By Karen Haywood Queen and Brett Brune

Smart Manufacturing magazine

EXPERTS QUOTED IN THIS 15-PAGE
SPECIAL REPORT
1 Sam Adhikari, research and operations lead at a Sysoft unit that is partly focused on blockchain 11 Alex Lightman, CEO of TokenCommunities
2 Kenneth Church, CEO of nScrypt 12 Stéphane Morel, founder and CEO of Akeoplus
3 Michael Cromheecke, CEO of Steamchain 13 Bhagat Nainani, group VP of IoT and blockchain applications development at Oracle
4 Trevor Curwin, VP of energy of markets at the green energy data analytics firm Greensparc 14 Joel Neidig, director of R&D at the gear shop Indiana Technology and Manufacturing Companies (ITAMCO).
5 Joe Fitzgerald, supply chain principal at Deloitte Consulting 15 Gil Perez, senior VP of products and innovations and head of digital customer initiatives at SAP
6 Arun Ghosh, U.S. blockchain leader at KPMG 16 Krishna Ratakonda, IBM fellow and CTO IBM Blockchain
7 Matthieu Hug, founder and CEO of Tilkal 17 Martin Ruskowski, factory systems research department head at the German Research Center for Artificial Intelligence
8 Joe Inkenbrandt, CEO of Identify 3D 18 Diego Tamburini, principal industry lead for manufacturing at Microsoft
9 Philippe Labalette, a senior project manager for process automation at Siemens 19 Hans Thalbauer, senior VP, IoT and digital supply chain at SAP
10 Stéphane Lannuzel, chief digital officer for operations at L’Oréal 20 Dave Vasko, director of advanced technology at Rockwell Automation

5 13 17 18

3 7 9 11

1 6 14 19

10
4 12

16
2 8 15 20
SPECIAL REPORT AdvancedManufacturing.org

The technology behind the rise

soft’s Diego Tamburini said. “At its very core, blockchain is Cause for snickering or investing?

of cryptocurrencies is widely a data model that consists of blocks that are linked. Per-
haps the most common way to characterize blockchain is
If you listen to the blockchain buzz, there’s a rush to
catch the blockchain train.

expected to bring ‘a common as a ‘technology.’ Specific vendors provide platforms that

support the technology. For us, it’s a platform and a tool
“There’s definitely a lot of hype on this topic,” Deloitte
Consulting’s Joe Fitzgerald said. “We have a ways to go.
development concept.” There will continue to be hype. It’s an evolving technol-
source of truth’ to manufacturing “The Army has blockchain; the Navy has blockchain; ogy. People see the promise in theory and now people
the Air Force has blockchain,” said Ken Church of nScrypt. are wrestling with how to implement it in practice.”

B
“These blockchains don’t always work together. They won’t As of now, “blockchain is still immature,” Tamburini
lockchain, the public but secure led- makes it easier for multiple parties within manufacturing to work together unless they’re coordinated to work together. said. “Sometimes it sounds like a solution looking for a
ger that propelled Bitcoin to success, work together. By using data from smart sensors, blockchain There’s no such thing as ‘Blockchain, done, it works.’ It’s problem.”
is primed to move into manufactur- can help verify that products are authentic and that quality really a system, a process, an approach.” “The hype will always be
ing. Early use cases are presenting standards have been maintained during shipping without the Sysoft’s Sam Adhikari emphatically describes block- there,” Adhikari said. “In the late
themselves in aerospace and de- need for companies to share private, proprietary informa- chain as a concept, not a technology. ’80s, early ’90s, I was showing a
fense, automotive and pharmaceuti- tion. Blockchain also can help establish machines-as-service “Like the Web was a concept,” Adhikari said. “Block- demo to someone about Yahoo!
cal manufacturing, as well as in any sector that is already and can enable automatic payment when performance chain is an open-data ledger where you can deposit the and the name itself was funny.
digitally well-connected. metrics are reached. data, collaborate together and be completely confident Everyone started laughing.”
Combined with other smart technology, blockchain “As we started to look at blockchain, we realized its po- the data cannot be changed.” Martin Ruskowski of the Ger-
enables improved monitoring of the entire supply chain and tential to go way beyond Bitcoin,” IBM’s Krishna Ratakonda man Research Center for Artificial
said. “Blockchain acts as a common source of truth, process- Data is locked down Intelligence said tech firms are
ing, organizing and connecting data in a way that was not Security is an essential selling point. But Blockchain is not “afraid they may lose time on the
possible before. People have started to sit up and notice.” 100% secure: In 2016, one hacker exploited a weakness and market.” Alex
“There’s such a big market,” ITAMCO’s Joel Neidig said. tricked the Ethereum Decentralized Autonomous Organiza- “In recent years, those who
Lightman
of Token-
“Every technology leader—IBM, Microsoft, Amazon—is tion system, siphoning off $50 million in Ethereum, according were able to establish the tech-
Communities
going to be into it. Blockchain will eventually become a to a 2016 CoinDesk article. nology first were able to grow.
technology like the Internet. When the Internet came out, Still, “compared with a regular database, which is always With all platforms, there are benefits of scale. We see it
people said, ‘Why would I need the Internet?’ Now every- vulnerable to cyber-intrusion, with blockchain it’s almost with Facebook. We see it with Amazon. People are afraid
body needs it. Now business runs on the Internet. How you impossible to alter the data,” Adhikari said. all the benefits come earlier, so they are investing.”
apply it—the connectivity, the software behind it—that’s “Any blockchain application is distributed all over the
where the solutions will happen. The key is developing network,” he added. “Even if a hacker somehow gets into a ‘Killer use case’ sought
those first use cases and filling those out.” server, any data alteration will render the whole chain cor- Beyond and behind the hype, researchers are figur-
A quick primer: Blockchain is a decentralized register rupt and everyone will know. Because the data is replicated ing out how to develop and best use blockchain to solve
made up of endless, connected cryptographic blocks. Data in many servers, in order to break into blockchain, someone manufacturing dilemmas.
is stored, time stamped—and automatically distributed to has to break into many, many servers. The problem is: no one “With technology like this, it’s easy to get too excit-
many servers at once. Security is a key value. Blockchain is knows where all these servers are.” ed,” Steamchain’s Michael Cromheecke said. SteamChain
tamper evident: Any change is immediately apparent to all “Parts of the Internet are not usable now because people enables machine-as-a-service contracts on industrial
involved. Where multiple entities are involved as on a mul- are not confident who they are dealing with,” he added. equipment.
tiple-tier manufacturing supply chain, blockchain creates a “Blockchain makes the Internet absolutely usable.” “It’s not a question of will blockchain will become im-
record of every transaction. If someone adds to the data, Motivated by the financial crisis of 2008, the developers pactful but when it will start to gain momentum. There’s
the widely distributed ledger shows when and where that of cryptocurrencies sought to find “something that the banks a chance that rollout adoption will proceed at an expo-
addition happened. Some call it the “ledger of ledgers.” couldn’t screw up,” TokenCommunities’ Alex Lightman said nential rate. Blockchain has the earmarks of a highly scal-
Yet, even defining blockchain can be a tangle. Technol- at a recent blockchain conference in Spain. “The idea with able system that solves a lot of challenges today without
ogy? Platform? Concept? Infrastructure? Blockchain is not Bitcoin is you are solving … the basic idea of trust online.” requiring everyone to be in concert.”
one single entity either. There are a number of blockchain In terms of importance to society, blockchain is at the People who ascribe to the ‘fail fast’ way of doing busi-
protocols, the most well-known being Ethereum and Hy- same level as the World Wide Web, he said. “Arguably, it’s ness are jumping into blockchain to see what works and,
perledger, as well as three types/ways of using blockchain: going to give us Internet the way it was supposed to be— equally important, what doesn’t work.
Joel Neidig of ITAMCO public, private and semi-private/consortium. more decentralized… more secure, more private, more equita- “Just like with the Internet and the dot-com bubble,
“You ask three people and you get five answers,” Micro- ble, and more accessible.” some early blockchain concepts are going to fail,” Neidig

