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By Robert Huschka

In 1900, London was home to roughly 50,000 horses. More than 11,000 horse-drawn cab drivers carted folks around the city. Thousands of workers helped bring in hay. Blacksmiths tended to the animals. And, laborers carted away the millions of pounds of manure that was generated every day.

Technology has always changed the jobs we do. Sure, we have fewer blacksmiths. But cars gave us mechanics, auto engineers, roadside construction workers, rubber tire manufacturers, and the drive-thru fast food window. Entire industries were spawned by the advent of automobiles.

The world economy continually faces this cycle of disruption and reinvention. Yet we have more people working today than at any point in history.

This is why robot taxes – an idea that seems to surface every few months — are worse than simple nostalgia. They would be a disastrous attempt to hold on to the past, while preventing our innovative companies – and our countries – from truly embracing the future.

INCREASING PRODUCTIVITY AS THE WORKFORCE AGES: In both Europe and the United States, there’s a perfect storm of pressures that can only be addressed with robotics and automation. Industrialized economies face unprecedented stagnation in productivity. This hampers wage growth and limits companies’ abilities to expand. Already, robots have made a difference. Between 1993 to 2016, robots contributed to 10 percent GDP growth in Organization for Economic Cooperation and Development (OECD) countries. And, employers are turning to robotics to help address aging populations and historically low unemployment that have made it difficult to find workers.

CREATING JOBS WITH AUTOMATION: Businesses must use automation to lower costs and increase productivity to survive competition. Look at Amazon. The e-commerce powerhouse has aggressively implemented 200,000 robots in its distribution centers while adding more than 300,000 jobs, doubling its workforce. Companies shed jobs when they fail to keep up with their competition, not when they add robots. In fact, as robot sales have hit records, unemployment has fallen.

GLOBAL COMPETITORS AREN’T STANDING STILL: Under its “Made in China 2025” initiative, the Chinese will invest $300 billion in their manufacturing and automation technologies. China wants to dominate the fields of robotics, artificial intelligence, 5G and quantum computing. In South Korea, there are already 710 robots for every 10,000 manufacturing workers. (The international average is just 85 per 10,000 workers.)

HOW DO YOU DEFINE A “ROBOT,” ANYWAY? Is a cash machine a robot? How about that self-driving car? Digital schedules have replaced administrative assistants. Is that iPhone calendar a robot? Just imagine the complex definitions and regulations that would need to go into such a tax.

In the end, the last thing governments should do is reduce the incentive for companies to invest in new technologies. Innovation won’t just solve business problems. It will help us make the world better. Robots will help us grow more food with fewer chemicals. They are removing dull and dangerous jobs from our workforce, freeing time for human creativity. Robot surgeons will assist doctors to save the lives of more patients.

But we must embrace our future. We must not let reckless and impractical taxes on robots stand in the way.

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By Jeff Burnstein
President of the Association for Advancing Automation

Robots don’t take away jobs.

When companies lose to their competition, that’s when workers lose jobs.

There seems to be this idea: If the robots hadn’t shown up, the jobs would have stayed. But nothing could be further from reality.

Here’s the truth: We aren’t using enough robots.

The New York Time recently published a column by Thomas B. Edsall that blames robots and artificial intelligence for the displacement of large chunks of Midwestern workers – and claims this led to today’s current political divisions.

This is a gross misunderstanding of the role automation plays in the American economy.

Over the last 25 years, many American manufacturers found themselves unable to compete with the lower costs and higher productivity of foreign manufacturers. They closed their doors or moved their operations. Those jobs left for another country. They weren’t taken away by machines.

In actuality, robots and automation have saved and created jobs – and will continue to do so. Businesses that used automation to lower costs and increase productivity were able to compete with foreign suppliers and keep their doors open. Workers stayed on the job at those facilities, and their communities didn’t suffer the traumatic loss of another local employer.

Companies that embraced automation had the opportunity to grow and ultimately make more hires. Ask Marlin Steel in Baltimore or Vickers Engineering in New Troy, Mich., how their businesses were transformed – while providing safer, better, higher-paying jobs.

The real crisis – and opportunity

The truth is American industry is indeed facing a worker crisis – a crisis on two fronts.

First, there simply aren’t enough workers.

In the next 10 years, according to a recent Deloitte Consulting report, more than 2.4 million manufacturing jobs will go unfilled, because there aren’t enough people with the necessary skills. Long-haul trucking is currently experiencing the worst worker shortage it has ever had. In the growing warehouse market, with its aging workforce, there is an “unprecedented labor shortage,” according to one report. In California’s agriculture sector, there are four jobs open for every applicant, and the implication of not finding workers is severe.

Companies have will no choice but to turn to robotics and automation to solve these problems – or they will go out of business.

And the second crisis: We lack the engineers, the technicians, AI specialists and workers with trade skills to help companies deploy automation solutions.

In the automation age, the range of opportunities is huge — and promising. Entry-level, automation-age manufacturing jobs can start at $20 per hour with just a high school diploma and a few months of training and professional certification. Highly technical positions can pay far more.

Rather than bashing robots, politicians and pundits could better spend their time by advocating for STEM-based education initiatives, while also developing public-private partnerships around worker retraining, apprenticeships and manufacturing certification programs.

Fifteen years ago, no one was an iPhone app developer or a search engine optimization specialist. As in previous industrial revolutions, we know new jobs will rise from innovation in automation.

We need to prepare for change and embrace it. Not stand it in its way – because our global competitors are not standing still.

