain.
A smart contract is simply a contract that runs on a blockchain — giving the digital contract the qualities of being immutable proof that an agreement was reached and executed at a certain time. Electronics manufacturers can benefit from smart contracts on the blockchain when they enable the automation of processes in a secure way.
Mike Alperin writes in an issue of TIBC:
“In pre-production, manufacturers may implement blockchain solutions for Collaborative Planning, Forecasting, and Replenishment (CPFR). These systems monitor inventory levels, enabling suppliers to replenish supplies before they run low. The expensive, proprietary B2B networks used today could be replaced with blockchain as the common sharing protocol, using non-proprietary or public networks.”
Do you see what is happening here? Electronics manufacturers — rather than relying on legacy B2B networks and trusting people to replenish supplies — can instead rely on smart contracts operating on a trustless blockchain to replenish those supplies.
And that’s only one use-case. Mr. Alperin goes on to write about another compelling use-case:
“During production, a manufacturing process machine can be registered on a blockchain with a unique identity; its performance and maintenance history can be recorded. A maintenance service provider could then be automatically notified, via a smart contract, when a predictive maintenance alert is written, allowing repair of machines before they fail.”
It’s easy to see that avoiding machine breakdowns — and their expensive downtimes — before they occur is a compelling use-case that directly affects the bottom line of any electronic manufacturing business.
3) Entirely new innovations
Blockchain will open the door to entirely new innovative use cases. That’s right — point #3 is, in fact, multiple use-cases.
There are more than 3 use-cases for blockchain tech in the electronics manufacturing industry. They cannot all be named because they are constantly evolving and growing. And that’s my point: blockchain will inspire new uses.
How about the fact that electronics suppliers can combine blockchain with IoT sensors — put them on shipping containers — and thereby provide a tamper-resistant record of shipping conditions.
Why? Well, let’s say that certain chemicals and equipment need to be shipped at a specific temperature and humidity tolerances. These blockchain and IoT sensors can help verify that those tolerances were not exceeded during shipping.
This innovation combines the above points: supply chain management and smart contracts AND new IoT sensors. For precision electronics which must be manufactured with chemicals and equipment shipped under specific conditions — this innovation is quite the breakthrough.
Let’s extend this further. The identity and materials in components and subcomponents of electronics may be put on a blockchain to verify compliance with laws and regulations imposed by environmental and health standards.
No more fudged paperwork or skeptical inspectors. One look at the blockchain and they’ll be convinced.
Another interesting use case is the prevention of counterfeiting. An article by TIBCO states:
“In the distribution stage, customers could search the ledger for a product’s complete history, reducing counterfeiting and solidifying the origin of properly sourced goods. When a faulty product is identified, the manufacturer may search the ledger to quickly locate the supplier or bad test results and alert all receivers of the defective product.”
The possibilities can be quite endless, really.
Remember, a smart contract on a blockchain includes the automatic enforcement of obligations. This is the very definition of “trustless” — the human factor is eliminated — reducing the risks of error, fraud, or manipulation. Middlemen are eliminated — reducing third-party costs and building trust directly between business partners.
Finally, since smart contracts on a blockchain are automated — this means fewer manual steps, processes becoming faster, more efficient, cost-effective and less broken due to human error.
In the end, it’s really no wonder that blockchain in the manufacturing market will reach $307 Million USD By 2024.