3 January 2019 January 2019 4

SPECIAL REPORT AdvancedManufacturing.org

said. “Everybody is in agreement blockchain will be utilized tors that are already functioning in the digital world with “The biggest application we currently see is use of
in the future but with what applications?” sensors and Big Data analytics. blockchain in the supply chain context,” Ruskowski said.
“Blockchain is living on data from the past,” Ruskowski “They already have the fundamental things in place to “Blockchain is feasible where you have non-trusted envi-
said. “Who establishes it early has a long track record of connect the physical to the digital, and they just need to ronments, such as suppliers delivering parts and you want
transactions in the blockchain. They gain knowledge of change the digital technology they’re using to get incre- to have full traceability throughout your delivery.”
what is working and what is not working. The philosophy mental benefit,” Fitzgerald said. Consider a large Tier One OEM shipping components
of ‘try early, fail fast’ is also an approach. Instead of in- to GM or Ford, Neidig said. Without blockchain and other
vestigating only in theory, they are investigating in their Appeal is wide smart technology, the OEM often is unable to trace the raw
Blockchain has applications for makers of pharmaceuti- material it uses. Blockchain shows its value in those sec-
Diego Tamburini of Microsoft
cals, luxury goods and aerospace and defense products, as ond- and third-tier supplier networks by adding a method to
well as other high-value, high-risk, highly regulated prod- control and monitor the process.
ucts, Fitzgerald said. Accountability “That raw material [may] come from China,” he said. “How
The value added comes from uncovering and prevent-
ing tampering, preventing counterfeiting and identifying
beckons in food and do they verify that it didn’t have any conflict minerals (min-
erals mined in an area experiencing armed conflict where
where, when and, often, how failures occur. beverage industry profits benefit the fighters) in it. That needs to be validated