The robotics race

Under its “Made in China 2025” initiative, the Chinese will invest $300 billion in their manufacturing and automation technologies. China wants to dominate the fields of robotics, artificial intelligence, 5G and quantum computing.

The rest of the world is also spending big.  Under its Industry 4.0 initiative, Germany will invest more than 200 million euros in research and development funding for advanced manufacturing.  Japan and South Korea are both investing heavily in industrial R&D as automation becomes even more essential to improving their competitiveness.  The United Kingdom is stepping up its R&D efforts – including targeting funds at electric vehicle batteries and robotics – to help stimulate its economy.

The United States is just 16th in the world in robot adoption rate – a metric that track how fast a company is expected to automate based on economic factors. We are behind China, Japan and Mexico – and even Italy and Sweden.

The slow rate of automation adoption will hamper the ability of the United States to compete.

It won’t be robots that take jobs away.

But it may very well be the lack of robots that costs the American worker.

Jeff Burnstein is the President of the Association for Advancing Automation (A3), an umbrella trade group representing more than 1,200 global companies focused on robotics, machine vision, motors, motion control and advanced manufacturing technologies. For the latest details about A3 activities, visit www.a3automate.org

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There’s a popular meme these days called #firstworldproblems that slyly probes the dark side of modern-day life. Tragedies like when you can’t find someone to wash your airplane, you have to settle for 3G, or they use non-organic avocados on your toast. But there’s a legitimate #firstworldproblem out there these days that not enough people are talking about.

June 5, 2018, was a significant day in U.S. history. On that date, the U.S. Labor Department reported that there are more jobs available than people currently seeking work. As a result, American businesses are suffering because they can’t find enough workers.

Despite the common narrative, supported by sci-fi analogies and dystopian references that robots are stealing jobs, the reality is far less cinematic. It is my contention that robots and automation are the best and fastest way to pull ourselves out of our current #firstworldproblem. For many employers, this news only reinforced what they were already experiencing.

Manufacturing

A Deloitte Consulting survey reports that manufacturing executives are worried that around 60 percent of current open positions in their businesses are unfilled due to lack of skilled workers, and as many as 2.4 million manufacturing jobs will be going unfilled over the next 10 years due to widening skills gap.1 One company in Indiana was so desperate for workers that it instituted drug rehab training to increase its pool of potential hires.2

Transportation

Long-haul trucking is currently experiencing the worst worker shortage it has ever had.3

Logistics

A growing warehouse market, combined with an aging workforce, has contributed to an “unprecedented labor shortage” according to one report.4

Agriculture

In California, there are four jobs open for every applicant5, and the implication of not finding workers is severe. In Santa Barbara County (CA) last year, $13 million worth of produce was plowed under as a result of labor shortages.6

So let me repeat: there aren’t enough workers. If we don’t automate ourselves out of this problem, the implications for the economy will be profound.

Robotics has traditionally been cast as solving problems around three job types: dirty, dangerous and dull. The 3Ds, as they are known, cover a lot of ground.  There’s a great deal of economic benefits to be gained through the adoption of robotic technology.

In fact, adoption of robotics and related technologies is well underway and showing no signs of slowing down. In the United States robot shipments have grown at a compound annual growth rate (CAGR) of 7.2% since 2007, and the International Federation of Robotics (IFR) is estimating that growth will accelerate to over 10% during the next 5 years.

One of the drivers of this adoption is increasing affordability of the technologies. Average revenue per robot shipped to North American customers has decreased 11.4% since 2007. During that same period, annual shipment volumes have more than doubled (14,920 units in 2007 to 33,575 units in 2017, a 125% increase). Small and medium sized companies especially are finding it’s easier to justify their automation investments and improve ROI.

The growing adoption isn’t just prevalent in traditional factory applications like the mature automotive industry either. Over the past five years, growth in non-automotive industries has outpaced growth in automotive for the first time in history (10% CAGR vs. 9% CAGR respectively; North America). Included among the rapidly growing non-automotive segment are industries such as life sciences, electronics, food and consumer goods, plastics, and metals.

Reports have been competing for years about whether robotics creates or destroys jobs. But it’s that kind of either/or mentality that contributes to a negative public perception of robotics. Yes, robotics and automation will replace some jobs, but will it give more than it takes? The answer is more often a resounding yes. Historically, more robots mean more jobs. When robot density goes up, unemployment goes down.

That worm is starting to turn according to recent reports. The World Economic Forum has recently reported that 75 million workers will be eliminated by automation; but also predicts that 133 million new jobs will be created by improvements in automation.7

Another word for automation is ‘progress’ and a recent report from ITIF claims that the U.S. is lagging in its adoption of robots.8 While that might seem inconsequential, if this U.S. doesn’t automate itself out of the latest worker shortage, some other country will step into the breach. As Robert Atkinson, ITIF Founder and President recently told The Wall Street Journal: “You either adopt automation or you see jobs go overseas to the countries that do.”9

There’s no question that job loss is prevalent and often traumatic. But the reality is that technology advances have always changed the nature of jobs and well before the ubiquitous Luddites. Did you know that Roman Emperor Vespasian dealt with this issue in A.D. 72?

So let’s stop demonizing robots and automation, get to work, and fix this #firstworldproblem. If we focus on our fears, we will miss the opportunities. The next time your barista uses caramel instead of hazelnut on your Venti iced skinny macchiato or Trader Joe’s runs out of matcha lemonade, remember that there are some real #firstworldproblems out there.

