While additive manufacturing (or 3D printing) has the potential to greatly reduce shipping costs and make operations more efficient, it can also make the supply chain more vulnerable to cyberattacks and counterfeiting. Blockchain technology may hold the answer for increasing security.
Dana Ellis is the senior program manager at the National Center for Manufacturing Sciences (NCMS). NCMS is a member-based organization that leverages its network of industry, government, and academia to develop, demonstrate, and transition innovative technologies efficiently, with less risk and lower cost.
Frank Schuster is director, program operations, at the National Center for Manufacturing Sciences (NCMS). NCMS is a member-based organization that leverages its network of industry, government, and academia to develop, demonstrate, and transition innovative technologies efficiently, with less risk and lower cost.
Imagine a worker being able to print specialized parts while on a construction site, or a mechanic being able to manufacture a replacement for a faulty engine part with the click of a few buttons. Sound like science fiction? Maybe, but these scenarios are rapidly becoming the new reality thanks to additive manufacturing (AM).
AM—a technology that builds 3D objects by adding layer upon layer of material regardless of whether that material is plastic, metal, concrete, or even human tissue—is fundamentally changing how companies manufacture, distribute, and maintain products. Because AM allows parts to be manufactured at the place and time of need, more and more companies are moving toward a decentralized manufacturing model freed from its traditional geographical restraints.
This shift dramatically alters the nature of supply chains, by replacing traditional networks consisting of a few original equipment manufacturers (OEMs) and suppliers with vast ecosystems of potential manufacturers and subcontractors. It also makes supply chains increasingly dynamic and offers requestors/customers a convenient source of supply. Product lifecycles are significantly shorter, while ramp-up and ramp-down periods are more intense.
Yet while additive manufacturing offers all of these benefits, it does not come without added risk. The digital nature of the AM supply chain can also make it more vulnerable to cyberattacks, counterfeiting, and tampering. The answer to these concerns may lie in another new innovative technology: blockchain.
A growing risk
Even in its more traditional format, manufacturing is one of the most targeted sectors for cyberattacks. A recent study by LNS Research indicates that more than half of the manufacturers participating in the survey experienced cyber-security breaches over the past year.1 These attacks are usually focused on industrial control systems at manufacturing sites and machines.
AM provides cyber criminals with a new potential target: the parts themselves—or more specifically, their "digital twin," a digital file that contains the parts' specs and manufacturing instructions. That's because the effectiveness of AM depends almost entirely on the integrity of digital files to tell the 3D printing mechanism what to do. Quite simply, the finished state of the printed item can only be as good as the digital instructions the printer receives to manufacture it. As a result, the delivery and security of those digital files is paramount.
Additive manufacturing increases not only the importance of digital files but also the number of organizations receiving highly sensitive product data. In the traditional manufacturing model, the company that creates the design files would also handle manufacturing and then shipping of the final product. In the AM supply chain, however, this is no longer the case. In an AM ecosystem, numerous product variations move through multiple parties, all of which are attempting to coordinate work together. All of these transmissions could be compromised or hacked, and the design files could fall into unauthorized hands and/or be used to create counterfeit, maliciously modified, or uncertified parts.
The power and potential of blockchain
To ensure the integrity and traceability of digital files and assure their secure delivery at each stage in the supply chain—from the file developer all the way to the end user—more companies are turning to blockchain. Blockchain functions like a distributed database that maintains a continuously growing list of ordered records ("blocks"). Because blockchains time stamp each record and link it to a previous block, they are inherently resistant to modifications of data.        Â
Blockchain works by storing information (such as design files) across each phase of the digital supply chain—design, distribution, manufacturing, and in-field—on participating nodes. A node is any electronic device connected to the blockchain network that automatically downloads and stores a copy of the blockchain. All transactions (such as the transfer of a file from one entity to another or a modification to a design file) within a block of data are cryptographically hashed (or given a unique digital fingerprint) along with the previous block to form the current block. As a result, any data modifications would result in a new digital fingerprint and—since the blockchain network is governed by consensus—the authenticity of any transaction can be rejected as fraudulent.