O
“Aerospace, car manufacturing and biomedical—those and verified. Without blockchain, it’s a paper system. It’s very
ne IBM client that distributes beef products to res-
are very highly regulated industries where they need to taurant chains loses 25% to 30% of its beef due to difficult and time-consuming. The benefit of blockchain is
know the data hasn’t been tampered with in any way,” waste because certain criteria are not met during mostly in that area where you lose control.”
Neidig said. “You can have sensors validating everything to shipping, IBM’s Krishna Ratakonda said, declining to name Using blockchain to track components and products in
a digital ledger that is not owned by any one entity.” the client. cross-border trade emerged as a key use case for a aero-
“Without blockchain, there’s no way to trace that beef,”
Blockchain offers value in five distinct networks within space parts manufacturer, KPMG’s Ghosh said. “We found a
he said. “No one is paying attention to whether the beef is
manufacturing, KPMG’s Arun Ghosh said. Those key five being routed properly because there is no reporting of the real tangible savings and productivity gain with blockchain in
networks are planning, sourcing, making, delivering and data. The only way to know the beef has expired is when cross-border trade and the value of understanding between
returning, he said. it’s received at the distribution center, someone looks at shipper, receiver, regulatory body, and customs brokerage.
it, sees the beef has expired and throws it out. There’s a
”We’re finding enterprise blockchain being deployed, We were able to set up a fairly transparent mechanism of not
pretty good incentive for this supplier because when there
added on as a trust mechanism or trust layer behind enter- is wastage, he ‘eats’ the cost.” just what was shipped and received but actually the docu-
prise systems, as well as helping ground the trust mecha- By using IoT sensors and RFID tags, manufacturers mentation that flows from jurisdiction to jurisdiction, from
nism as an anchor to understand both supplier authenticity can verify temperature automatically at certain points country to country, as well as the recognition of value-added
and the data is automatically entered into the blockchain,
as well as product sort of verifiability.” tax or duty drawbacks, which can now be computed using
Microsoft’s Diego Tamburini said. If the temperature rose
or dropped out of spec during shipment, the wholesale smart contracts.”
Supply chain a natural fit customer would find out immediately and the shipment Currently, most companies track products and compo-
Blockchain has begun proving its value along supply contract would be voided. nents only at certain steps of the supply chain where they
Martin Ruskowski of the
chains where there are multiple users but not necessar- Ratakonda imagined a different, more productive sce- collect the data, Ruskowski said.
German Research Center
for Artificial Intelligence nario:
ily 100% trust. As supply chains have wrapped around the “If the supplier has blockchain, he can predict where An inspector with a clipboard (or tablet) at a receiving
world, the need has grown for a better way to monitor and when issues are going to happen and take action early dock checks the temperature of the milk or other product
environment. They find out early what are the benefits and and verify supply chain conditions and transactions. With on. For example, if he knows there are 10 cases of beef and and enters a note saying, “Yes, the temperature was within
what are the shortcomings. blockchain in use among multiple suppliers, it’s easy to there’s no way they’re going to reach the end point in time specs at that moment,” Tamburini said.
(before the shipment is out of spec), he could divert that
“You need that killer use case to get everyone to join,” determine where and when value was added or a failure In the absence of blockchain, no one can verify if any of
beef somewhere else so it could be used.”
he said. “It’s still the early days. It will take several years occurred. Blockchain, again paired with smart sensors and other that data is altered, Ruskowski said.
before we see major applications coming out and high- “Supply chain has grown truly global over the last 20 technology, also can help food and beverage companies “Blockchain has the advantage of the continuous transac-
volume use. But we are starting to see that in the sup- years, and supply chain-related blockchain activity has validate that their subcontractors meet production condi- tion,” he said. “You cannot take out data. You can check if the
tions.
ply chain area. We are already starting to see production started to pick up,” Ratakonda said. “A lot of the goods we transaction is part of any change. You can always ensure the
For example, if brewery A contracted with brewery B to
incentives.” buy are not made near us. They come from far away and make beer using brewery A’s recipe, brewery A could use transaction is genuine.”
As opposed to that solution looking for an ephemeral change hands multiple times.” blockchain to monitor and validate that brewery B followed In the food and beverage sector, better supply chain
problem, “early adopters are often in supply chain net- Blockchain is a natural fit for multi-tier manufacturers the recipe, maintained temperature parameters and avoid- monitoring and tracking via blockchain gives manufacturers
ed fraudulent activity, Siemens’ Philippe Labalette said.
works looking to solve a problem they can’t use another that want to monitor components from the original raw the ability to act quickly to recall a product, for example food,
“This makes it possible in real time for the producer to
technology to solve,” Neidig said. materials to the final product for authenticity and for con- see how his batch has been produced today,” he added. and companies can avoid lawsuits and bad publicity, said
Early use cases of blockchain are in industries and sec- ditions during transport. Matthieu Hug, founder and CEO of Tilkal, which describes its

5 January 2019 January 2019 6

SPECIAL REPORT AdvancedManufacturing.org

Matthieu Hug of Tilkal

main offering as a digital ing end-to-end visibility across the supply chain,” he said. App developers are has been manufactured and there’s a failure, the block-
identity platform organiz- “When we talk to large companies, what we find is they have chain data can show during an investigation the root cause
ing traceability across visibility mostly into one level of their supply chain and they
on the case of the trouble. There is a way to trace back the audit trail.”