1https://www2.deloitte.com/us/en/pages/manufacturing/articles/future-of-manufacturing-skills-gap-study.html

2https://money.cnn.com/2018/05/22/news/economy/employers-opioid-rehab-belden/index.html

3http://fortune.com/2018/06/27/americas-trucker-shortage/

4https://www.joc.com/international-logistics/logistics-providers/world-bank-sounds-alarm-logistics-worker-shortage_20170908.html

5https://agamerica.com/farm-labor-shortage/

6https://www.independent.com/news/2017/jun/22/labor-shortage-leaves-13-million-crops-rot-fields/

7https://www.weforum.org/press/2018/09/machines-will-do-more-tasks-than-humans-by-2025-but-robot-revolution-will-still-create-58-million-net-new-jobs-in-next-five-years/

8https://itif.org/publications/2018/11/19/which-nations-really-lead-industrial-robot-adoption?mod=article_inline

9https://www.wsj.com/articles/robot-reality-check-they-create-wealthand-jobs-1543500001

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By Jeff Burnstein
President of the Association for Advancing Automation

Robots don’t take away jobs.

When companies lose to their competition, that’s when workers lose jobs.

There seems to be this idea: If the robots hadn’t shown up, the jobs would have stayed. But nothing could be further from reality.

Here’s the truth: We aren’t using enough robots.

The New York Time recently published a column by Thomas B. Edsall that blames robots and artificial intelligence for the displacement of large chunks of Midwestern workers – and claims this led to today’s current political divisions.

This is a gross misunderstanding of the role automation plays in the American economy.

Over the last 25 years, many American manufacturers found themselves unable to compete with the lower costs and higher productivity of foreign manufacturers. They closed their doors or moved their operations. Those jobs left for another country. They weren’t taken away by machines.

In actuality, robots and automation have saved and created jobs – and will continue to do so. Businesses that used automation to lower costs and increase productivity were able to compete with foreign suppliers and keep their doors open. Workers stayed on the job at those facilities, and their communities didn’t suffer the traumatic loss of another local employer.

Companies that embraced automation had the opportunity to grow and ultimately make more hires. Ask Marlin Steel in Baltimore or Vickers Engineering in New Troy, Mich., how their businesses were transformed – while providing safer, better, higher-paying jobs.

The real crisis – and opportunity

The truth is American industry is indeed facing a worker crisis – a crisis on two fronts.

First, there simply aren’t enough workers.

In the next 10 years, according to a recent Deloitte Consulting report, more than 2.4 million manufacturing jobs will go unfilled, because there aren’t enough people with the necessary skills. Long-haul trucking is currently experiencing the worst worker shortage it has ever had. In the growing warehouse market, with its aging workforce, there is an “unprecedented labor shortage,” according to one report. In California’s agriculture sector, there are four jobs open for every applicant, and the implication of not finding workers is severe.

Companies have will no choice but to turn to robotics and automation to solve these problems – or they will go out of business.

And the second crisis: We lack the engineers, the technicians, AI specialists and workers with trade skills to help companies deploy automation solutions.

In the automation age, the range of opportunities is huge — and promising. Entry-level, automation-age manufacturing jobs can start at $20 per hour with just a high school diploma and a few months of training and professional certification. Highly technical positions can pay far more.

Rather than bashing robots, politicians and pundits could better spend their time by advocating for STEM-based education initiatives, while also developing public-private partnerships around worker retraining, apprenticeships and manufacturing certification programs.

Fifteen years ago, no one was an iPhone app developer or a search engine optimization specialist. As in previous industrial revolutions, we know new jobs will rise from innovation in automation.

We need to prepare for change and embrace it. Not stand it in its way – because our global competitors are not standing still.

The robotics race

Under its “Made in China 2025” initiative, the Chinese will invest $300 billion in their manufacturing and automation technologies. China wants to dominate the fields of robotics, artificial intelligence, 5G and quantum computing.

The rest of the world is also spending big.  Under its Industry 4.0 initiative, Germany will invest more than 200 million euros in research and development funding for advanced manufacturing.  Japan and South Korea are both investing heavily in industrial R&D as automation becomes even more essential to improving their competitiveness.  The United Kingdom is stepping up its R&D efforts – including targeting funds at electric vehicle batteries and robotics – to help stimulate its economy.

The United States is just 16th in the world in robot adoption rate – a metric that track how fast a company is expected to automate based on economic factors. We are behind China, Japan and Mexico – and even Italy and Sweden.

The slow rate of automation adoption will hamper the ability of the United States to compete.

It won’t be robots that take jobs away.

But it may very well be the lack of robots that costs the American worker.

Jeff Burnstein is the President of the Association for Advancing Automation (A3), an umbrella trade group representing more than 1,200 global companies focused on robotics, machine vision, motors, motion control and advanced manufacturing technologies. For the latest details about A3 activities, visit www.a3automate.org

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There’s a popular meme these days called #firstworldproblems that slyly probes the dark side of modern-day life. Tragedies like when you can’t find someone to wash your airplane, you have to settle for 3G, or they use non-organic avocados on your toast. But there’s a legitimate #firstworldproblem out there these days that not enough people are talking about.

June 5, 2018, was a significant day in U.S. history. On that date, the U.S. Labor Department reported that there are more jobs available than people currently seeking work. As a result, American businesses are suffering because they can’t find enough workers.

Despite the common narrative, supported by sci-fi analogies and dystopian references that robots are stealing jobs, the reality is far less cinematic. It is my contention that robots and automation are the best and fastest way to pull ourselves out of our current #firstworldproblem. For many employers, this news only reinforced what they were already experiencing.

