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How Blockchain Unshackles the Connected Factories of the Future

June 10, 2018 | Rob Moysey

Manufacturers are using the distributed ledger technology to weave  data together like never before

Two-hundred billion.

That’s the number of connected devices Intel expects will exist in the world by 2020. That surge in connectivity will be most apparent with the electronics we use everyday, but its real impact will be felt in places the average person won’t see: factory floors that dot the industrial landscape.

It’s part of a tectonic-sized technological shift underway in the manufacturing space dubbed Industry 4.0, or the fourth industrial revolution. A key staple of that movement is the so-called Industrial Internet of Things, or IIoT: connecting machines of all stripes to Internet-enabled systems so that data can be shared and leveraged in previously impossible ways. Some analysts suggest this could ultimately slash product development and production costs in half.

The ripple effects could be massive. A recent study by Accenture estimates IIoT could inject more than $14 trillion of value to the global economy in just two years. Meanwhile, McKinsey and Company suggests IIoT in factories alone could yield $3.7 trillion in economic impact each year. Manufacturers are understandably excited: they’re expected to spend $70 billion on bringing IIoT to life by 2020.

There’s a critical challenge to unlocking all of IIoT’s potential, however. Connecting all the data those billions of connected devices gather in a sensible way is a gargantuan task. A growing number of businesses are turning to blockchain as a way to bridge that gap.

New Brunswick-based Eigen Innovations is one of them. It develops IIoT-enabled sensors and artificial intelligence-infused analytics software for quality control systems in the automotive sector. The firm believes the distributed ledger technology can streamline the supply chain and enhance the value of AI on the shop floor. It’s developing blockchain-based solutions to integrate into its services.

Eigen Innovations co-founder and Chief Executive Officer Scott Everett recently shared his take on the transformative power of blockchain. Below is a snapshot of that conversation, edited for clarity and length.

Rob Moysey, Globalive Media: First off, why do you believe quality control is a part of the manufacturing process ripe for disruption?

Scott Everett, Eigen Innovations: It’s a really difficult task; there’s a lot of subjectivity in determining product quality. Even if you were to have 100% inspection using today’s methods, it’s really only 80 to 85% effective. And when you’re inspecting car panels or bumpers or lights, the types of defects that would be present change a lot, so they’ve conventionally been difficult to automate. But now with artificial intelligence and machine learning, we can start to tackle some of those really complex inspections.

RM: Where does blockchain enter the picture?   

SE: One of the specific challenges a lot of our customers face is that they manufacture product and certain parts aren’t 100% inspected; there are gaps in the quality of each individual part. So creating systems that inspect each individual part is something we’ve been working on. But then when that part gets shipped to their customer, the customer inspects it again, and there’s a whole other level of subjectivity around that process. They could say, ‘Nope, I don’t think this is good’ and send the product back. Inherently there’s always this fight between ‘How do we standardize quality?’ and ‘How do we verify that the quality is the same from when it was shipped and when it arrived?’ One of the things we see with the potential for blockchain is to securely share data through the different stakeholders that need access to it.

RM: So it’s about establishing trust in ways that weren’t previously possible?

SE: Anywhere there are sources of distrust or there is that challenge of standardizing on one particular data aggregation point, I think that’s where blockchain has a real advantage. The inherently immutable transfer of that knowledge of what was shipped and what was received allows parties to fully agree upon the quality of the part and what’s accepted and what you paid for. That can all be automated through the system and it completely streamlines a process that is extremely labour-intensive and extremely subjective.

RM: I suppose blockchain also lends credibility to the AI systems in the factory producing those data points, too.

SE: I think that’s one of the big things with IIoT — anytime someone integrates AI into their factory, it’s got to be based on a level of trust of the people who are supplying it and the technology itself. Without that trust, nobody is going to adopt it. Blockchain is really that underpinning of trust that can let us take the next step in opening up these applications where IIoT can prove its value. If there are any issues, you have the full traceability of the information, and you can be guaranteed that you can manage those systems and those people effectively.

RM: Can blockchain actually help improve the quality of the data those AI systems are producing? 

SE: We’re trying to enable engineers and operators and quality assurance people in the factories to teach and train their own systems. One of the key elements to this is making data accessible, tracking the information that was used and making sure there are sufficient records of changes to the algorithms. The backbone to be able to track and create this machine–teaching platform is one of the things in which we see the real value of blockchain.

RM: The upfront cost of implementing IIoT solutions must be daunting for many manufacturers. How can blockchain help encourage their adoption?

SE: One of the things you’ll see talked about more and more in IIoT is ‘processing at the edge’: the deployment of intelligent algorithms to control individual machines. It’s definitely an opportunity for blockchain to help speed up those deployments. When you make a decision to implement a solution on one machine, you’ll know everything is secure and that it helps reduce cost and you can start to scale it after you’ve proven out the value. I think that’s what most customers want to see: a really quick, immediate value and return on investment on one part of their factory.

RM: One of the more intriguing applications of blockchain technology is so-called ‘smart contracts’. Do you see a place for them in quality control?

SE: The ‘smart contract’ component to blockchain I think is really, really significant because there are so many different areas where defects can occur. You have components with parts that are assembled, and the reason the final product fails is because of a part manufactured on the other side of the world. So who pays for that? Whose problem is that? The potential of smart contracts to basically standardize the transaction across that really diverse supply chain can streamline that process. The added layer on top of that is making sure it’s agreed that my inspection process with AI has the same performance and capacity as the AI in the other inspection process where the part is coming from. It’s a verification on the quality of the product and also a verification of the systems and mechanism used to evaluate and measure product quality at those two locations.

RM: When do you think we’ll start to see smart contracts implemented in connected factories?

SE: There will be early opportunities in 2018 and 2019, but I’d wager it’ll be another couple of years before the systems in place will be there to implement these smart contracts effectively. You have to hit a certain level of adoption with the underlying quality management systems first.

RM: Speaking of timelines, what’s the way forward for Eigen Innovations in the next couple of years?

SE: Taking systems from a level two to a level three or four where they can self-optimize and start to run themselves — that’s something I see as very achievable within the next two years.

Globalive Technology Inc.  (“GT”) is an investor in Eigen Innovations Inc. (“Eigen”). Eigen and GT have entered into a Framework Agreement providing for a technology joint venture, subject to negotiation and documentation of definitive terms.