B
supply chain stakehold- would like to share information and have visibility across it, lockchain is not plug-and-play. ITAMCO’s Joel Within a manufacturing supply chain, pharmaceutical
ers. but there’s no easy way to share information and even if it is Neidig said blockchain “does take a whole lot to companies, suppliers and regulators can track and moni-
“Nobody has an shared, they’re not guaranteed that it’s easily verifiable.” set up.” So application developers are getting into tor production, Siemens’ Philippe Labalette said. “With this
blockchain to develop platforms that simplify blockchain
end-to-end view” of the The verifiable nature of the information, and its result- technology, we will be able to share batch parameters with
adoption. It’s a replay of the late 1990s, when HTML cod-
supply chain at this point ing trustworthiness, can help device manufacturers do a ing needed to be tamed and simplified so Web sites could different companies in a secure way.”
in time, Hug said. “If you root cause analysis easily because the information can’t be proliferate.
want to buy a frozen tampered with. “The blockchain ledger by itself doesn’t do anything,” Counterfeiting will be harder
product, nobody in the It can also save money in the event of a recall. Current Microsoft’s Diego Tamburini said. “You need an app on top Beyond the food and beverage sector, blockchain
of it creating new blocks (based on your business needs).”
supply chain is able to practice is to recall every device to preserve a manufactur- IBM, Microsoft and numerous startups are developing makes it possible for manufacturers to trace products and
tell you the temperature er’s reputation and provide an answer to skeptics. But with offerings that will communicate with blockchain and help components to more easily identify and prevent counter-
of this item from the time blockchain, since every device is traceable end-to-end in a manufacturers achieve their individual business goals. feiting and certify products meet certain standards.
it went out of the factory tamper-evident record, only those devices that present a Simbachain, produced by Neidig’s company, and Micro- “We see efforts mostly in large companies … in the
soft’s Azure product aim to take the pain out of starting
until the time it arrived. problem need be recalled. automotive, pharmaceutical and food industries where
and managing a private network. “We’re providing API and
One of the consequences “With blockchain, you actually have more trust in the templates for people getting started,” Neidig said. “We’re you want to have traceability,” Ruskowski said. “It’s about
of that is nobody is able transactions that are happening,” Nainani said. providing early use cases so people can hit the ground traceability of quality. They want to monitor the whole sup-
to properly organize a running. It takes some technical expertise. Just the under- ply chain and make sure the product they’re buying is an
Bhagat Nainani of Oracle standing of how it works is a challenge.”
recall of an entire product.” original product, not one with fake ingredients.”
“The opportunity for us is to simplify the development
Oracle’s Bhagat Nainani said blockchain can also help of blockchain-based applications end to end,” Tamburini There is a significant financial incentive to validate
medical and other manufacturers keep track of every asset said. “We want to hide the programming, the scaffolding, products and reduce knock-offs.
and transaction in their operations with end-to-end, share- the authorizations and the particulars so developers can The total amount of counterfeiting worldwide, in prod-
focus on creating the business logic and smart contracts.”
able, non-repudiable record-keeping. ucts ranging from watches to defense equipment, reached
Companies like Steamchain are working to develop ap-
With blockchain, every event or transaction in the sup- plications tailored to clients’ problems and business needs. $1.2 trillion in 2017 and is projected to reach $1.82 trillion
ply chain is recorded in a shared ledger after it’s verified and Early APIs and platforms also enable end users to easily by 2020, according to the 2018 Global Brand Counterfeit-
agreed upon by at least two parties through a smart con- access blockchain, similar to the way Web browsers, paired ing Report.
tract, he said. In manufacturing, the entire chain or just parts with an Internet data connection, allow users to access the Blockchain can help shippers track pharmaceutical
Internet.
can be shared with collaborators. containers in a way that is auditable and non-repudiable,
“One of our clients purchases machines and locates
“This is an area where we feel technology has a lot of them at their vendors’ sites,” Steamchain’s Michael Crom- Hug said.
promise because having this notion of a ledger that’s distrib- heecke said. “The vendors run the machines and produce By combining blockchain with data analysis capabilities,
uted and tamper proof, using applications such as track- the parts the client needs. The challenge is when it comes blockchain helps companies identify where thefts occur
to crunch time and our client is not getting what they need
and-trace or our lot-lineage, each trading partner, as they’re and reduce or eliminate counterfeit drugs, he added.
to fulfill their orders. They call their vendor and say, ‘We
transacting with the other partner, can decide which aspects need this stuff urgently,’ and they get subjective answers, Fitzgerald chimed in: “For pharmaceuticals, for aircraft,
of their transaction can be shared with the broader busi- such as ‘We ran for six hours yesterday. We’ll get it to you.’ you’re lowering the risk of counterfeiting and reducing the
ness network (which can include regulatory agencies, the “With blockchain and smart contracts, our client can risk of doing excessive inspections, compliance and [main-
see exactly what the machine is producing and pay as they
government and even consumers),” Nainani said. “Similarly, Collaboration will be easier taining] records of where things have been.”
go, based on production. That results in a financial perfor-
regulatory agencies want to know which tests were done, Within the aerospace, pharmaceutical and other mance incentive for the vendor.” In the future, someone about to buy a luxury handbag
what clinical trials data were used before it was released, industries, blockchain will make it easier for companies on eBay could type the serial number and learn where and
and things like that. Our track-and-trace and lot-lineage are to work together. No company wants to be blamed for when it was originally sold, who else has owned it and,
directed toward that.” a failure it did not cause. The appeal can be especially most important, whether it is really the brand it purports
Oracle last year started offering blockchain applications strong for small companies that don’t have the deep to be, he said.
for intelligent track-and-trace, lot-lineage and provenance pockets to rectify a problem they did not cause but yet Custom, multi-component, high-value products also are
(which helps with unique device identifier compliance), intel- may be blamed for. a good use case for blockchain, Ratakonda said. Consider
ligent cold chain and warranty and usage tracking. “One of the reasons companies don’t want to work to- a circuit board’s complex chip, which likely includes de-
“Blockchain provides a unique way of addressing these gether is because of the trust issue,” Adhikari said. “Small signs from dozens of manufacturers.
(applications) because it handles problems that were not companies are always worried they will be blamed for “How do you then go back and ensure that each sales
possible to address before in an easy way, the main one be- something that goes wrong in manufacturing. If an engine dollar gets accurately split among all those different com-