Bottom line? While blockchain technology has taken on many different forms and has had many distinct applications, the underlying concept of all blockchain-based systems is similar. While blockchain does not directly keep the data it transmits secure, it does have the ability to indicate when files have been tampered with and to expose when a file has been corrupted.
So, if an additive manufacturing supply chain implemented blockchain at the transactional node level, it would assure that all assets were traceable and their provenance known and that users could see the full lifecycle of the part.Without blockchain, security relies on encryption alone, and there is no way to really determine if a digital file has been corrupted. Blockchain grants authenticity by exposing if a file has been corrupted or changed.
To be effective, though, it is essential to secure supply chain data at each phase of the AM digital supply chain. This begins with the design phase, where both the final design of the part and all of its associated engineering data need to be considered highly valued assets that require protection. Securing supply chain data could require file encryption, digital licenses and smart contracts, and digital references as well as the use of blockchain.
By encrypting the design files, part designers ensure that only authorized users will have access to the information enclosed. Doing so blocks access to the design files until they are decrypted by a designated AM machine. A smart contract then acts as a licensing mechanism, that will allow the owner of the intellectual property to define who can have access to that data, for what length of time, and how and where that data is to be used in manufacturing the part.
In the traditional manufacturing model, the company that creates the design files would also handle manufacturing and then shipping. In the AM supply chain, however, this is no longer the case. Instead the parts designer transmits the encrypted design files—along with an accompanying digital license—to downstream companies that are part of the supply chain via email, an offline system, or direct access to the company's server from one system to another, depending on the level of security measures required.
Given the potential for such measures to be compromised, using a smart contract-enabled blockchain here is essential. Doing so allows the digital distribution license to be authenticated, transported, and recorded by blockchain transactions. It also enables all members of the blockchain to participate in and substantiate design data provenance, while simultaneously enforcing the distribution and asset management rules set by the smart contract.
Engineers can also use blockchain to apply business and production rules to the encrypted design files that will specify the make and model of the machine allowed to execute the design, the types of build materials permitted, and various other build parameters. Manufacturers will only be able to decrypt the design files once these specifications are met. Moreover, production rules will control the number of parts each manufacturer is licensed to print. This ensures quality standards are met and prevents counterfeits from being made on authorized equipment. Additionally, the blockchain ledger will track and store all events associated with the lifecycle of the part design so the provenance of each part can be verified and any errors detected in end products can be traced to their source.
Finally, when a physical part is manufactured, it should be tagged with a digital reference and recorded in the blockchain ledger. For example, parts could be coded with a chemical tracker, radio frequency identification tag, or serialization number that can then be matched to information stored in the digital ledger. Doing so provides a link between the digital and physical thread that can be used to trace any part back to its manufacturer, the machine that created it, the conditions under which it was created, and the original design creator. The blockchain ledger can also be used for performance modeling, failure simulation, and overall performance improvement of a specific part.
"An elegant solution"
As more industries realize the benefits of AM, it will become important for companies to recognize that the products of AM are only as viable as the integrity of the digital files and the printers that create them. Clearly, securing the digital supply chain with blockchain technology is critical. Blockchain serves as a hedge against lost revenue caused by intellectual property (IP) theft.
For manufacturers in the government and military space, the benefits go even beyond protecting against IP theft, as counterfeit parts could threaten safety and national security. The Department of Defense (DoD) named supply chain integrity and counterfeit parts as two of its top concerns for the electronics sector in its Fiscal Year 2017 Annual Defense Industrial Capabilities Report.
According to the DoD report, one of the key reasons that counterfeit parts enter the supply chain is technological obsolescence, where the equipment is no longer manufactured by the OEM and must then be purchased from third party. According to the DoD report, between 50 percent and 80 percent of suspected counterfeit parts were for obsolete equipment at the time of discovery.
One of the benefits of AM in the defense space is that it allows suppliers to store designs for replacement parts that OEMs have stopped manufacturing and produce them on the spot. Blockchain can validate that suppliers are using the correct design file.
