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Blockchain technology ensures transparency, verifiability and immutability

Sept. 18, 2023
Enhanced transparency, mitigated costs and streamlined operations will benefit supply chains and smart contracts

Blockchain. It’s a simple word that elicits a range of reactions from people. Are we talking about a digital currency, a decentralized finance application or a non-fungible token (NFT)? Is it a scam? A fad? What role will it play in the world of industrial automation?

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Understanding blockchain technology

Blockchain technology is the underlying framework that drives most cryptocurrencies, including bitcoin, the most widely known blockchain application. Operating through a distributed network of computers, it upholds an immutable ledger of transactions. Each individual block within the chain encapsulates vital information such as timestamps, part numbers, prices and dates. This decentralized structure ensures transparency, verifiability and immutability, fortified by cryptographic verification.

If technology can offer value to our lives, then applications that make it easy to use are inevitable. I know what you’re thinking—what does this have to do with industrial automation?

Blockchain’s impact on supply-chain management

The traceability of parts within the supply chain has become a critical concern in many industries, and blockchain technology emerges as a game-changer in addressing this challenge. By establishing secure, transparent networks, blockchain facilitates direct transactions, thereby diminishing reliance on intermediaries.

Industries, particularly the automotive sector, stand to gain significantly by leveraging this technology to enhance transparency, mitigate costs and streamline operations. The integration of sensors and Industrial Internet of Things (IIoT) devices imbues supply chains with real-time data, effectively revolutionizing product tracking and delivery processes.

Blockchain's potential in driving sustainability and ethical practices in industrial automation is significant. Industries, including automotive, can utilize it to track the origin of raw materials and monitor production, ensuring ethical and environmentally responsible processes. This newfound transparency enhances brand image, aligning with consumer demand for ethical and sustainable products.

By emphasizing supply-chain traceability, secure and transparent networks, enhanced tracking and sustainability, blockchain transforms how industries source, manufacture and deliver products. Embracing blockchain technology enables resilient, accountable supply chains, meeting evolving customer and stakeholder expectations while delivering superior quality.

Smart business contracts

The next area where blockchain will impact industrial automation is smart contracts, which are self-executing agreements coded with terms between buyers and sellers. Automating supply-chain tasks like order fulfillment and payments through smart contracts reduces intermediaries, cutting error risks and fraud. Securely storing patent and trademark data on blockchain enhances intellectual-property protection and patent-registration efficiency. These contracts further streamline order fulfillment by triggering raw-material orders based on conditions like inventory levels, offering real-time order tracking via IIoT integration.

Payment processing is another area where smart contracts will have a major impact. By using smart contracts, payment terms can be pre-programmed into the contract itself. When these conditions are met it initiates automatic payments upon fulfillment, eliminating intermediaries, reducing costs and improving cash flow. Smart contracts minimize reliance on intermediaries in industrial processes, reducing costs, minimizing delays and increasing efficiency.

Tracking device lifecycles

Blockchain technology will have a significant impact on the device side of manufacturing by enabling secure and transparent tracking of devices throughout the entire lifecycle, from production to end of life. By integrating blockchain into the manufacturing process, it assigns unique IDs to devices that are recorded on the blockchain, allowing manufacturers to easily trace history, ownership and maintenance records.

One potential use case is in the warranty-and-after-sales-service aspect of device manufacturing. Blockchain is used to trace maintenance and ensure authorized repairs with genuine parts, curbing counterfeiting, and enhancing customer satisfaction. Additionally, blockchain can potentially manage the supply chain of critical components, ensuring genuine parts and protecting against counterfeits and low-quality components. This technology thus revolutionizes device manufacturing by ensuring authenticity, quality and transparency.

Improving communication between devices

Blockchain technology enhances manufacturing device communication through secure peer-to-peer messaging, enabling direct interaction without intermediaries. Devices connect to the blockchain network using a decentralized protocol, ensuring faster information exchange, reduced latency and enhanced security.

Encrypted messages stored immutably guarantee communication integrity and confidentiality, reducing the risk of unauthorized access, data manipulation or eavesdropping. Smart contracts enable automated device interaction based on predefined conditions, streamlining collaboration without human intervention.

Blockchain technology will establish a common framework for communication, promoting interoperability and simplifying integration, while its distributed ledger ensures data integrity, transparency and accountability, enhancing trust, as any discrepancies or unauthorized modifications can be easily identified and resolved.


Blockchain technology's core features of security, transparency and decentralization offer significant potential for industrial automation. Addressing challenges and improving various aspects, blockchain enhances supply-chain management efficiency, reduces costs and provides greater transparency and accountability through the entire manufacturing process. Tracking devices securely from production to end of life, it ensures authenticity, improves warranty management and safeguards against counterfeiting.

The utilization of smart contracts automates processes, eliminates intermediaries and enhances order fulfillment, payment processing and intellectual-property (IP) protection. Blockchain also facilitates secure device communication and enables seamless collaboration and standardized protocols and offers a tamper-resistant platform for data exchange.

By harnessing the power of blockchain, the industrial-automation market can achieve higher levels of trust, efficiency and sustainability, paving the way for a more connected and optimized future.

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