Michael Cromheecke of Steamchain

7 January 2019 January 2019 8
SPECIAL REPORT AdvancedManufacturing.org

peting manufacturers,” Ratakonda said. Blockchain makes Additive manufacturing primed

it easy to slice that financial pie.
for blockchain adoption

B
Another model to come lockchain in additive manufacturing (AM) offers example, a customer paying to print 50 parts but actually
Ruskowski’s team at the German Research Center for AI immediate opportunities for military use, said Ken- printing 100 and selling the surplus on the gray market.
has been investigating the possibilities for using blockchain neth Church of nScrypt. “3D printing is changing many industries,” Ratakonda
“We’ve been working with DoD for a while,” he added. said. “It used to be low-volume parts that were difficult to
within a self-contained factory and hasn’t yet seen good use
One of the first use cases will be to easily and securely obtain. 3D printing is becoming much easier and higher
cases. replace broken or missing tools, Church said. volume. Typically, you own the design for a part and go to
Arun Ghosh of KPMG
Within a single production environment where everyone is For example, the U.S. Army could place a 3D printer in the designer to print those parts. But how do you know
trusted, blockchain doesn’t add value, he said. a Conex box (a standardized steel shipping container) in if he prints 100 instead of the 50 you authorized and the
“We found out it’s not really true that blockchain can solve Newfangled contracts envisioned a forward deployment, he said. If a part breaks, a soldier other 50 go into the gray market? Once the design is out
there, how do you know who is printing the design or
everything,” Ruskowski said. “It’s feasible with a non-trusted Another application is automated, performance-based know who leaked the design? Without blockchain, none of
environment with a limited number of participants. It doesn’t contracts and warranties. these is traceable.”
solve every problem on the market. The technology is prom- The value of smart contracts extends beyond track-and- “The manufacturer makes a big profit off the (3D
ising but it has some issues that have to be addressed in the trace to integrating accounts receivable with accounts pay- printed) parts they sell,” he said. “Blockchain provides a
guarantee and a way to track who accessed my design,
future. Today’s blockchain will not be the model we see on able for all components moving from the supply chain to a
and how many times it was printed.”
the market in the end. There will be another model.” warehouse, KPMG’s Ghosh said. Church concurred. “If you guys are going to make this,
Greensparc’s Trevor Curwin is skeptical that block- “Smart contracts are being used not just to understand I will know how many you are making and where they are
chain’s application to power grids will ever do away with where, what and when but also to actually push and pull going. That’s huge from a vendor relationship (standpoint).
Large companies will embrace this.”
the middleman—because the complexities of providing events to trigger payments, or recognize revenue, and even
Blockchain addresses the challenge of how to certify
power are so great, he said during a recent conference put it into a journal entry in an ERP system,” he added. the product was printed using the original design and that
panel talk in Barcelona on blockchain technology. Steamchain is positioning itself as a firm that can devel- the person who printed it had authorization, Microsoft’s
It is possible blockchain technology could enable “a dis- op tailored applications, such as automated contracts, for Diego Tamburini said. “You can avoid counterfeiting, which
is a big risk, and ensure the provenance of that part.”
tributed network of suppliers that that you can then trust,” manufacturers and others to use, Cromheecke said. In these
he added. But the models he has seen so far prove that use cases, blockchain tracks the production quantity and Identify 3D partners with several firms
“we’re in early days,” he said. quality of what a machine makes and automatically causes Identify 3D is working on blockchain with Siemens, in
terms of its relatively new AM network, as well as with SAP,
payment to be sent based on performance.
IBM and others, Identify 3D’s Joe Inkenbrandt said at the
‘Everyone can see what is happening’ In one hypothetical scenario, the first payment for a recent International Manufacturing Technology Show in
But even a factory working with just one supplier can factory machine would be released when the machine Chicago. “I can’t sell it today (in traditional manufacturing),
derive benefit. archived a benchmark of 400 components per minute over Kenneth Church of nScrypt because the quantities aren’t big enough for blockchain
to be interesting. In two years, when quantities are big
Blockchain makes it possible for direct, automatic 17 shifts; the second payment when the machine reached
would take that part to the Conex box where a technician enough, our system will move right into that.”
machine-to-machine reordering and shipping of inventory, 500 components per minute over 30 shifts and the third When distributed manufacturing does take hold, “it’s
could then download design parameters in blockchain to
said Labalette, who works closely with the IC3 blockchain payment when the machine achieved 800 components per going to happen quickly,” Inkenbrandt said. And when
print a replacement part. No information would need to be
initiative. That initiative is based at the Jacobs Technion- minute over 30 shifts, he said. stored within the Conex box itself, eliminating the risk of the average number of supply chain players rises to 30
Cornell Institute at Cornell Tech and is funded in part by a This scenario would prove to be a very convenient and what would happen if the box were lost. from six, blockchain will “all of a sudden become really
“If I do that for a forward deployment, I can get a CAD interesting.”
National Science Foundation grant. flexible alternative to the traditional site acceptance pro-
file out there right away,” Church said. “The Army is seeing ‘Supporting mechanism’ only, for now
Instead of a human keeping up with inventory needs, a cess that today is very subjective and short term, he added. In AM, smart contracts on blockchain could result in
the benefit right now. Blockchain will be huge in helping
machine using blockchain can automatically recognize that These use cases could be especially valuable in situa- move that forward.” companies being licensed to produce X number of parts
inventory will be depleted in a few days or a few months, tions where Company A owns production machines being In general, AM is a prime place for blockchain because over X months and then being required to renew a license,
order the replacement product from a supplier, and then used by Company B to produce products for Company A, the process is already digitally driven and because the Deloitte Consulting’s Joe Fitzgerald said. “This is a sup-
need is apparent. Additive will be a key driver in distrib- porting mechanism to improve the business model of vari-
enable automatic payment, he said. Cromheecke said. In this scenario, there’s no need for hu-
uted manufacturing. ous additive applications,” he said.
“It’s not only efficient but it’s possible to have better track- man checking or monitoring and no opportunity for human “Additive in and of itself is pretty digital,” IBM’s Krishna But be careful about betting the farm on early block-
ing,” Labalette said. “We create an environment in which the fudging or stonewalling—the truth is in the blockchain. Ratakonda said. “It starts with a model that is transformed chain, he cautioned.
performance data of the machine is collected in a way that all “It’s a very elegant way to deploy a business model that digitally and then printed right there. That’s definitely For example, “If your entire business model is about
prime for enabling the technology.” controlling how many times people can print things with
parties have visibility. When the data goes in, everyone sees has proven successful in many other industries,” he said.
By using blockchain, manufacturers can monitor and your blockchain solution and you get it wrong and people
the same version of the truth at the same time. Everyone can “We think it unlocks a world of possibilities.” can print an infinite number, that’s a problem. It’s a new
even limit how many copies of a product or component
see what is happening and the financial calculation.” are printed. That lessens or eliminates the possibility of, for technology. People dive in and make mistakes.”
Ilene Wolff contributed to this report.