Manufacturing

A Deloitte Consulting survey reports that manufacturing executives are worried that around 60 percent of current open positions in their businesses are unfilled due to lack of skilled workers, and as many as 2.4 million manufacturing jobs will be going unfilled over the next 10 years due to widening skills gap.1 One company in Indiana was so desperate for workers that it instituted drug rehab training to increase its pool of potential hires.2

Transportation

Long-haul trucking is currently experiencing the worst worker shortage it has ever had.3

Logistics

A growing warehouse market, combined with an aging workforce, has contributed to an “unprecedented labor shortage” according to one report.4

Agriculture

In California, there are four jobs open for every applicant5, and the implication of not finding workers is severe. In Santa Barbara County (CA) last year, $13 million worth of produce was plowed under as a result of labor shortages.6

So let me repeat: there aren’t enough workers. If we don’t automate ourselves out of this problem, the implications for the economy will be profound.

Robotics has traditionally been cast as solving problems around three job types: dirty, dangerous and dull. The 3Ds, as they are known, cover a lot of ground.  There’s a great deal of economic benefits to be gained through the adoption of robotic technology.

In fact, adoption of robotics and related technologies is well underway and showing no signs of slowing down. In the United States robot shipments have grown at a compound annual growth rate (CAGR) of 7.2% since 2007, and the International Federation of Robotics (IFR) is estimating that growth will accelerate to over 10% during the next 5 years.

One of the drivers of this adoption is increasing affordability of the technologies. Average revenue per robot shipped to North American customers has decreased 11.4% since 2007. During that same period, annual shipment volumes have more than doubled (14,920 units in 2007 to 33,575 units in 2017, a 125% increase). Small and medium sized companies especially are finding it’s easier to justify their automation investments and improve ROI.

The growing adoption isn’t just prevalent in traditional factory applications like the mature automotive industry either. Over the past five years, growth in non-automotive industries has outpaced growth in automotive for the first time in history (10% CAGR vs. 9% CAGR respectively; North America). Included among the rapidly growing non-automotive segment are industries such as life sciences, electronics, food and consumer goods, plastics, and metals.

Reports have been competing for years about whether robotics creates or destroys jobs. But it’s that kind of either/or mentality that contributes to a negative public perception of robotics. Yes, robotics and automation will replace some jobs, but will it give more than it takes? The answer is more often a resounding yes. Historically, more robots mean more jobs. When robot density goes up, unemployment goes down.

That worm is starting to turn according to recent reports. The World Economic Forum has recently reported that 75 million workers will be eliminated by automation; but also predicts that 133 million new jobs will be created by improvements in automation.7

Another word for automation is ‘progress’ and a recent report from ITIF claims that the U.S. is lagging in its adoption of robots.8 While that might seem inconsequential, if this U.S. doesn’t automate itself out of the latest worker shortage, some other country will step into the breach. As Robert Atkinson, ITIF Founder and President recently told The Wall Street Journal: “You either adopt automation or you see jobs go overseas to the countries that do.”9

There’s no question that job loss is prevalent and often traumatic. But the reality is that technology advances have always changed the nature of jobs and well before the ubiquitous Luddites. Did you know that Roman Emperor Vespasian dealt with this issue in A.D. 72?

So let’s stop demonizing robots and automation, get to work, and fix this #firstworldproblem. If we focus on our fears, we will miss the opportunities. The next time your barista uses caramel instead of hazelnut on your Venti iced skinny macchiato or Trader Joe’s runs out of matcha lemonade, remember that there are some real #firstworldproblems out there.

1https://www2.deloitte.com/us/en/pages/manufacturing/articles/future-of-manufacturing-skills-gap-study.html

2https://money.cnn.com/2018/05/22/news/economy/employers-opioid-rehab-belden/index.html

3http://fortune.com/2018/06/27/americas-trucker-shortage/

4https://www.joc.com/international-logistics/logistics-providers/world-bank-sounds-alarm-logistics-worker-shortage_20170908.html

5https://agamerica.com/farm-labor-shortage/

6https://www.independent.com/news/2017/jun/22/labor-shortage-leaves-13-million-crops-rot-fields/

7https://www.weforum.org/press/2018/09/machines-will-do-more-tasks-than-humans-by-2025-but-robot-revolution-will-still-create-58-million-net-new-jobs-in-next-five-years/

8https://itif.org/publications/2018/11/19/which-nations-really-lead-industrial-robot-adoption?mod=article_inline

9https://www.wsj.com/articles/robot-reality-check-they-create-wealthand-jobs-1543500001

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by Jeff Burnstein, President, Association for Advancing Automation

Last week I delivered a keynote address on the Outlook on US Robotics and Intelligent Technologies at the fourth annual World Robot Conference (WRC) in Beijing.  Some 1200 people attended the Main Forum, which also featured keynotes from industry leaders such as Esben Ostergaard and Dr. Daokui Qu of RIA Members Universal Robots and Siasun respectively.  In addition to the Main Forum and several other conference sessions, WRC featured exhibits from leading industrial and service robot companies and student competitions.  More than 250,000 people were expected to attend the exhibits (many of them children, as WRC is a public show).

The opening ceremonies featured a talk from Vice Premier Liu He, who discussed the importance of cooperation in the global robotics industry.  His message was well received since WRC has 21 international sponsoring organizations from associations in Russia, Israel, Australia, Italy, the US, among others.  Following Premier Lui’s talk, I had a brief chance to encourage him to move toward a quick resolution of the current trade disputes between the US and China.  He told me solutions were being worked on (he heads the Chinese bilateral talks with the US).  The next day, right before my keynote, China announced that the talks, which had been stalled, would be resumed in the US shortly.  I shared this positive news with the audience during my introductory remarks.

