Everyone thinks that Boeing produces a Boeing 787 aircraft, how many suppliers are included in it?
According to public reports, the 787, known as the “Dream Passenger Aircraft”, was the longest-running aircraft in Boeing’s history. It was delayed from 2008 to delivery in 2011, and eight delays were announced in the middle.
A key reason for the delay was that on the 787 projects, a large amount of work at Boeing headquarters was outsourced to global suppliers, and Boeing itself was only responsible for about 10% of the production process – the tail and final assembly work. Boeing 787’s complex global supply chain, once one of the links fails, can lead to repeated delays in delivery.
In the process, Boeing only has direct contact with 23 Tier 1 suppliers worldwide. That is to say, the remaining 90% of the production process, Boeing, cannot be regulated and controlled, can only rely on the supervision of sub-subcontractors by Tier 1 suppliers.
In the face of the raging blockchain technology wave, which industry uses the blockchain technology the fastest? The answer is – manufacturing. For China, in the era of Industry 4.0, how can the blockchain help the manufacturing industry? The Silicon Valley Insight Institute tried to analyze and explore this article.
Manufacturing: Fastest adoption of blockchain technology
The famous statistical website Statista conducted surveys of more than 1,000 senior executives from seven countries including China, the United States, Britain, France and Germany from March to April this year. The statistics on the proportion of blockchain technology used in different industries are now counted.
The 1,000 senior executives are primarily involved in 10 industries including consumer goods and manufacturing, healthcare, Bioscience, automation, and TMT.
According to Stastata data, blockchain technology was the fastest in consumer goods and manufacturing as of April 2018. According to the blockchain research phase (Awareness), concept testing phase (Experimenting), production application phase (Production), about 74% of respondents from consumer goods and manufacturing said that their company is in the blockchain The test phase or production phase of technology development (29%+45%) has the highest proportion of blockchain technology in various industries.
Not only is the Stastata data, Deloitte’s “2018 Global Blockchain Survey Report” (hereinafter referred to as the “Deloitte Report”) shows that most industries are still in the research and learning stage of blockchain technology. However, from the perspective of adopting blockchain technology in different industries, nearly 30% of consumer goods and manufacturing respondents indicated that their companies are already in the application stage of the blockchain, that is, blockchain technology has begun to follow The company’s existing business combination. The next two industries are life sciences (23%) and technology/media/telecommunications (20%).
Addressing pain points: supply chain opacity, lack of supervision
Why is manufacturing the fastest industry to adopt blockchain technology? This is related to the characteristics of the industry itself.
As the Boeing case at the beginning, Boeing has become a typical representative of the global supply chain in the era of globalization. Boeing’s global supply chain strategy will undoubtedly allow Boeing to focus on core business such as aircraft design and development, assembly, supply chain management, marketing and branding, and reduce Boeing’s supply costs.
However, in the context of the global supply chain, there are also hidden dangers. That is: once the management of the supply chain is improper, it will cause delays in shipments, and even more serious cases of fake goods and intellectual property infringement.
If the blockchain technology is applied to the manufacturing industry, what are the pain points in the manufacturing industry?
1. Respond quickly to production needs and make the supply chain predictable;
The predictability of the supply chain is a very critical business challenge for manufacturing. Most companies have little information on their secondary and tertiary suppliers, which is exactly what Boeing used to do with only Tier 1 suppliers. . Keeping the end-to-end supply chain transparent and visible will help many companies on the chain quickly understand the production process, from raw materials to manufacturing, testing and finished product chains, providing new insights into business operations, risk and sustainability. .
Not only that, but other participants in the chain also include the government. As Boeing’s senior systems engineer Robert Rencher revealed, Boeing has the complete source details of each component through the blockchain. This information can then be accessed by every manufacturer, aircraft owner and maintainer, and even government regulatory agencies in the manufacturing process.
In addition to real-time information exchange, blockchain technology can even leverage smart contracts to enable order release, procurement, and faster response to production needs. For example, a vendor issues a smart contract on a blockchain platform that specifies product definitions, quantities, prices, availability dates, and shipping and payment terms. The manufacturer automatically searches for the smart contract in the blockchain that meets its requirements, verifies the quality and timeliness of the seller based on the data on the chain, and then completes the transaction without the need to manually generate a purchase order. This helps reduce human intervention and ensures faster payment resolution.
In the Deloitte Report, when interviewed industry executives were asked about the “blockchain’s advantage over existing systems,” the highest percentage of answers (32%) were faster. This shows that companies want to use the real-time information exchange function of the blockchain to accelerate business processes and achieve higher operational efficiency.
2. Transparent and traceable production links to combat fraud, counterfeit products and protect intellectual property rights;
According to Cognizant, a technology consultancy, global supply chains typically involve thousands of organizations, and manufacturers and other raw material users face $300 billion in supply chain fraud and disclosure each year. The main reason is that determining the supply chain is an extremely slow and expensive process that requires a combination of instruments, email, phone calls and on-site visits.