9 January 2019 January 2019 10

SPECIAL REPORT AdvancedManufacturing.org

SAP, Intel, IBM, Microsoft, Dow Chemical,

DMDII, L’Oréal, ITAMCO, Akeoplus, Siemens,
Rockwell also try blockchain on for size
work involved, is where blockchain technology,
combined with today’s super-cheap sensors, can
automate a lot, making processes much more
efficient.”
Cargo ships will no longer sit in port for days
waiting for paperwork. Digitized paperwork—
that becomes part of a blockchain-based record-
keeping system—“can take out 10 days in the
shipping process,” Thalbauer said.

IBM, Microsoft pick some partners

IBM is working with supply chain-related op-
erations in the food and beverage industry. The
company also has seen interest from aerospace
and automotive firms, IBM’s Krishna Ratakonda
said.
Microsoft has engaged directly with custom-
Hans Thalbauer of SAP ers in developing applications for its Azure plat-
form to support specific blockchain use cases,

S
AP piloted blockchain with 15 pharmaceutical Microsoft’s Diego Tamburini said.
firms, including AMGEN, AmerisourceBergen, Microsoft also is working with Dow Chemical and The
Boehringer Ingelheim, GSK, McKesson, Merck and Digital Manufacturing and Design Innovation Institute (DM-
Novo Nordisk, SAP’s Hans Thalbauer said in an interview at DII) on using blockchain for supply chains, he said.
IMTS 2018 in Chicago.
The No. 1 use case for blockchain is all around track- L’Oréal testing two use cases
and-trace: knowing where a product is and how it is hold- L’Oréal considers “connected products” a pillar of its
ing up, he asserted. digital transformation, L’Oréal’s Stéphane Lannuzel said in
In the six-month pilot that ended in May last year, SAP did a recent interview in Paris.
one billion transactions on blockchain, SAP’s Gil Perez said. “It starts from a simple QR code that will be able to in- Stéphane Morel of Akeoplus
One lesson the SAP team learned: For drug companies, teract with your smartphone. It goes through RFID or NFC
speed was less critical on the production side and more technology, and now even using blockchain. These tech-
nologies are there to make the link between the physical raw materials to the consumers, and all of the logistics in machines and robots.
critical when unused drugs were being returned.
world, which is the product, and the digital world, which information,” he said. “When you ship products from one The addition of blockchain will improve machines’ trace-
“The pharma use case we are addressing is prescription
is the data and your smartphone. That’s all the reflection country to another, you need to provide a lot of certifi- ability, he said.
drugs’ ‘sellable return’,” Perez said. “As such, on the pro-
around the connected products.” cates, and putting the certificates in the blockchain is very “When you register what the machine is doing, for ex-
duction side it didn’t matter if it takes another two seconds
L’Oréal is testing two use cases for blockchain technol- promising.” ample, each second and record this data in a blockchain, it
or 10 seconds to write the data to blockchain.
ogy around transparency—concerning “the products, from could be a very new opportunity for customers and suppli-
“Yet the performance is critical when the returned ITAMCO does some government work
ers to avoid disputes.
drugs are moving on a conveyer belt,” he added. “The sys- The gear manufacturing shop Indiana Technology and
“You can’t change the data written in the blockchain,”
tem needs to make a split-second decision on how to sort Manufacturing Companies (ITAMCO) got its feet wet with
Morel added. “So we want to include blockchain in our tech-
the drugs after reading and verifying the information from blockchain in a Defense Advanced Research Projects
nology to help customers and suppliers be more efficient
the blockchain.” Agency (DARPA) project, ITAMCO’s Joel Neidig said.
and transparent in how machines will produce in the future.”
SAP also recently partnered with semiconductor maker The company developed low-latency platforms to
Akeoplus is working with “early-stage adopter customers”
Intel to experiment with blockchain. aggregate data at the machine level and push up to the
on the first version of blockchain inside AkeoSpine, which is just
“In the high-tech industry, it’s again the track-and-trace blockchain only the data that was really needed.
about ready to come out of the oven, he said, declining to name
scenario: They are tracking their products, making sure that
Akeoplus sees new way to avoid disputes the customers.
the components going into the finished product are serial-
In the fall of 2017, Akeoplus started an R&D program
ized and can be matched and mapped,” Thalbauer said. Siemens explores the ‘digital recipe’
with CEA, France’s Atomic Energy Commission, to explore
“It’s also the digitization of documents,” he added. “For Siemens, which has become a major player in block-
blockchain technology, Akeoplus’s Stéphane Morel said in a
example, in the whole import-export scenario, there are chain’s use on the power grid, is also working, via its Next47
recent interview in Paris. “We are working with the scientists
thousands and thousands of documents that can be digi- unit, with use cases for blockchain in manufacturing.
there to develop blockchain inside AkeoSpine,” he added,
tized. It makes life so much easier”—whether it is dealing The company is piloting projects in discrete and process
noting that he developed that “gateway edge computing”
with government officials or truck drivers. manufacturing and working with the blockchain platforms
software to include computer science and machine learning
“This [situation], where we still have a lot of paper-

