The discussion about digital transformation is trending. I found it is very timely and important. Digital sounds like a buzzword. Therefore, I think, it is very important to share perspective on different aspects of digital transformation to take it down to the earth from high level marketing articles and discuss how digital transformation will change technologies and business. Some of my latest discussions related to digital transformation:

Digital Transformation and PLM Data Quality

Digital Unbundling and Business models

Manufacturing shop-floor and digital transformation

PLM and Web API – the route towards digital transformation.

Today I want to to come back to the topic of blockchain. There is a confusion about blockchain. Some people automatically think it is about cryptocurrency, bitcoins, ICOs, etc.  I won’t be discussing these topics. I’d like to talk about distributed manufacturing ledger and its role in future digital transformation of PLM services.

You can catch up on my latest write up about blockchain here – PLM and blockchain: yes, no, maybe? For the last few months, I’ve been spending time talking to many people about PLM and blockchain. I have to tell you- topic is very much resonating with people’s mind in manufacturing business. Especially when it comes to supply chain and communication between independent vendors, contractors, suppliers, etc.

The trigger for my blog today was Forbes article  – One Thing Is Clear From Davos, Blockchain Is Out Of Beta. Read the article – it gives you many examples of blockchain applications and why they are very much exciting people in the industry.

Here is my favorite passage about supply chain blockchain adoption:

On supply chains and the provenance of goods and commodities, Leanne Kemp, Everledger’s founder and CEO, is committed to resolving perennial blood diamond issues through a Blockchain-based registry. With this, she is at once solving one of the industry’s most insidious challenges, while opening the door to making diamonds a tradable commodity for the first time. Blockchain’s power of transparency and widescale trust, borne from its unalterable record keeping, are on pace to transform a number of supply chains, from precious metals and gems to food and agriculture. Perhaps with the advent of this technology, commodity producing countries will begin moving up the value chain.

With the doomsday clock inching two minutes closer to midnight and on the heels of an annus horibilis for risk, a technology that can sow the seeds of trust, reduce friction and pull stranded assets into the global economy on an unprecedented scale will help drive shared prosperity and resilience. The world will be well served by accelerating Blockchain’s adoption.

In a current state of PLM business, centralized platforms are taking a dominant position. PLM vendors put a sophisticated PLM database inside new thing called “PLM innovation platform”. However, new name didn’t change much how PLM systems can help companies to organize trustful communication across multiple companies. Because PLM systems cannot do so. There is a deadlock. All current PLM platforms has it. Somehow, somebody should play a role of world administrator to put everyone in a single PLM platform from a single vendor (let assume all manufacturing companies will agree to have it). But, I’m not sure manufacturing companies will agree. And in that case, the reality will be even more harsh. Manufacturing companies will demand using  PLM software from different vendors and even all these packages will be running in the cloud, it won’t solve any problem – most of communication is using push / pull of data (very often via Excel spreadsheets and other sophisticate integration middleware developed 20 years ago).

So, here is why Blockchain distributed ledger will become important – it will provide a way to integrate transactions between manufacturing companies in a distributed form without central admin function. In such a way companies and their suppliers will stop relying on old-fashion centralized relational databases to hold the data and do administration. Such transformation will demand changes in infrastructure by bringing different ways to manage data, track changes and share information. But it will be an ultimately new paradigm in data management and collaboration.

What is my conclusion? Digital PLM platforms will allow to OEMs, suppliers and contractors to collaborate in a new “trusted” way without establishing of world super PLM admin. New data management, collaboration and data sharing technologies will be required to make it happen. Blockchain and its distributed ledger paradigm will play an important role in making it happen. Just my thoughts…

Best, Oleg

Want to learn more about PLM? Check out my new PLM Book website.

Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased.

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