While I was in Beijing I did several interviews with leading media outlets in China and throughout Asia.  The highlights were live segments on CNBC Asia and CGTN (China’s English-language television network).  I also filmed a segment with the Associated Press.  These press interviews provided great opportunities to discuss key issues as well as establish additional awareness of RIA and A3 to the world’s largest robotics market.

Other key activities included participating in a roundtable discussion with Chinese leaders and the international sponsoring organizations, meeting with RIA member Siasun, touring the exhibits, and listening to talks on robotics, AI, and current research efforts.

The week was packed with business, but our Chinese hosts did take us to the world-famous Laoshe Teahouse to see amazing acrobatic performers, musicians, tea preparations, and more.  I highly recommend a visit if you’re ever in Beijing.

This was my second trip to WRC and I look forward to returning for the 5th Anniversary event next year.

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By Robert Huschka, Director of Education Strategies, Association for Advancing Automation

Forget about Bitcoin.

It’s blockchain — the underlying technology behind cryptocurrency – that might be the real revolution with the potential to dramatically alter how businesses manage their supply chains.

Imagine using your phone to find out where every part in a new truck was made. Or to discover what pesticides were used on those tomatoes. What if you add a new supplier to your operation in hours or days instead of weeks or months? Or dump the piles of paperwork needed for typical transactions?

This year, blockchain has rapidly become the latest business buzzword, as big tech companies and industrial leaders look to leverage its unique information management and security capabilities.

The technology – which uses digitally decentralized ledgers to record transactions — has already rolled out in diverse segments of the economy, from food safety and product tracking to banking and property sales. Blockchain is probably best-known for its use as the backbone of Bitcoin and other cryptocurrencies.

But it’s the supply chain where blockchain may have the greatest impact on the way business is done. It has the potential to simplify transactions between companies, while adding an unprecedented level of transparency and security.

“I can see material flowing, manufacturing, logistics, shipping, customers receiving product. … That this visibility isn’t just inside a company. It’s across all the trading partners,” says Joe Francis, director of Digital Supply Chain Transformation at Accenture. “It’s extremely difficult to do this using traditional techniques. Blockchain makes it really easy to do.”

Tech giants — Microsoft, IBM, Oracle, and Intel — are investing heavily in developing blockchain solutions. Google is quietly researching its own cloud-based blockchain technology. Global consulting firm Accenture had more than 500 blockchain-related job openings in 2017.

Companies have already begun blockchain experiments. For example, Walmart has entered into a coalition with Unilever, Dole and Nestle to explore how to apply the technology to their food supply chains.

The blockchain solutions market could grow from $706 million last year to more than $60 billion by 2024, according to WinterGreen Research.

So, how does blockchain work?

At its simplest, blockchain is a rolling log – a digital ledger or database – where each new record, transaction or event is added to the end of the log. Each new record becomes a “block” on the continually expanding “chain” of data.

No one authority has oversight of the ledger. It’s decentralized. A network of independent computer “nodes” shares management of the blockchain. As new data is added, each of the nodes records the transaction and verifies it – creating identical copies of the ledger. Once written, a block can’t be deleted or changed, thus building a unified trail of verified transactions that can be accessed by the parties involved.

The decentralized nature of the system creates trust and transparency. If anyone tried to alter or manipulate previous blocks, the other nodes would spot the change and prevent any tampering. This arrangement has been called “trustless trust” — where partners can conduct business without a middle man or auditor keeping tabs.

“Blockchain can provide a kind of a magnifying glass,” says Michela Menting, digital security research director at ABI Research. “You can see all of that data from end-to end.”

How would this work in my supply chain?

Let’s say Fred wants to buy 10,000 Widgets. Currently, Fred’s purchase might involve a barrage of electronic paperwork or crisscrossing documents with the seller. There might be a purchase order, an exchange of contracts, confirmation notifications, invoices and delivery receipts. If Fred’s Widgets didn’t arrive as expected, it could mean more paperwork – and weeks or months — to settle the dispute.

Using blockchain, both Fred and the Widget seller can get instant, verifiable data on the transaction. Fred places his order into the chain, and it’s acknowledged by the seller with another block. Yet more data is added to the chain as the Widgets rolls through the assembly line. The shipping company adds a block when the Widgets are picked up – and again when they are handed to Fred.

Software at Fred’s company monitors the blockchain, makes note of the delivery and issues an automatic payment to the Widget manufacturer. And that payment is added as another block to the chain.

“So all the reconciliation between all the trading partners goes away,” says Accenture’s Francis. “You don’t have a debate about who’s correct about when the arrival was. There’s only one arrival date. Everyone shares the same information.”

For decades, Electronic Data Interchange (EDI) systems have helped manage these types of business-to-business communications. But those systems can be cumbersome, inefficient and vulnerable — and often require expensive equipment and lengthy onboarding times. That communication is often just one-way or point-to-point exchanges and can leave key stakeholders out of the loop.

Under a blockchain solution, all parties can see exactly how a deal is proceeding — cutting down on the possibility of a dispute or problem later. And because networks can be built to be private, with layers of different permissions, it’s secure. Business partners can only see the details of the transactions that they are allowed to access.

IBM’s Blockchain for Dummies guide explains it this way: “A blockchain for business network can be set up as a members-only club, where every participant has a unique identity, and participants must meet certain criteria to conduct transactions. Participants can conduct transactions confident that the person they’re dealing with is who she claims to be.”

