Will Blockchain and Smart Contracts Accelerate Smart Manufacturing?

Local sourcing can be more efficient and secure with blockchain and smart contracts.

Local sourcing can be more efficient and secure with blockchain and smart contracts. Can it go the next step toward moving manufacturers to smart manufacturing as well?

No manufacturer is an island – and thus a digitally connected supply chain is a cornerstone of any Industry 4.0 or Smart Manufacturing discussion. For most companies secure and semi-automated work with supply chain partners is just a concept, but now you can get started in earnest!

On November 15, SyncFab, a procurement platform for precision parts, opened up a pre-sale of blockchain MFG utility tokens. These tokens would be used with their SaaS exchange and their smart contracts. I believe this ushers in a new era of efficiency, security and intelligence, and a level playing field for industrial supply chains.

This is a classic instance of the “marketplace” explained in Industry 4.0 and smart manufacturing visions. Designers, buyers and sellers, connected to the SyncFab platform and using the Industrial Internet of Things (IIoT) will automatically find and work with each other. Innovators and buyers issue RFPs for the parts they need with a target price, and those able to make those parts can decide whether to bid and at what price, knowing there is an acceptable range of prices.

What is blockchain and how does it work?

The blockchain provides a secure encrypted means of tracking digital records. (Blockchain is perhaps best known as the digital ledger for bitcoin currency.) Using this technology, all participants in a supply chain interaction will safely store information and it cannot be altered. The part specifications, including CAD drawings, can be exchanged in this way, along with smart contract information about design intent and contractual terms and conditions from the buyer and quality data from the supplier.

SyncFab’s CEO and Founder Jeremy Goodwin says, “It’s very early in the use of blockchain in industrial supply chains. We are looking at how to upgrade capabilities so JIT manufacturing requirements can be met more rapidly – tightening supplier requirements.”

Why do it?

SyncFab’s mission is to create local marketplaces for precision parts, reshoring manufacturing and removing transport and latency costs from the supply chain. The vision is that a supply chain for precision parts can participate in a peer-to-peer fashion that favors responsiveness, rather than size or brand name.

The SyncFab platform will be able to help buyers source, track and manage precision parts production. For the suppliers, participating in this exchange will help them improve capacity utilization.

Blockchain creates a more seamless process that will

  • Speed and ensure unbiased and organized sourcing activities by reducing misunderstandings
  • Boost the reach of smaller 3D printing, CNC and other types of precision parts companies
  • Secure IP for innovations both by buyers and sellers of precision parts

I hope SyncFab founder Jeremy Goodwin is correct that this will “Incentivize CNC machine shops – and their blue-collar workers who write up quotes – to be more responsive.” I also hope he’s right that it will help to decentralize power in supply chains so not only the larger companies but all “innovators” will be driving activity in these smart supply chains.

Who else is involved in the “block” party?

This is a partnership between SyncFab with its procurement applications and smart contract technology and Smart MFG Tech Ltd for its ERC20 Ethereum MFG utility tokens. The combination is a platform for peer-to-peer supply chain activities for precision parts makers.

I agree with Goodwin that the path to smart manufacturing and supply chains will be for broad industry collaborations to move toward standards. To that end, SyncFab is part of several public-private networks. One is with San Leandro, the San Francisco Bay area city that hosts their headquarters, for local parts procurement and selling. Another is with Clean Energy and Smart Manufacturing Innovation Institute (CESMII) the US-government-industry partnership organization focused on smart manufacturing.

Beyond SyncFab, IBM is using blockchain in its HyperLedger, which is more focused on private instances. We suspect that larger companies that are already captains in their supply chain may gravitate toward this approach, at least initially.

SyncFab has also created Smart Contract technology, and that will be critical to the success of such a marketplace. As with any trading exchange, the capabilities of the suppliers – and the behaviors of the buyers – become more evident over time. Looking forward to seeing what emerges from this platform!

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