11 January 2019 Stéphane Lannuzel of L’Oréal January 2019 12

SPECIAL REPORT AdvancedManufacturing.org

“You can query our system and all that data is contained
there so we can help build a digital twin,” he added. “And Eight key blockchain challenges
then of course we can use blockchain to do it as well.”
But blockchain only becomes useful when there are “a for manufacturers to overcome
lot of collaborators” in a distributed manufacturing model,
Inkenbrandt said. Today, with just six players in a typical Not born in manufacturing Blockchain
traditional manufacturing supply chain, a centralized data-
base using a trace application like the one in Identify 3D’s
software works just fine.
1 Because blockchain was designed and
intended first as a secure, public ledger for Bit-
coin, some challenges have emerged with early
is not intended
to be a storage
mechanism for
Rockwell Automation ‘optimistic’ applications in manufacturing, Microsoft’s Diego Tamburini large data sets
Rockwell Automation is taking a cautious approach to said. “Originally, blockchain wasn’t intended for enterprise but rather for
blockchain. The Milwaukee-based firm did some blockchain systems. Establishing smart contracts and integrating critical data veri-
pilots with vendors last year, Dave Vasko said, declining to blockchain with new manufacturing systems is difficult fication.”
name any of them. For this year, he said, “we’ll continue to because blockchain wasn’t born in the enterprise.” Tamburini
look at what’s developing and how we integrate best into chimed in:
that.” Garbage in, garbage in “People trying to
Philippe Labalette of Siemens

Hyperledger and Ethereum, Siemens’ Philippe Labalette

The company knows it does not want to own its own
blockchain. “We’re going to participate with other vendors
and consortiums where required,” Vasko said, adding that
2 The fact that blockchain is immutable is a
blessing and a bane.
As multi-tier manufacturers move into
Martin Ruskowski
finding problems.”
store a lot of data
on blockchain are

said. the firm is too diversified for one system to work. predictive maintenance, they face the challenge of data In addition to being vetted, data should be screened for
About four years ago, Siemens began working with “Leveraging standard tools for the infrastructure and sources that don’t always supply information at optimal relevance before being written into blockchain, Perez said.
Identify 3D to further develop a protected, repeatable being able to participate in different ledger schemes levels of quality, intelligence or transparency for true pre- “The attitude should not be, ‘Let’s write everything into
and traceable manufacturing process. Siemens so far has makes sense for Rockwell,” he said in a recent interview in dictive analytics, SAP’s Gil Perez said. blockchain.’ Writing things into blockchain costs money.
integrated the startup’s software into its PLM system and Philadelphia. “I’m very optimistic about it” in large part be- “The data quality is extremely important,” he said. “If It’s not free. There is a balance between brute force put-
automation equipment. cause blockchain technology will facilitate having “trusted bad data goes into blockchain, it will stay there forever. ting all information into blockchain and finding the minimal
“Our goal is to enable distributed manufacturing: the transactions with much smaller companies” than those Imagine different scenarios: if a car is not providing the valuable set of data. Blockchain is not ‘let’s just stuff data in
idea that you can keep a digital recipe of how to build with which Rockwell partners today. right data mileage… if a half-million-dollar compressor there’.”
something and then manufacture it on demand,” Identify “We’re trying to connect enterprises together,” Vasko doesn’t provide the right hours of operation … that will Speed is not a blockchain use case or selling point either.
3D’s Joe Inkenbrandt said. “Of course, the industry, like said. “Having small and medium manufacturers participate have a cascading impact on value of the call and mainte- “The speed with which you can transact blockchain has
Siemens, wants to move this way, especially for high value, with trust is going to be a big change going forward.” nance schedule, etc. If the data is not correct, then every- historically been pretty slow compared with how you trans-
high precision parts in low quantities.” thing you do you do will be built on that incorrect foun- act in manufacturing,” Deloitte Consulting’s Joe Fitzgerald
To address the problem of moving engineering further dation with bad decisions being made. You need to start said. “When you transact Bitcoin, it can take minutes for
away from manufacturing, San Francisco-based Identify 3D with the right foundation. You need to ensure that data the transaction to clear. That can’t happen in high-volume
focused on IP security, repeatability of standardization and along the chain from multiple systems is accurate, not cor- manufacturing.”
production traceability, he said. rupted, not manipulated, and continuously monitored.” Martin Ruskowski of the German Research Center for
The company’s software stores data about when a Manufacturers should have a review process before Artificial Intelligence noted that a public blockchain is
license was created, and for how many parts. It notes the writing data to blockchain, Perez said. “It will not elimi- naturally very slow.
serial numbers used, who designed the part, who made nate all the errors, but hopefully will reduce them to a “Everyone has to have all the information,” he said. “It’s
the part on what day, who the workshop manager was that non-significant number.” not practical. Blockchain processes seven transactions per
day, and any design revisions. “That traceability becomes If someone steals your blockchain key and uses it to second worldwide. That’s not sufficient for real-time needs
really important in distributed manufacturing,” Inkenbrandt add false information, there is no way to regain access or like in manufacturing. The public approach is not feasible
said, “because now that we’ve separated engineering and fix the incorrect data, Siemens’ Philippe Labalette said. for this. You have to keep it in the local environment.”
manufacturing, how do you know what your yield rate is?” Siemens is exploring “crypto signatures” to add an- Sometimes, however, manufacturers don’t need full-
other security layer to blockchain, he said. strength blockchain. Streamlining blockchain can make it
A crypto signature will require all blockchain key us- faster: Call it blockchain lite, for some use cases.
ers to prove they are who they say they are before they In one pilot, SAP used what’s called Multi-Chain block-
can make a ledger entry, Labalette said. The crypto sig- chain—an open-source platform that helps users establish
nature technology relies on machine learning and hybrid private blockchain—that doesn’t support smart contracts.
blockchain technologies. The result: a performance-optimized blockchain for a par-
ticular application that didn’t require smart contracts.
“It’s still immutable, distributed, decentralized,” Perez
Neither a ginormous parking
3
said. “Using Multi-Chain in a permissioned-blockchain
garage nor a fast highway network, without smart contracts, was the right choice for
Blockchain is not the Kennedy Center parking this solution because it’s much faster and less costly. The
garage for data. Blockchain is not the Autobahn consensus algorithm is very straightforward. You optimize
for fast travel. the blockchain for performance.”
“It’s not a database,” Steamchain’s Michael Cromheecke One data challenge now being addressed is off-chain
said. “You’re not going to store all your Netflix videos. storage and analytics, Tamburini said.
Joe Inkenbrandt of Identify 3D

