Blockchain for the manufacturing shop floor.

Blockchain is being explored to offer solutions to longstanding industry pain points such as:

• Supply-chain monitoring provides better transparency into complex, cross-industry supply chains where delays and sourcing limitations have an influence on production and profitability.

• According to World Trademark Review, materials provenance and counterfeit detection will help to lessen the $4.2 trillion effect of counterfeiting and piracy on the global economy by 2022.

• Technical design for long-duration, high-complexity goods where delays in providing updated engineering specifications or component supersessions might increase rework and cause final delivery to be delayed (e.g., aircraft)

• Identity management for when it is critical to know who is taking action and what credentials they have, such as attorneys, auditors, engineers, and technicians.

• Asset monitoring helps keep track of complicated and costly equipment moves or intermodal logistics among carriers.

• Quality assurance that can assess qualifications, quality, trends of defects, and so on across a manufacturing life cycle. • Regulatory compliance strengthened by indelible recordings of activities conducted, asset transfers shown by consensus — available in seconds. Blockchain-powered solutions can easily collect all of this information, offering considerable value to industrial organizations while also assisting in unlocking the full potential of other modern technologies such as augmented reality, IoT, and 3D printing.

A normal single-aisle commercial airplane has 300,000 or more components, whilst a superjumbo might have over 2 million. Even with developments in sensor technology, linked devices, data analytics, and cloud computing, there is still a lack of transparency (or real-time access) to information on which parts are on which aircraft (and in what configuration), when they were last maintained, and who repaired them. In reality, obtaining a comprehensive, real-time image of a complete fleet of aircraft—regardless of who may want such information (e.g., an airframer, an airline, or a critical supplier)—is nearly impossible.

The capacity of blockchain to establish a digital birth certificate for every item put in a plane and update it every time it is repaired or examined by a professional is critical. The data collected could include the tail number of the aircraft, the location of the part (GPS and/or slot location on the aircraft), the manufacturer, the permissibility of the part (e.g., supersession, "red tag" status, etc.), the identity of each technician with whom the part has interacted, and the location where the service was performed.

And a blockchain-powered system may provide the appropriate stakeholders with a view of that component from birth certificate to present day, while withholding data from others to prevent disclosing sensitive information or trade secrets.

For example, an airframe manufacturer or airline that implements such a solution may be able to see the condition, usage, installer, and manufacturer of all parts on each of its planes, whereas a parts manufacturer may only see aircraft in which its products are installed, but not those in which a competitor's product is installed. Nonetheless, even this level of transparency would provide remarkable insight into its genuine market share.

Other benefits for the aerospace industry:

• Maximize asset use. A real-time, continually updated ledger of each part's status and usage might assist minimize the amount of time spent on normal aircraft inspection and maintenance. It may help lower the amount of spare parts required by airlines.

• Increase the resale value of planes. Jet engines that are maintained to the manufacturer's requirements and feature only certified original parts command high secondary market values. The verifiability provided by blockchain might also increase the resale value of secondhand airplanes.

• Lower the cost of flight safety. An operator (passenger or freight) will not utilize an untrustworthy part. A part with no provenance can cost as little as the inventory carrying cost of that item until its history is discovered, or as much as an aircraft grounded due to a lack of a part that is accessible but not trusted. Knowing the history of a part in the moment you deal with it has the ability to lessen the effect of assuring safe flight substantially.

Potential benefits for other industries:

• Improve recall response. Identifying which cars have components subject to a recall can be a time consuming and resource-intensive task; the data is typically stored across multiple systems and requires reconciliation for accuracy to track products. By leveraging blockchain, vehicles with defective parts can be quickly and seamlessly identified—perhaps even before they’ve left the plant. And the faulty part’s journey from the supplier’s factory through final assembly can be traced.

• Strengthen inventory management. A blockchain powered solution can help automakers and their suppliers track bottlenecks in real time throughout the supply chain and enable better inventory planning.