 But I already have a bunch of databases, right?

Blockchain won’t necessarily replace old internal methods of tracking products and data. Most blockchain solutions would likely pull in existing data and accounting tools.

“I don’t think there will be a need for any significant investment in new infrastructure,” ABI’s Menting says. “Blockchain is not supposed to really replace everything that’s there.”

Think of it as an additional analytics tool that will give you new insights into your operations. For example, let’s say you are using RFID to track shipments. There’d be no need to change tracking infrastructure. You’d simply tie that data into the blockchain.

So you might be asking: Do we really a blockchain? Menting says you shouldn’t overlook the potential insights and the speed at which you can arrive at them.

“You can expedite a lot of things. You can drive a lot more transparency. You can augment your data with a better analytical tool by plugging the relevant information into that blockchain,” Menting says. “Things happen faster. It’s an enabler.”

Consider the recent E. Coli outbreaks in romaine lettuce. The CDC advised everyone in the United States to stop eating romaine lettuce altogether as it worked to track the source of the contamination – an often laborious forensics exercise as investigators work their way back through the supply chain.

Under blockchain, data on the lettuce would have been captured and stored at each stage of its journey from field to grocery store. Conceivably, these solutions could allow you to scan a barcode on a single sandwich and learn within seconds where and when that lettuce was harvested.

What are smart contracts?

Once a blockchain is operating, it can unlock other powerful tools – such as smart contracts.

A smart contract is a transaction or operation that is automatically executed by the blockchain software – once it verifies that agreed-upon criteria have been met.

Let’s use Fred’s Widgets again as a simple example. That agreement might call for bonuses to the manufacturer and shipping company for early delivery. Fred’s software can monitor the blockchain and see that the Widgets did indeed arrived ahead of schedule. The smart contract can then pay out the extra cash – without any human signing off.

A smart contract solution could be programed to only ship products when costs were below a certain threshold. Or one could automatically place new orders for new parts when it determined that existing supplies were low. Smart contract software could estimate freight requirements and reserve space with multiple carriers for the holiday season.

This helps build efficiency – but it might also save costs by cutting out expensive middle men, such as escrow services, banks and billing firms.

Potentially, a blockchain or smart contract could be programed to head off problems. It can learn “to recognize problems or opportunities,” says Francis. “It’s doing performance analysis of cycle times or benchmarking.”

If the blockchain software spots a supply chain issue – such as a small delay at a downstream supplier that will resonate later as a bigger problem – it can trigger a warning, like sending an alert or email. Or it can take automated action – such as ordering parts for another supplier — to alleviate the issue.

What else might blockchain do?

FASTER SUPPLIER ONBOARDING: Today, it can take months to change suppliers or add a new supplier into your production process. Under blockchain, your new supplier could simply plug in their node to your existing blockchain to begin a relationship.  “Everyone’s used to how horrible it is to set up (a new partner) and they can’t quite believe that you just set up the channel and start training,” Francis says. “That’s why it’s such a powerful technology.”

SOPHISTICATED BENCHMARKING:  With the new transparency, companies should gain new insights into the efficiency of their supply chain. Potentially, companies could use this data to rate suppliers or shipping companies – or to find bottlenecks in their set-ups. Industries could even use opt-in anonymized data to allow companies to truly measure themselves against an industry standard. “Because this data is available, you can rate various players in the supply chain,” Menting says.

TRANSPARENCY ACROSS INDUSTRIES: What if you desperately needed to get products to Frankfurt for Christmas? The problem is 4,000 other industries are shipping stuff that week, too, taking up much of the freight headroom. But there’s no easy way to see that outside your industry. Blockchain technology may allow companies to manage resource consumption across industries, giving you a real-time view of availability of shipping space, key components or other materials.

AN EBAY FOR THE SUPPLY CHAIN? Imagine being able to crowd-source your supply chain. You could use smart contracts that would accept bids from manufacturers based on criteria such as quality or price. The “winner” would be slotted into the production process by the blockchain software.

 How quickly will blockchain solutions arrive?

Blockchain is still a developing technology – but one that’s developing quickly. IBM, Microsoft and others are already marketing blockchain solutions to businesses.

However, despite some high profile proof-of-concepts, experts say we might not see mature, widely-used solutions until early in the next decade.

Two major blockchain software platforms have already emerged: Etherum and Hyperledger. Without going deep into the specifics, both are collaborative open-source efforts working to create standards and protocols to run blockchain applications. These frameworks will create the language that blockchains will use to run – similar to how HTML is the language of the web.

“We’re going to see the first commercial solutions probably emerge in the latter part of this year,” says ABI’s Menting. “I think we’re going to have some commercialization, mass-market appeal from 2022.  And then by 2025, some more tech maturity for the supply chain.”

Blockchain does bring with it some unique hurdles. As blockchains grow in complexity, they require more and more storage space – and more computational power. And we that computing power comes greater energy consumption.

There are various solutions to these issues, “but it’s definitely something that’s not mature yet, so I think the concerns are valid in terms of energy consumption and data storage. If everyone is going to have a copy of that ledger — and if there’s 1000 people in that supply chain — do we really all need a copy of everything that’s happening?”

As with any new technology, security is a concern, but most blockchain solutions are being built to plug potential vulnerabilities.

“With new technologies, there’s a lot of unknowns,” Menting says. “Some of that can be addressed when you design the application – that it’s designed with security in mind.”