In addition to supply chain fraud, the Organisation for Economic Co-operation and Development (OECD) estimates that there are nearly $500 billion in pirated goods per year. In the automotive industry alone, counterfeiting costs $12 billion in sales each year, affecting up to 200,000 jobs. It can be seen that when the manufacturing industry joins the blockchain technology, the goods and processes are more transparent, traceable, and the blockchain cannot be changed, which helps to combat counterfeit products and protect intellectual property rights.
Therefore, in the increasingly complex manufacturing supply chain, more comprehensive and transparent regulatory technologies are needed to provide industries with high efficiency, reliability, seamlessness and predictability. The traceable and transparent features of blockchain technology are closely integrated with every aspect of manufacturing.
Case study: from supply chain to food safety
In addition to Boeing, there are many other big companies in the global community trying the blockchain. Next, the Silicon Valley Insight Institute will analyze the use of blockchain technology in the global and Chinese manufacturing industries.
1. The world’s largest container shipping company adopts blockchain
Participants: Maersk, IBM, the world’s largest container shipping company
Pain point: Traditionally, the information system of the international shipping industry uses paper legal documents, and electronic data is transmitted by electronic data interchange (EDI). Although EDI is a 60-year-old technology, electronic data does not represent real-time data. Paper documents are prone to shipping delays due to file errors or information asymmetry.
Specific projects: In January 2018, Maersk teamed up with IBM to launch the TradeLens platform. In this cooperation, Maserk is the world’s largest container shipping company, providing professional integrated arrangement services. IBM is a technology giant and provides blockchain technology.
At present, 94 organizations have joined the TradeLens platform, with approximately 234 estuaries, 20 operating terminals established in major ports in Singapore, Manila, Hong Kong, Sydney, Rotterdam, Philadelphia, etc. More than 154 million events are recorded in TradeLens. The blockchain network.
Through blockchain technology, TradeLens enables real-time information sharing, secure file transfer and full cargo tracking between buyers, sellers and intermediates. All interested parties in the supply chain can sort the ledgers through the licensed blockchain, and view the tracking information of the arrival time of the goods and customs clearance, commercial invoices and bills of lading in near real time. More specifically, tracking a batch of goods in the past may require 10 people to work with 5 people before and after, and now through TradeLens, only one person can do it in one operation.
Extended case: Another interesting case in the blockchain + supply chain application that IBM is involved in is diamond identification. IBM offers “Blockchain as a Service” based on the IBM cloud, and the UK startup Everledger focuses on tracking and identifying diamond jewelry. More than 2 million diamonds have been password certified on the blockchain. Prior to this, Everledger also used Ethereum (public chain), Eris Industries (private chain) and so on. The IBM service used today is based on the Hyperledger alliance chain.
2. GE: Blockchain control 3D printing finished products are not “dropped”
Participant: GE (General Electric)
Pain points: As 3D printing plays an important role in manufacturing, such as print proofing and rapid prototyping, designers and inventors can create new products anywhere, but need to “borrow” 3D printing plant equipment. The factory has print problems such as “damage” of the sample. Designers can find printing devices faster, without leaking data from printing products to device vendors. There are problems such as lack of mutual trust, tracking of printed records, and protection of intellectual property rights.
Specific projects: In July of this year, the US Trademark Patent Office announced GE’s patents on 3D printing. GE is using blockchains to validate and validate 3D prints in its supply chain. Because the print manufacturer replaces the fine parts, it is sometimes difficult for the receiving end user (such as the designer) to verify that the printed parts are accurately generated and will not be replaced. GE believes that the use of blockchain technology can provide pedigrees for all 3D parts manufactured by GE, from design to production, as well as certification of materials, machines and processes used to ensure that there is no possibility of counterfeiting.
Extended case: Like the US Navy, since June last year, it has begun experimenting with blockchain technology to remotely manage 3D printers and projects. Today, the US Navy has more than 40 projects for 3D printing. This is because 3D printing saves money and drastically shortens the lead time, especially for offshore work.
3. China: Wal-Mart starts supply chain management, 2 seconds traceable pork
Participants: IBM, Wal-Mart, Jingdong, Tsinghua University
Pain point: The food supply chain is too long. Once a problem occurs in a certain link, it is easy to cause food safety accidents.
Specific projects: In December last year, the four jointly launched China’s first safe food blockchain traceability alliance. The project is operated jointly with Jingdong, and the National Engineering Laboratory of E-commerce Transaction Technology of Tsinghua University participates in the guidance. In this collaboration, IBM is responsible for providing blockchain technology, and Tsinghua University is responsible for providing key technologies and guidance on food safety in China.
Under the cooperation of the Quartet, the use of blockchain technology is expected to achieve food safety from raw materials, to production and processing, warehousing and distribution, to supermarket shelves, and finally to real-time tracking on the table. Once a food safety incident occurs, the source of pollution can be quickly identified.