3 Best practices:

1. Make the business case: Commit to new ways of working, frame the problem and the solution, and start small, then scale out To be sure, blockchain can be a powerful tool — but it’s not a cure-all. It’s important to make sure it’s a strategic fit. When there’s a need for different parties to share and update data, when time is of the essence and trust between parties is needed but intermediaries add too much complexity, then blockchain-based solutions can be very effective. But if none or only one or two of those types of challenges are present, then other solutions may be better placed. It’s also crucial not to assume that a blockchain solution will be able to “change the world” for a company or industry right from the start. It very well might, but the reality is that progress is slow going. Our survey findings reflect this mentality, across industries: Of the respondents to PwC’s 2018 Global Blockchain Survey who reported a blockchain project in the pilot stage, 54% said the effort sometimes or often hasn’t justified the result.

2. Starting small and experimenting with just a piece of the process that could ultimately be shifted onto a blockchain-based solution can help avoid frustration.

3. Build an ecosystem: Focus on a cooperative few, broaden your network, and work across the value chain Bringing together a group of stakeholders to collectively agree on a set of standards that will define the business model is perhaps the biggest challenge in blockchain. Participants have to decide the rules for participation, how to ensure that costs and benefits are fairly shared, what risk and control framework can be used to address the shared architecture, and what governance mechanisms are in place, including continuous auditing and validation, to ensure that the blockchain functions as designed.

In PwC’s 2018 Global Blockchain Survey, researchers found that 84% of executives across industries said their companies have had some involvement with blockchain, and 15% have live projects. The potential of blockchain-powered solutions to create value by empowering firms to overcome challenging problems is clear. Blockchains can increase transparency throughout supply chains, track the identity and credentials of key personnel and allow for more seamless audit and compliance functionality. Industrial manufacturing firms are already recognised as being out front in developing the technology - with respondents in its survey ranked as the sector second among industries leading the way in blockchain.

What about linking blockchain efforts in the industry to crypto?

Keys to begin your process-maturity analysis:

1. Identify common misconceptions about blockchain technology.

2. Articulate the challenges of predicting technological evolution and its impact on the economy.

3. Compare the emergence of blockchain technology to that of other general purpose technologies.

4. Discern the role of entrepreneurial strategy in a time of technological uncertainty.

5. Evaluate a business application of blockchain through the lens of a strategic framework.

6. Interpret bitcoin as a medium of exchange, store of value, and unit of account.

7. Explain the double-spending problem and how it is addressed by Bitcoin (as it will help you framing a mental model of the possibilities of your project)

8. Review the technical details of the Bitcoin protocol.

9. Determine from a Bitcoin transaction how the PoW algorithm works.

10. Compare the algorithms used to establish consensus in a blockchain to ensure its integrity.

11. Investigate alternative cryptocurrencies and how they might address the challenges presented by bitcoin.

12. Investigate the role of mining in bootstrapping Bitcoin's infrastructure.

13. Evaluate current issues with scaling the Bitcoin blockchain and how they can be addressed.

14. Identify situations where settlement and reconciliation are expensive today.

15. Demonstrate the cost of verifying the attributes of a transaction.

16. Determine how to build data integrity with costless verification.

17. Investigate (online and offline) complements to blockchain technology that may help to solve the last mile problem.

18. Compare applications of cheaper settlement and reconciliation across different industries

19. Recommend feasible solutions to the last mile problem.

20. Articulate the economic consequences of a reduction in the cost of networking.

21. Deduce how the nature of intermediation may change as a result of blockchain technology.

22. Analyze the risks associated with smart contracts.

23. Investigate the conditions under which relational contracts can be automated.

24. Discern the role of tokens in incentivizing the growth, operations, and security of a platform.

25. Assess the ability of case examples to capitalize on the reduction in the cost of networking.

26. Recommend a reward system for an incumbent adding a token to its ecosystem.

27. Analyze examples of tokens and decide which industry verticals are most promising.

28. Investigate the value that tokens may bring to a business's ecosystem.

29. Distinguish the role of tokens in funding blockchain innovations and platforms.

30. Deduce how challenges around securities regulation can affect the successful tokenization of an ecosystem.

31. Evaluate various tokens, ranking them in terms of capital raised and trading performance, and evaluate if it is worth investing in those projects.

32. Articulate how blockchain technology may interact with broader changes in digital platforms, AI, and the IoT.

33. Distinguish the capacity of blockchain technology to increase competition and lower barriers to entry.

34. Debate the impact of blockchain technology and incentives on the consumer privacy paradox.

35. Produce a primer for a blockchain-based solution to a business problem within your own context.

36. Reflect on the key outcomes of your program.