Blockchain in Manufacturing Industry - Locus IT Services

Blockchain in Manufacturing Industry

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Blockchain in Manufacturing Industry

This article explains about Blockchain in Manufacturing Industry and its features. The most common use of blockchain today is for the variety of crypto-currencies in circulation around the world, including Bitcoin. However, several industries have begun to look at how blockchain technology can be used to transform their business processes and the transaction processing.

Patent filings, which are often viewed as a measure of innovation, also differ sharply by the industry. Twenty-one percent of all organizations have filed for blockchain patents. Consumer products and the manufacturing companies lead the way, with 38% having filed patents this suggests that industry could be on the threshold of a period of significant blockchain innovation.

Blockchain in Manufacturing Industry Overview

The application of blockchain technology for the manufacturing industry has multiple potentials for the improvement of existing processes, and security/protection of intellectual property including a sample, as follows:

Supply Chain Improvements

  • One of the most common examples of how blockchain is being used in the supply chain can be found in the ocean line and in the transportation company,
  • Through blockchain, all the organizations in the supply chain have access to the information that is relevant for them, and they can act on it.
  • Future applications will include other players like the shippers, freight forwarders, ocean carriers, ports, and customs authorities.

Internet of Things (IoT) and Industry 4.0 Applications

  • One of the barriers to a wider deployment of IoT technology is the authentication of devices. They realized that the current form of authentication based on the certificates from authorities is too expensive and that the scalability is questionable.
  • Hence, they want to register the devices on a blockchain to create a digital identity of the device which cannot be manipulated. It also offers the advantage that the information about the device can be dynamically updated and added in comparison to the traditional certificates.

Main Challenges

Although blockchain presents enormous opportunities for the manufacturing providers, most applications are still in proof of concept phases or are simply ideas on a whiteboard.

Some Current Barriers to Broader Adoption Include:


Specific technology standards have not yet been developed for the deployment of the technology. As such, some older, established organizations will be reluctant to venture into the wild, wild west without either a broader adoption or a set of standards being developed, deployed, and implemented by blockchain technology providers.


  • While one of the benefits and potential drivers of the blockchain technology should be an ease in auditing as the transactions on the blockchain are immutable.
  • However, some companies have indicated that they intend to take a “wait-and-see” attitude to determine how auditing standards bodies or regulators will treat blockchain transactions.

Smart Contracts

  • Another feature of the blockchain technology is the use of Smart Contracts. These are the contracts that are ‘programmed” in the blockchain that cause certain transactions to react to certain situations.
  • The use of smart contracts is still very much in the conceptual stage and many are worried about whether the courts of law will treat smart contracts with the same discipline they treat traditional contracts.

Features of Blockchain in Manufacturing Industry

Distributed System of Record

  • With a distributed system of record in blockchain network, there is no “central” data store that is controlled by one organization.
  • The distributed ledger provides all the participants with a view into the data (depending on the framework and its configuration), thus increasing transparency, data distribution timeliness, information sharing, and data access. Hence, Security is improved as there is no one central information store open to external attacks.

Security and Trust

  • Because blockchain technology utilizes cryptographic techniques and supporting data structures to improve the tamper-resistant nature of a network, it brings trust to a potentially trustless environment.
  • Blockchain technology facilitates the creation of trust in a network without the need for a centralized third party.

Smart Contracts 

  • Smart contracts are embedded business terms or business logic that can be added to blockchain. This enables the automation of many processes, the secure handling of contracts, etc.
  • In the manufacturing industry, when combined with technologies such as IoT and AI/ML, blockchain can support a number of use cases across the various phases of manufacturing, including pre-production, production, and post-production.
  • This includes use cases such as product traceability, simplified information sharing, parts management, supply chain automation, and payments.
  • Blockchain may enhance the ability of organizations to protect the IP associated with design documents, and it may reduce counterfeiting by securing the transactions associated with the product provenance.
  • Blockchain technology is not the ultimate answer as it is only as good as the information provided to it, but it can improve the current status quo by facilitating the secure exchange of the information over a decentralized network.

As the industry learns about Blockchain applications and its impact on technology and its potential role in furthering interoperability and information exchange, Locus IT will provide you with thought leadership and resources for Blockchain in Manufacturing Industry. For more information please contact us.

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