Will Blockchain Be a Fit for Manufacturing?

What is blockchain?

Distributed ledger technology (DLT) is a type of database spread over multiple locations that can be used like a digital ledger to record and manage transactions. Blockchain, which is made up of “blocks” of transactions, is one of the most well-known uses of DLT and underlies the cryptocurrency Bitcoin. 

Because blockchain is decentralized, whenever a user initiates a transaction, the ledger uses an automated process to ask other participants to approve the transaction without a third-party intermediary. Approved transactions are timestamped, cryptographically signed, and added to the block. The new block then becomes part of the blockchain an immutable record of all transactions of interest to the participants. Because the network validates every transaction, the blockchain holds a single version of the truth that all participants can trust.

Blockchain for supply chains

Although there are many software solutions that can provide visibility into supply chains, manufacturers may eventually also use blockchain technology to exchange data and track transactions within their supply chains. Because blockchain can provide an immutable and permanent digital record of materials, parts, and products, it can provide end-to-end visibility and a single source of truth to participants in a supply chain regardless of how complex. While there are many efficient and affordable means to capture, store, and share supplier and logistical information embedded in auto identification (AutoID) technologies such as RFID, a unique feature of blockchain is an improved anti-counterfeiting capability.

Use cases in the industry again, not exclusive to blockchain include better third-party supply chain monitoring, improved auditing, increased verification for provenance, and increased integrity for designs, and possibly, improved regulatory compliance.

A blockchain ledger also enables network participants to set up a wide range of self-executing agreements, contracts, and escrows (known as smart contracts) that can automate repetitive processes such as billing and shipping. A blockchain can execute any contract triggered by measurable conditions for example, the on-time delivery of goods.


Lack of standards is currently holding blockchain back. Because technology standards have not yet been developed, many companies are reluctant to venture into the technology without broader industry adoption. The International Standards Organisation (ISO) is currently working on a series of blockchain and DLT standards, ISO/TC 307, and has published a business plan that says the first standards will be released in 2020. 

Blockchain as a service

The recent launch of Blockchain as a Service (BaaS) may also help advance implementation of blockchain in the manufacturing industry. For many manufacturers, using BaaS will be easier and more cost effective than implementing a self-managed blockchain. BaaS is based on the Software as a Service (SaaS) model and works in a similar way. It allows companies to leverage cloud-based solutions to build, host, and operate their own blockchain apps while the cloud-based service provider keeps the infrastructure operational. Major players in the BaaS space include Microsoft, Amazon, R3, and PayStand.