Dave Vasko of Rockwell Automation

13 January 2019 January 2019 14
SPECIAL REPORT

“Smart contracts cannot access external data with- to a database. It could be the big companies who own
out breaking the trust,” he said. “We are addressing that the whole supply chain, or a consortium where everyone
problem by allowing some code to run in the blockchain pays a little bit or pays proportionally. There is nothing
while maintaining the integrity of the blockchain.” in the technology to dictate that.”
“If you are accepting an external database, you want
to make sure that everyone who queries that database
Costly computing power needed
6
gets the same result,” Tamburini said. “You can’t do that
Companies using blockchain also will need
if the database is outside the blockchain. That forces
robust and potentially expensive computing
you to put data on the blockchain. But putting data on
power.
the blockchain impacts performance, especially if you
“The scalability issue we see with blockchain is we
have to replicate the blockchain across many sites.
need very high computing power for public transac-
tions,” Ruskowski said. “Blockchain is mainly feasible
The middleman is still needed for small-size groups of participants interchanging

4 One of the key advantages of blockchain

is that it eliminates the need for a middle-
man—either a real person or software or
data.” “That’s going to a business decision,” ITAMCO’s
Joel Neidig said. “For example, currently, to be a Tier
One supplier to a large OEM could cost a small compa-
technology—to verify transactions. But because there ny $100,000 to become compliant with the standards.”
are numerous competing blockchain ledgers currently in “Some of these cases may emerge where the domi-
play (including Hyperledger and Ethereum), middlemen nant player may need to pay to support their supply
are needed at least temporarily to integrate differing chain on the solution they prescribe,” Fitzgerald said.
versions.
“There is an irony,” Fitzgerald acknowledged. “You
Getting parties to share
7
have this ‘no middleman’ technology that now requires
a middleman. But it’s a different kind of middleman. It information can be difficult
takes the shape of a clearinghouse.” When companies that are competing with
Moving forward, blockchain will make it easier for each other are “all of a sudden connected
manufacturers using different technologies to work to-
gether, Cromheecke said.
in this distributed environment with the blockchain,”
the idea of sharing information can be a show-stopper, Subscribe to Smart Manufacturing magazine
SAP’s Hans Thalbauer said. “But more and more these
Go to: www.SME.org/smart
“Blockchain can be set up where multiple parties can
create multiple opportunities to interact with the data days, they are willing to do that because people see the
without having to conform to a system,” he said. “You’re benefit.”
not expecting everyone to align with a certain data Broad adoption of blockchain tech in manufacturing
management regime. The data is universal. There are is two or three years out, he said.
ways deployed to ensure that the data remains objec-
tive, is transparent to parties that have access to it, and Standards still coming
highly secure from those who don’t.”
8 Eventually, standards bodies will create new
standards for blockchain. The National Insti-
tute of Standards and Technology (NIST) is
Tough for legacy systems,
5 small manufacturers
Integrating blockchain into legacy systems
“leading the charge on that,” said Neidig, who is part of
the NIST blockchain standards working group.
In the meantime, smaller groups within industries are
and into companies that haven’t yet embraced
agreeing to use certain versions of blockchain ledger
the Industrial Internet of Things (IIoT) poses another
and particular smart contracts programs, Tamburini said.
challenge.
KPMG’s Arun Ghosh said some of these groups
“We can’t say we will throw everything we have into
include the Trusted IoT Alliance and the Blockchain in
the garbage and add blockchain,” Sysoft’s Sam Adhikari
Transportation Alliance (BiTA).
said. “We need to bring blockchain applications slowly
Certain industries, such as aerospace, already are
into legacy systems.”
starting to create informal standards, Fitzgerald said.
“Blockchain is a challenge for small manufacturers to
Along a supply chain, the dominant player would be
set up, Ruskowski said. “What we see is the big compa-
the one to set up the servers and establish the block-
nies will also be the platform providers. They are look-
chain to validate transactions, he said. “You naturally
ing into it and they hope to be able to set up a platform
have the clearing house effect of who is controlling the
like a modern bank or modern certification authority to
integrity of the blockchain. Over time, that will shift to
be the interchange.”
industry consortiums.”
“Users will need a subscription to Azure (Microsoft’s
“It’s hard to say which protocol is going to win the
cloud computing platform) to get access to read and
day,” Cromheecke said. “It’s not important which one
write to the blockchain,” Tamburini said. “Who pays for
does. Eventually, standards will emerge and certain
that subscription is a business decision just like what
technologies will win the day. That will be good and
happens today when you need to read and write data
healthy.”

15 January 2019