Benefits of better manufacturing Visibility via Blockchain
Until recently, Indian manufacturing companies relied on foreign consultants to design complicated products. MNCs, too, preferred to source and import components from their parent companies, especially in high-technology sectors like aerospace engineering or automotive manufacturing. But, today, Indian companies are no longer confined to assembling components, with companies like Boeing, Airbus, Bosch, Mercedes Benz, Volvo, Ricoh, Abbott, Panasonic, and others setting up Industry 4.0 Centers of Excellence in India. Over the last 3 years, more than 140 GCCs (Global Captive Centers) have set up base here, taking the total number of GCCs to over 1430, with 40+ centres focusing exclusively on AI and ML.
While R&D is necessary to accelerate innovation, the ‘smart factories of the future’ will require a more integrated and intelligent supply chain, which embraces digital technologies to enable closer collaboration between manufacturers and suppliers. In this post, we will look at the role played by blockchain in the creation of this better-networked supply chain, and focus on how the evolution of this technology is helping improve visibility across contract manufacturers.
A blockchain-based platform funnels data from different sources (raw material suppliers, contract manufacturers, logistics service providers and underlying systems) to create a virtual representation of processes, status and inventory. This integrated data can be shared with internal and external stakeholders on a need-to-know basis, and protected from view by permission-based settings. Blockchain technologies help orchestrate every link in the manufacturing chain to optimize production, minimize wastage and improve logistics performance.
Let’s take a look at the benefits this brings.
Typically, enterprises outsource some parts of their production processes to contract job operators. For instance, within the automotive industry, some vendors may be responsible for handling large amounts of sheet metal to fabricate automobile parts. The supply chain management team is tasked with tracking this raw material across multiple stages of material conversion on a daily basis. This is done to recover maximum scrap, keep a check on other related wastage to minimize loss, and ensure the material does not go missing. Also, finished goods and the packaging materials are tracked as they move from warehouse to warehouse, going from authorized vendors to contract job worker locations.
Today, all of this unstructured information is contained in excel sheets that log materials as they are received, produced and dispatched. Data exists in silos and SCM teams have to liaise with individual vendors and look up multiple documents to get an accurate picture of material movement in real time. Lots of time is spent monitoring operations, addressing quality issues and reconciling transactions to process payments and fulfill orders in a timely and efficient manner.
New-age startups like ParamNetwork help ease these bottlenecks by mapping and digitally mirroring every step of these outsourced processes so SCM team leads have end-to-end visibility into their inventory and operations. Setting up these digital workflows which are validated against business rules translates into a number of operational efficiencies. Production and dispatch plans can be shared with vendors on demand, modifications can be accommodated on the fly, and material movement becomes easy to reconcile. What’s more, the use of permission blockchains ensures that the highest levels of transparency, security and trust are maintained, with data being shared with stakeholders on a pre-approved basis.
Benefits of better Manufacturing Visibility
- By using real-time production data captured by blockchain platforms such as those offered by ParamNetwork, manufacturers can improve production load utilization, and use accurate data-led insights to unlock hidden capacity, without spending on overtime or driving up CapEx costs. In our experience, clients have been able to realize cost savings of up to 20% by tracking material movement digitally, as it changes hands.
- Companies are able to respond faster to an increase in demand, or estimate delays arising out of material shortages. The supplier receives changes without delay, the customer immediately recognizes whether a changed order can be fulfilled.
- Production problems at the supplier end can be quickly identified to ease troubleshooting. Also, the traceability of serialized parts can be improved significantly, since all data regarding shipments is available electronically.
4. Harvesting data — both upstream and downstream — helps create a healthy feedback loop, which can be used to continuously optimize production planning on both the supplier and contract manufacturer end, resulting in significant savings on time, labour resources and costs.
The promise of blockchain technology is manifold. Clients from diverse industries, including automotive, aerospace, railway, plant construction and electronics manufacturing, are looking to leverage the power of digitalization to transform their supply chains and improve visibility across outsourced manufacturers to modernize operations and accelerate growth.
