Here at Industry Today, we’ve been talking about the ”smart factory” for quite a while now. Tal Elyashiv, Founder and Managing Partner of SPiCE VC, takes the position in this week’s feature article that we are on the verge of realizing the promise of the smart factory thanks to a combination of IoT and blockchain.
IoT is a key component of smart factory and Industry 4.0 initiatives, with IoT in manufacturing driving unprecedented disruption to make factories safer while increasing productivity and efficiency, as well as reducing costs. Here are a few examples cited by Elyashiv:
- Global industrial IoT market size was estimated at USD 326.1 billion in 2021 and is expected to hit around USD 1.7 trillion by 2030 with a registered CAGR of 20.47% during the forecast period 2022 to 2030.
- In 2023, discrete manufacturing and process manufacturing alone are expected to account for over $200 Billion in IoT services spending. Companies driving this IoT boom include ABB, General Electric, IBM, Intel, Rockwell Automation, Siemens, Microsoft, Cisco and NEC.
Such good news about the evolution of the smart factory notwithstanding, Elyashiv notes there are still obstacles to overcome, particularly in the areas of security and privacy. “That’s where blockchain comes in,” he says. “By decentralizing IoT networks, blockchain technology can add a layer of security that traditional centralized models can’t match. Hybrid blockchain and IoT applications offer a range of benefits – specifically when it comes to the power of ‘smart contracts’…self-executing programs built on the blockchain that automatically enforce the terms of an agreement between parties without the need for intermediaries.”
The value of smart contracts to the smart factory include:
- Enforcement of quality standards throughout the supply chain.
- Shared digital ledger with an audit trail that verifies where materials are sourced, preventing counterfeiting
- Better inventory management
- Faster warranty and recall cycles
- More effective tracking and recording of safety incidents; predictive analytics to identify and prevent hazards before they occur
- Green factory sustainability; creating more efficient supply chains, identifying more renewable energy resources, reducing waste, and improving production processes
“According to Gartner, the business value-add of blockchain is expected to exceed $3.1 trillion by 2030, with close to 30% manufacturers (with more than $5 billion in revenue) implementing industry 4.0 projects leveraging blockchain by 2023,” Elyashiv writes, adding that blockchain underpins the ability to truly achieve smart factory goals. “I believe (and the data is proving this out), that the industrial sector stands to significantly benefit from its ability to digitize and modernize quickly and efficiently with implementation of blockchain technology across all aspects of the ecosystem. In fact, manufacturing may become the industry to watch as other sectors look to innovate and evolve with similar successful outcomes.
Read the complete article, Is it Really a Smart Factory Without Blockchain?
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Susan Poeton 