Wal-Mart Chinese stores have started pork traceability. Yan Zhinong, executive director of the Wal-Mart Food Safety Collaboration Center, gave an example in an interview. In the past, it took 6 days, 18 hours and 26 minutes to use a paper method and make a phone call to trace back to the farm. It is now as fast as 2.2 seconds.
Significance: In the “13th Five-Year Plan” of China, the food traceability system is listed as the construction focus. It is expected that all the foods for sale in China must be traceable by 2020.
The use of blockchain in the entire industrial field, the “White Paper on China’s Blockchain Industry in 2018” issued by China’s Ministry of Industry and Information Technology (hereinafter referred to as “White Paper”) is affirmation of this distributed manufacturing model. From the perspective of local policies, Tianjin, Guangdong, Anhui, Hangzhou, Fujian and other provinces and cities have issued policies related to manufacturing.
Current obstacles: industry standards to be developed
Blockchain technology has many advantages in solving the problem of supply chain security and mutual trust for the manufacturing industry. However, it also faces multiple challenges and obstacles in the present. The obstacles of the current application of blockchain technology can be challenged from external and internal challenges. Look.
Cognizant interviewed 281 manufacturing companies in Europe and the United States in his “Blockchain in Manufacturing” report, with more than 50% of respondents having annual revenues of more than $500 million.
From the outside, the most frequently mentioned by respondents is: privacy and security (68%). This mainly involves whether the common public chain, such as Ethereum, can meet the security and privacy needs of B2B manufacturing. Because the data on the chain is publicly accessible, but some supply chain data should be accessible only to partners.
The second most frequently mentioned obstacle is the development of industry standards. Although it takes time in the early stages of the blockchain development, respondents believe that creating a set of standards for the entire industry will help maximize efficiency.
Indeed, large companies have emerged in different industries. In 2017, Bosch, Cisco and Foxconn Group’s first private equity fund HCM Capital jointly launched the IoT Alliance, hoping to develop open source blockchain protocol standards supporting IoT technology, and develop APIs. Software development kits, etc., to serve a variety of IoT devices.
For the internal enterprise, the top executives of the interviewed companies believe that the first major obstacle is to understand the commercial value of the blockchain. More than half (56%) of respondents said that this is the biggest internal barrier to blockchain technology use. Closely related to business value, companies need to consider cost-effectiveness (46%) and uncertainty about when benefits (42%): despite the advantages of blockchain technology, how fast can it be and how fast? Benefits expand?
Second, there are differences between companies on which blockchain platforms to adopt. The most common ones today are the public chain (37%) and the private chain (33%). But because of the need for functionality, privacy, security, and speed, manufacturers still need to choose the platform that best fits each case. Of course, this also depends on the speed of development of various public-chain platforms. From the case described above, there are more companies that choose private chains and alliance chains, while large companies like IBM and GE are working in blockchains. Most also use these two methods.
Of course, this does not mean that the public chain has no advantage.
When respondents were asked “what platform became the choice of the company’s blockchain project,” Ethereum still ranked first with 62%.
According to the above-mentioned corporate executives, the primary goal for manufacturing companies is to understand the commercial value of the blockchain. In the end, what kind of application scenarios will the blockchain technology have in the manufacturing industry?
Combined with the report on the application potential of blockchain in manufacturing industry at the Blockchain Center of the Frankfurt Business School in Germany, the Silicon Valley Insight Institute believes that from the potential of the blockchain application in manufacturing, the potential and market entry time are two. A latitude division, a fast-acting field, will occur in the fields of crowdfunding, management of electric vehicle charging networks, energy tracking, etc., and the transfer of intellectual property, supply chain tracking, etc. will be second, and it will take longer. The one with the greatest market potential is one of the examples presented in the previous section – 3D printing and distributed manufacturing.
Industry 4.0 era: blockchain has begun to work synergistically
China’s “Report of the Ministry of Industry and Information Technology” mentioned that it is convinced that blockchain technology is expected to become one of the underlying technologies of the fourth industrial revolution. According to the key factors of the industry 4.0 era, the three elements of automation, connectivity and digitization should be met.
The Silicon Valley Insight Institute believes that blockchain technology and the industry 4.0 era are slowly playing a synergistic role:
Imagine if the company added a blockchain to the parts supplier and the factory network system. Once the machine can place orders and replace parts through smart contracts, is it automated? This happens to be an attempt at the blockchain 2.0 smart contract era;
According to the latest data, there will be about 24 billion devices connected by 2020, including billions of IoT systems. The combination of the Internet of Things (iOT) and blockchain technology will help the blockchain accelerate connectivity.
As for the process of data, the blockchain itself is a safe and reliable file storage place, which not only eliminates the paperwork problem in the manufacturing process, but also the characteristics that are difficult to tamper, and also helps to protect the security and integrity of the data. .