Collaborative Tracking
Blockchain Technology and Electronics Manufacturing: Getting Started
From secure data exchange to managing EoL parts, the applications are numerous. by Quentin B. Samelson

In last month’s discussion of how electronics companies first began to use Blockchain technology to automate and simplify “high-friction” multiparty processes, we noted many of the earliest projects tended to focus on the relationship between a single “sponsor” company and its partners. In other cases, companies worked together as a consortium to solve a common problem. Quickly, however, electronics companies began to leverage applications originally developed for other industries, especially to leverage the “track and trace” capability originally developed for the food industry.

Basing a new blockchain network on functionality that has been developed and implemented for another network1, even in a completely different industry, lowers the cost of entry and simplifies the process of setting up that new network. That has turned out to be very important, since it also makes it easier to create a valid business case for the application.

A blockchain network set up to support companies in one industry can be adapted to provide the same functionality in a completely different industry
Figure 1. A blockchain network set up to support companies in one industry can be adapted to provide the same functionality in a completely different industry.

Of course, the benefit to your own company will be your biggest concern in building a business case, but be aware of the value proposition for the other trading partners in the network. Blockchain requires a team effort. The business case is likely to proceed from one or a combination of the following:

  1. Labor savings and efficiency. These often are the result of not having to do redundant work, such as filling out a series of different forms at different steps of a process, all of which repeat most of the same data. Avoiding unnecessary effort generally comes from improving the different partners’ trust in the process, which comes from the fact that they can all view at least part of the same transaction.
  1. Quality improvements. These may be related to component or product quality, where early detection, enabled by sharing quality data via a blockchain network, eliminates a quality problem before it reaches customers. In addition, frequently there are also improvements in the quality of data, as blockchain creates a single source of verified truth.
  2. Cycle-time reductions. These often are associated with the labor savings and the data quality improvements mentioned above. Much of the cycle time of multiparty processes is caused by waiting for information from the previous party, checking and verifying the previous party’s data, or reentering that data for the next party in the process. Blockchain eliminates nearly all this work and the associated cycle time.
  3. Improved access to data and other network parties. In many companies’ reverse supply chains, extensive, manual (and therefore expensive) visual inspection is needed to verify the product received back from customers is actually a product that the company sold to the customer. Blockchain can provide the mechanism for secure, controlled access to data that permits automated verification. This improves the process, again reducing time and labor costs.
  4. Some companies have also found that blockchain enables improved access to potential business partners. Once a blockchain network has been established for a specific purpose, engaging with the network provides access to every member of that network.

If you primarily need a way to track and trace items between parties in a network – whether in the forward or the reverse supply chain – leveraging and adapting existing functionality can provide the needed functionality in a cost-effective manner. Not only does this take advantage of existing functionality, but it also provides all the other mechanisms necessary for an effective network: onboarding services, user authorization and assignment, data services, and other support.

Of course, another way to leverage blockchain technology is to join an existing network, as long as other companies have already joined to solve a problem that you also need to address. They can join a network already set up to solve an industry-wide problem. As mentioned last month,2 networks already exist to assist with logistics, responsible sourcing of minerals, local contractor qualification, and other industry issues.

Where Blockchain is Going

As blockchain networks and capabilities mature, it has also become possible to integrate blockchain capabilities into other systems. For instance, IBM has demonstrated an end-to-end process that uses blockchain to securely and privately provide the results of artificial intelligence-powered visual inspection at a supplier to the quality system at a customer. This integration permits the customer to accept or reject a production lot before the supplier ships it and ensures the two parties maintain a common understanding of what constitutes a “good” part.

Some of the most innovative ideas use blockchain to address security and privacy issues with applications based on IoT (Internet of Things) devices. An early example of this idea that uses blockchain to help manage loads on an electricity grid managed by TenneT in the Netherlands has now grown into a European energy consortium called Equigy3 that uses blockchain, consumer batteries and electric vehicles to balance the supply of energy to electricity grids. Blockchain may also be of interest to assist in managing warranty and service calls for IoT-enabled devices on consumer appliances like washers and dryers or on sensitive medical equipment, especially equipment assigned to a specific person.

New use cases for blockchain most often arise either from recognizing that a particular multiparty process is time-consuming and inefficient or by identifying a desirable new process that will function best if it is transparent but secure and immutable. As the electronics industry implements and enables new capabilities leveraging IoT devices and platforms, cloud and edge computing, machine learning and artificial intelligence, it’s helpful to understand that blockchain doesn’t usually replace capabilities but rather complements and improves those processes.

Blockchain-based energy balancing. (Source: IBM)
Figure 2. Blockchain-based energy balancing. (Source: IBM)

Just as it would have been difficult to predict ride-sharing and food-delivery applications when the world was introduced to the internet, it’s hard to know new blockchain applications the electronics industry may be using five years from now. However, as several people4 have said, “the best way to predict the future is to create it.” It isn’t hard to identify several use cases in the electronics industry that would benefit from a way to securely and privately share data between parties. Blockchain could even permit competitors to do business with each other in a mutually beneficial way. Here are a few examples:

  • Manage end-of-life (EoL) parts inventories. Companies often purchase more than they need and hold EoL parts longer than they should. If a company needs a quantity of parts that have already gone EoL, they often must engage in a long, frustrating search. If they are lucky, they may find some of the parts at a steep markup and questionable quality. Blockchain could provide a secure and private mechanism for a shared “pool” of EoL parts.
  • Provide verified data for rebates or ship-and-debit transactions between manufacturers and distributors. Even with automation, this process can require a good deal of extra verification. With blockchain, the process could be extended to make it essentially self-verified.
  • Exchange of quality data between manufacturer and customer. Most of the time, electronics companies can trust the quality of the parts they buy, but nearly every company has at least one supplier that causes issues. It isn’t necessarily because the supplier is incompetent. Sometimes problems are the result of miscommunication of expectations, design changes, tolerance stack-ups, or other issues. Provided a supplier’s parts don’t consistently work in the application, however, there is value in advance information on the conformance levels of each lot as it is shipped. Blockchain can provide the means to securely and privately transmit quality data direct from a manufacturer to a customer. Because the structure and format of quality data depend on the item (different for a lot of chip capacitors than for a lot of transistors or ICs), this sort of data exchange has always been difficult to automate. But blockchain, perhaps combined with XML “tags,” would make this possible.

We don’t know all the ways in which the electronics industry will use Blockchain technology in the coming years, but we do know it has the potential to make any number of dysfunctional multi-party processes work more efficiently and effectively. The companies that identify and implement use cases for this exciting new technology now will have the opportunity to steer the direction of those use cases, gaining cost and performance advantages ahead of the rest of their industry.

Ed.: See the previous two articles in this series in the June 2021 and July 2021 issues, respectively.
References
  1. See, for instance, IBM Blockchain Transparent Supply: Supply Chain Transparency Solution, ibm.com/blockchain/solutions/transparent-supply.
  2. Quentin B. Samelson, “How are Electronics Manufacturers Using Blockchain Technology?” PCD&F/CIRCUITS ASSEMBLY, July 2021.
  3. Ledger Insights, “Blockchain Energy Platform Launched by Swiss, Dutch, Italian National Electricity Grids,” Apr. 29, 2020, ledgerinsights.com/blockchain-energy-platform-electricity-grid-tennet-swissgrid-terna.
  4. Most prominently Peter Drucker, but the quote has also been attributed to several technologists, including Alan Kay, the former chief scientist of Atari.
Quentin B. Samelson is senior managing consultant, Electronics Center of Competence and Member of the IBM Industry Academy at IBM (ibm.com); qbsamels@us.ibm.com.