For these reasons, the Department of Defense is very interested in the potential of blockchain to be used in AM supply chains. "Blockchain is an elegant solution," said Steven Dobesh, Commander, U.S. Navy, Technology & Innovation Branch Chief, Joint Chiefs of Staff-J4. "It will address the concerns of securing the digital thread of AM. I think it is the best answer to the important issue of traceability and provenance. We must have the same level of confidence when we pull a part off the printer that we currently have when we pull a physical part off the shelf. Blockchain will help us to achieve this through an append-only immutable ledger of transactions."
With any new technology comes disruptions to culture, thinking, and the supply chain. Additive manufacturing paired with blockchain technology is just this kind of disruption. While best practices for securing and authenticating data and ultimately improving the digital supply chain through blockchain-enabled security solutions still need to be determined, blockchain technology undoubtedly holds the key to counterfeit mitigation, data integrity, compliance rights, and feedback monitoring.
In the end, incorporating blockchain into the manufacturing cycle will lead to faster production by accelerating time to market and reducing physical storage requirements. This will enable additive manufacturing to live up to its full potential.
p>Notes:
1. Matthew Littlefield, Putting Industrial Cyber Security at the Top of the CEO Agenda, LNS Research and Honeywell, 2017.
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
The practice consists of 5,000 professionals from Accenture and from Avanade—the consulting firm’s joint venture with Microsoft. They will be supported by Microsoft product specialists who will work closely with the Accenture Center for Advanced AI. Together, that group will collaborate on AI and Copilot agent templates, extensions, plugins, and connectors to help organizations leverage their data and gen AI to reduce costs, improve efficiencies and drive growth, they said on Thursday.
Accenture and Avanade say they have already developed some AI tools for these applications. For example, a supplier discovery and risk agent can deliver real-time market insights, agile supply chain responses, and better vendor selection, which could result in up to 15% cost savings. And a procure-to-pay agent could improve efficiency by up to 40% and enhance vendor relations and satisfaction by addressing urgent payment requirements and avoiding disruptions of key services
Likewise, they have also built solutions for clients using Microsoft 365 Copilot technology. For example, they have created Copilots for a variety of industries and functions including finance, manufacturing, supply chain, retail, and consumer goods and healthcare.
Another part of the new practice will be educating clients how to use the technology, using an “Azure Generative AI Engineer Nanodegree program” to teach users how to design, build, and operationalize AI-driven applications on Azure, Microsoft’s cloud computing platform. The online classes will teach learners how to use AI models to solve real-world problems through automation, data insights, and generative AI solutions, the firms said.
“We are pleased to deepen our collaboration with Accenture to help our mutual customers develop AI-first business processes responsibly and securely, while helping them drive market differentiation,” Judson Althoff, executive vice president and chief commercial officer at Microsoft, said in a release. “By bringing together Copilots and human ambition, paired with the autonomous capabilities of an agent, we can accelerate AI transformation for organizations across industries and help them realize successful business outcomes through pragmatic innovation.”
Census data showed that overall retail sales in October were up 0.4% seasonally adjusted month over month and up 2.8% unadjusted year over year. That compared with increases of 0.8% month over month and 2% year over year in September.
October’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were unchanged seasonally adjusted month over month but up 5.4% unadjusted year over year.
Core sales were up 3.5% year over year for the first 10 months of the year, in line with NRF’s forecast for 2024 retail sales to grow between 2.5% and 3.5% over 2023. NRF is forecasting that 2024 holiday sales during November and December will also increase between 2.5% and 3.5% over the same time last year.
“October’s pickup in retail sales shows a healthy pace of spending as many consumers got an early start on holiday shopping,” NRF Chief Economist Jack Kleinhenz said in a release. “October sales were a good early step forward into the holiday shopping season, which is now fully underway. Falling energy prices have likely provided extra dollars for household spending on retail merchandise.”