With today’s software, security is thought about only after there’s a breach or an exposed vulnerability, Menting says.

“You can instill some secure design practices early on (with blockchain),” she says.

In any case, the businesses case will need to be clear for companies to jump aboard. And they’ll need to be convinced that the process isn’t too cumbersome.

“Unless block chain is easy as – or easier than –current practice, it’s never going to be adopted,” Francis says, “even though it looks wonderful, and it’s got all these features.”

Robert Huschka writes about emerging technologies for the Association for Advancing Automation. Contact him at rhuschka@a3automate.org.

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By Robert Huschka, Director of Education Strategies, Association for Advancing Automation

Forget about Bitcoin.

It’s blockchain — the underlying technology behind cryptocurrency – that might be the real revolution with the potential to dramatically alter how businesses manage their supply chains.

Imagine using your phone to find out where every part in a new truck was made. Or to discover what pesticides were used on those tomatoes. What if you add a new supplier to your operation in hours or days instead of weeks or months? Or dump the piles of paperwork needed for typical transactions?

This year, blockchain has rapidly become the latest business buzzword, as big tech companies and industrial leaders look to leverage its unique information management and security capabilities.

The technology – which uses digitally decentralized ledgers to record transactions — has already rolled out in diverse segments of the economy, from food safety and product tracking to banking and property sales. Blockchain is probably best-known for its use as the backbone of Bitcoin and other cryptocurrencies.

But it’s the supply chain where blockchain may have the greatest impact on the way business is done. It has the potential to simplify transactions between companies, while adding an unprecedented level of transparency and security.

“I can see material flowing, manufacturing, logistics, shipping, customers receiving product. … That this visibility isn’t just inside a company. It’s across all the trading partners,” says Joe Francis, director of Digital Supply Chain Transformation at Accenture. “It’s extremely difficult to do this using traditional techniques. Blockchain makes it really easy to do.”

Tech giants — Microsoft, IBM, Oracle, and Intel — are investing heavily in developing blockchain solutions. Google is quietly researching its own cloud-based blockchain technology. Global consulting firm Accenture had more than 500 blockchain-related job openings in 2017.

Companies have already begun blockchain experiments. For example, Walmart has entered into a coalition with Unilever, Dole and Nestle to explore how to apply the technology to their food supply chains.

The blockchain solutions market could grow from $706 million last year to more than $60 billion by 2024, according to WinterGreen Research.

So, how does blockchain work?

At its simplest, blockchain is a rolling log – a digital ledger or database – where each new record, transaction or event is added to the end of the log. Each new record becomes a “block” on the continually expanding “chain” of data.

No one authority has oversight of the ledger. It’s decentralized. A network of independent computer “nodes” shares management of the blockchain. As new data is added, each of the nodes records the transaction and verifies it – creating identical copies of the ledger. Once written, a block can’t be deleted or changed, thus building a unified trail of verified transactions that can be accessed by the parties involved.

The decentralized nature of the system creates trust and transparency. If anyone tried to alter or manipulate previous blocks, the other nodes would spot the change and prevent any tampering. This arrangement has been called “trustless trust” — where partners can conduct business without a middle man or auditor keeping tabs.

“Blockchain can provide a kind of a magnifying glass,” says Michela Menting, digital security research director at ABI Research. “You can see all of that data from end-to end.”

How would this work in my supply chain?

Let’s say Fred wants to buy 10,000 Widgets. Currently, Fred’s purchase might involve a barrage of electronic paperwork or crisscrossing documents with the seller. There might be a purchase order, an exchange of contracts, confirmation notifications, invoices and delivery receipts. If Fred’s Widgets didn’t arrive as expected, it could mean more paperwork – and weeks or months — to settle the dispute.

Using blockchain, both Fred and the Widget seller can get instant, verifiable data on the transaction. Fred places his order into the chain, and it’s acknowledged by the seller with another block. Yet more data is added to the chain as the Widgets rolls through the assembly line. The shipping company adds a block when the Widgets are picked up – and again when they are handed to Fred.

Software at Fred’s company monitors the blockchain, makes note of the delivery and issues an automatic payment to the Widget manufacturer. And that payment is added as another block to the chain.

“So all the reconciliation between all the trading partners goes away,” says Accenture’s Francis. “You don’t have a debate about who’s correct about when the arrival was. There’s only one arrival date. Everyone shares the same information.”

For decades, Electronic Data Interchange (EDI) systems have helped manage these types of business-to-business communications. But those systems can be cumbersome, inefficient and vulnerable — and often require expensive equipment and lengthy onboarding times. That communication is often just one-way or point-to-point exchanges and can leave key stakeholders out of the loop.

Under a blockchain solution, all parties can see exactly how a deal is proceeding — cutting down on the possibility of a dispute or problem later. And because networks can be built to be private, with layers of different permissions, it’s secure. Business partners can only see the details of the transactions that they are allowed to access.

IBM’s Blockchain for Dummies guide explains it this way: “A blockchain for business network can be set up as a members-only club, where every participant has a unique identity, and participants must meet certain criteria to conduct transactions. Participants can conduct transactions confident that the person they’re dealing with is who she claims to be.”

 But I already have a bunch of databases, right?

Blockchain won’t necessarily replace old internal methods of tracking products and data. Most blockchain solutions would likely pull in existing data and accounting tools.

“I don’t think there will be a need for any significant investment in new infrastructure,” ABI’s Menting says. “Blockchain is not supposed to really replace everything that’s there.”