Despite that positive trend, market watchers cautioned that retailers still need to offer competitive value propositions and customer experience in order to succeed in the holiday season. “The American consumer has been more resilient than anyone could have expected. But that isn’t a free pass for retailers to under invest in their stores,” Nikki Baird, VP of strategy & product at Aptos, a solutions provider of unified retail technology based out of Alpharetta, Georgia, said in a statement. “They need to make investments in labor, customer experience tech, and digital transformation. It has been too easy to kick the can down the road until you suddenly realize there’s no road left.”
A similar message came from Chip West, a retail and consumer behavior expert at the marketing, packaging, print and supply chain solutions provider RRD. “October’s increase proved to be slightly better than projections and was likely boosted by lower fuel prices. As inflation slowed for a number of months, prices in several categories have stabilized, with some even showing declines, offering further relief to consumers,” West said. “The data also looks to be a positive sign as we kick off the holiday shopping season. Promotions and discounts will play a prominent role in holiday shopping behavior as they are key influencers in consumer’s purchasing decisions.”
Third-party logistics (3PL) providers’ share of large real estate leases across the U.S. rose significantly through the third quarter of 2024 compared to the same time last year, as more retailers and wholesalers have been outsourcing their warehouse and distribution operations to 3PLs, according to a report from real estate firm CBRE.
Specifically, 3PLs’ share of bulk industrial leasing activity—covering leases of 100,000 square feet or more—rose to 34.1% through Q3 of this year from 30.6% through Q3 last year. By raw numbers, 3PLs have accounted for 498 bulk leases so far this year, up by 9% from the 457 at this time last year.
By category, 3PLs’ share of 34.1% ranked above other occupier types such as: general retail and wholesale (26.6), food and beverage (9.0), automobiles, tires, and parts (7.9), manufacturing (6.2), building materials and construction (5.6), e-commerce only (5.6), medical (2.7), and undisclosed (2.3).
On a quarterly basis, bulk leasing by 3PLs has steadily increased this year, reversing the steadily decreasing trend of 2023. CBRE pointed to three main reasons for that resurgence:
Import Flexibility. Labor disruptions, extreme weather patterns, and geopolitical uncertainty have led many companies to diversify their import locations. Using 3PLs allows for more inventory flexibility, a key component to retailer success in times of uncertainty.
Capital Allocation/Preservation. Warehousing and distribution of goods is expensive, draining capital resources for transportation costs, rent, or labor. But outsourcing to 3PLs provides companies with more flexibility to increase or decrease their inventories without any risk of signing their own lease commitments. And using a 3PL also allows companies to switch supply chain costs from capital to operational expenses.
Focus on Core Competency. Outsourcing their logistics operations to 3PLs allows companies to focus on core business competencies that drive revenue, such as product development, sales, and customer service.
Looking into the future, these same trends will continue to drive 3PL warehouse demand, CBRE said. Economic, geopolitical and supply chain uncertainty will remain prevalent in the coming quarters but will not diminish the need to effectively manage inventory levels.
That result came from the company’s “GEP Global Supply Chain Volatility Index,” an indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses. The October index number was -0.39, which was up only slightly from its level of -0.43 in September.
Researchers found a steep rise in slack across North American supply chains due to declining factory activity in the U.S. In fact, purchasing managers at U.S. manufacturers made their strongest cutbacks to buying volumes in nearly a year and a half, indicating that factories in the world's largest economy are preparing for lower production volumes, GEP said.
Elsewhere, suppliers feeding Asia also reported spare capacity in October, albeit to a lesser degree than seen in Western markets. Europe's industrial plight remained a key feature of the data in October, as vendor capacity was significantly underutilized, reflecting a continuation of subdued demand in key manufacturing hubs across the continent.
"We're in a buyers' market. October is the fourth straight month that suppliers worldwide reported spare capacity, with notable contractions in factory demand across North America and Europe, underscoring the challenging outlook for Western manufacturers," Todd Bremer, vice president, GEP, said in a release. "President-elect Trump inherits U.S. manufacturers with plenty of spare capacity while in contrast, China's modest rebound and strong expansion in India demonstrate greater resilience in Asia."