Think of it as an additional analytics tool that will give you new insights into your operations. For example, let’s say you are using RFID to track shipments. There’d be no need to change tracking infrastructure. You’d simply tie that data into the blockchain.

So you might be asking: Do we really a blockchain? Menting says you shouldn’t overlook the potential insights and the speed at which you can arrive at them.

“You can expedite a lot of things. You can drive a lot more transparency. You can augment your data with a better analytical tool by plugging the relevant information into that blockchain,” Menting says. “Things happen faster. It’s an enabler.”

Consider the recent E. Coli outbreaks in romaine lettuce. The CDC advised everyone in the United States to stop eating romaine lettuce altogether as it worked to track the source of the contamination – an often laborious forensics exercise as investigators work their way back through the supply chain.

Under blockchain, data on the lettuce would have been captured and stored at each stage of its journey from field to grocery store. Conceivably, these solutions could allow you to scan a barcode on a single sandwich and learn within seconds where and when that lettuce was harvested.

What are smart contracts?

Once a blockchain is operating, it can unlock other powerful tools – such as smart contracts.

A smart contract is a transaction or operation that is automatically executed by the blockchain software – once it verifies that agreed-upon criteria have been met.

Let’s use Fred’s Widgets again as a simple example. That agreement might call for bonuses to the manufacturer and shipping company for early delivery. Fred’s software can monitor the blockchain and see that the Widgets did indeed arrived ahead of schedule. The smart contract can then pay out the extra cash – without any human signing off.

A smart contract solution could be programed to only ship products when costs were below a certain threshold. Or one could automatically place new orders for new parts when it determined that existing supplies were low. Smart contract software could estimate freight requirements and reserve space with multiple carriers for the holiday season.

This helps build efficiency – but it might also save costs by cutting out expensive middle men, such as escrow services, banks and billing firms.

Potentially, a blockchain or smart contract could be programed to head off problems. It can learn “to recognize problems or opportunities,” says Francis. “It’s doing performance analysis of cycle times or benchmarking.”

If the blockchain software spots a supply chain issue – such as a small delay at a downstream supplier that will resonate later as a bigger problem – it can trigger a warning, like sending an alert or email. Or it can take automated action – such as ordering parts for another supplier — to alleviate the issue.

What else might blockchain do?

FASTER SUPPLIER ONBOARDING: Today, it can take months to change suppliers or add a new supplier into your production process. Under blockchain, your new supplier could simply plug in their node to your existing blockchain to begin a relationship.  “Everyone’s used to how horrible it is to set up (a new partner) and they can’t quite believe that you just set up the channel and start training,” Francis says. “That’s why it’s such a powerful technology.”

SOPHISTICATED BENCHMARKING:  With the new transparency, companies should gain new insights into the efficiency of their supply chain. Potentially, companies could use this data to rate suppliers or shipping companies – or to find bottlenecks in their set-ups. Industries could even use opt-in anonymized data to allow companies to truly measure themselves against an industry standard. “Because this data is available, you can rate various players in the supply chain,” Menting says.

TRANSPARENCY ACROSS INDUSTRIES: What if you desperately needed to get products to Frankfurt for Christmas? The problem is 4,000 other industries are shipping stuff that week, too, taking up much of the freight headroom. But there’s no easy way to see that outside your industry. Blockchain technology may allow companies to manage resource consumption across industries, giving you a real-time view of availability of shipping space, key components or other materials.

AN EBAY FOR THE SUPPLY CHAIN? Imagine being able to crowd-source your supply chain. You could use smart contracts that would accept bids from manufacturers based on criteria such as quality or price. The “winner” would be slotted into the production process by the blockchain software.

 How quickly will blockchain solutions arrive?

Blockchain is still a developing technology – but one that’s developing quickly. IBM, Microsoft and others are already marketing blockchain solutions to businesses.

However, despite some high profile proof-of-concepts, experts say we might not see mature, widely-used solutions until early in the next decade.

Two major blockchain software platforms have already emerged: Etherum and Hyperledger. Without going deep into the specifics, both are collaborative open-source efforts working to create standards and protocols to run blockchain applications. These frameworks will create the language that blockchains will use to run – similar to how HTML is the language of the web.

“We’re going to see the first commercial solutions probably emerge in the latter part of this year,” says ABI’s Menting. “I think we’re going to have some commercialization, mass-market appeal from 2022.  And then by 2025, some more tech maturity for the supply chain.”

Blockchain does bring with it some unique hurdles. As blockchains grow in complexity, they require more and more storage space – and more computational power. And we that computing power comes greater energy consumption.

There are various solutions to these issues, “but it’s definitely something that’s not mature yet, so I think the concerns are valid in terms of energy consumption and data storage. If everyone is going to have a copy of that ledger — and if there’s 1000 people in that supply chain — do we really all need a copy of everything that’s happening?”

As with any new technology, security is a concern, but most blockchain solutions are being built to plug potential vulnerabilities.

“With new technologies, there’s a lot of unknowns,” Menting says. “Some of that can be addressed when you design the application – that it’s designed with security in mind.”

With today’s software, security is thought about only after there’s a breach or an exposed vulnerability, Menting says.

“You can instill some secure design practices early on (with blockchain),” she says.

In any case, the businesses case will need to be clear for companies to jump aboard. And they’ll need to be convinced that the process isn’t too cumbersome.

“Unless block chain is easy as – or easier than –current practice, it’s never going to be adopted,” Francis says, “even though it looks wonderful, and it’s got all these features.”

Robert Huschka writes about emerging technologies for the Association for Advancing Automation. Contact him at rhuschka@a3automate.org.

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