SyncFab Manufacturing Blockchain
This article provides an overview about SyncFab Manufacturing Blockchain. There are plenty of sources throughout the text for further research. The article is definitely not a financial advice.
To be completely transparent, I'm not related to the team but I do hold some MFG tokens.
Now let's start!
The text is divided into several parts:
1, Introduction
2, Problems and challenges manufacturing supply chains are facing
3, SyncFab solution
4, MFG token
5, Notable partnerships/memberships
6, Other interesting information and additional sources
Introduction
SyncFab is no newbie to the market. The team made of experts from automotive, aerospace and enterprise resource planning sectors has been working on their platform since 2013. The platform was improved significantly based upon the company’s direct contact with San Leandro manufacturers through the STIR partnership in 2016.
Today, SyncFab is the lead industry pioneer in developing blockchain applications for Decentralized Manufacturing Supply Chain Management with multiple patents pending at USPTO (United States Patent and Trademark Office). As the team says here, “What began as a way for product designers to source local manufaturing has rapidly grown into something greater than we could have hoped for.”
The original vision did not involve blockchain technology but as it was becoming more and more obvious how distributed ledger technology could be utilized to provide enhanced features for users of the platform at every stage of manufacturing process, team decided to implement this emerging technology into their platform in 2016. The value blockchain can bring to manufacturing industry was also acknowledged by Deloitte, who stated in their Blockchain Global Survey 2018 that “Blockchain’s greatest potential to deliver business value is in manufacturing.”
Being already partnered with the National Tooling and Machining Association (NTMA), which alone accounts for 10% of US suppliers, and being recognized as a founding member of the White House-appointed and US Department of Energy (DOE) sponsored Clean Energy Smart Manufacturing Innovation Initiative (CESMII) puts SyncFab into great position to become a crutial part of industrial revolution 4.0 in the US and globally. As a CESMI member, SyncFab is part of the dialogue and implementation of DOE driven standards for data driven Smart Manufacturing and Clean Energy applications in the supply chain.
What problems is SyncFab solving?
To better understand the value SyncFab brings into manufacturing industry, we first need to look at problems and challenges it is facing.
The fact is that current supply chains systems are proving themselves to be outdated and not able to react to global shocks in supply/demand. Trade tariffs and recent Corona virus outbreak are now fully revealing how vulnerable these systems are.
According to this Bloomberg article, manufacturers with a presence in China report operating at 50% capacity with 56% of normal staff, average lead times have more than doubled from the end of 2019, 53% have difficulty getting supply chain information from China and 44% of respondents don’t have a plan to address supply disruptions!
Here are some of the bottlenecks manufacturing supply chain industry faces today, in no particular order.
- Current tech and manufacturing processes are outdated. Inefficient product procurement processes account for yearly loss of $1,5billion in revenue within North America.
- In modern manufacturing, the supply chain can include multiple organizations and countries, which can make it difficult to chase individual events or find solutions to increase efficiency. Most company information flows through a supply chain characterized by communication with little or no agreement on data taxonomy, or even a uniform way of recording, storing and exchanging data. This is causing shipments getting lost, delayed, stolen, etc., at considerable cost.
- Suspected unapproved parts (or SUPs in short) introduce serious risks to multiple industries. Over time, documentations of various parts can get lost or counterfeited, which can cause serious damage especially in automotive, aerospace or medical industries, where a fake part is a threat to human life. Federal Aviation Administration estimates 500,000 or more Bogus Part installs occur each year. In Aerospace, Government records show 2,868 incidents of SUPs discovered on commercial planes flown by almost every airline resulting in Aircraft Recalls, Large Fines, up to 15% decrease in system reliability and an NTSB estimated 200 plane crashes.
- Manufacturing today lacks accessibility and visibility into the procurement process. 31% of buyers cite finding the right manufacturing suppliers as being problematic issue.
- Businesses lack intellectual property protection. 36% of businesses cite intellectual property as a top concern. 39% of businesses have experienced a breach in the last 12 months.
- Manufacturers prefer large companies as customers, squeezing out small innovators. “Mon and Pop” manufacturers are expected to spend time quoting jobs without a payment. Quoting a part can take 30 minutes or a month, depending on it’s complexity. If you spend a month quoting and then someone else gets the job, you’ve worked for a month and didn’t get paid. This results in less manufacturers being able/willing to quote, causing less competition and less options for buyers.
Blockchain can help avoid or at least vastly mitigate these issues and SyncFab is working towards solving all of them. This Forbes article describing 5 advantages blockchain can bring to supply chain says 49% believe that blockchain can help ensure better compliance with current and future regulations, 31% state that blockchain can enable better product sales in new markets, 28% think that blockchain will reduce the risk of product recalls.
“All firms are very interested in avoiding the high costs associated with product non-compliance. The capability to rapidly recall products is necessary, both to avoid these costs and to avoid interruptions in the supply chain. In the coming decade, blockchain will be instrumental in all these areas.” — Greg Cline, Head of Research for Aberdeen Group’s Product & Innovation and Manufacturing
SyncFab solution
SyncFab has created a one stop decentralised application that works as a platform directly connecting parts buyers and manufacturers. No brokers or intermediaries needed.
The main purpose of the platform is to directly connect ANY buyer with ANY manufacturer/machine shop that has enough capabilities/certifications needed to manufacture ANY part that a buyer needs to have manufactured. ANY buyer or manufacturer is free join this smart manufacturing ecosystem and be part of the competition to get the best price/quality/time ratio for their work.
Simplicity as a priority
The beauty of the platform is that users need absolutely zero knowledge of blockchain or cryptocurrencies. Everything is running at the backend.
As a buyer, you simply send your RFQ (Request For Quote) where you describe what part you want to manufacture — materials, dimensions, required capabilities, 2D or 3D drawing of your part etc. Your RFQ is then transmitted via RFQ Dashboard to pre vetted manufacturers that fit your requirements based on the capacity, capability, certifications and other qualifying data submitted to SyncFab.
As a manufacturer, you can see only RFQs that are relevant to your capabilities and you can start annonymously bidding with your price and procurement offer. The best offer wins.
This is a complete turnaround compared to current situation where buyers usually negotiate with multiple manufacturers for the best offer. It makes the whole process much faster and it should incentivise manufacturers for more competitive quotes.
SyncFab’s ambitions, however, extend well beyond online matchmaking. By rooting its network in blockchain, the company eventually hopes to automate virtually the entire front office. “The big thing holding up smart manufacturing and the IIoT (Industrial Internet of Things) is, how do we share data between different entities in a way that establishes trust and security?” explains Dennis DelGado, chief design officer at SyncFab. “Blockchain will help free up siloed company data over a secure network that is built for validating and sharing all that information”.
Since data is the new oil, unlocking these siloed and fragmented data from different segments of the supply chain and bringing it all together for full visibility for all interested and permissioned parties from multiple departments into one common ledger/DApp/platform brings a huge value for everyone involved.
This will give a significant push to all participants towards an idea of Smart Factories, which is a leap forward from more traditional automation to a fully connected and flexible system — one that can use a constant stream of data from connected operations and production systems to learn and adapt to new demands. Many manufacturers using the platform might be surprised how close they actually are to reach this achievment.
SyncFab has been asking their customers for feedbacks during the development as mentioned here, here or here for example. This means the platform is being developed with regards to needs and requirements of real established manufacturing companies that are going to use it.
Based on this update, to overcome scaling issues faced by Ethereum, the underlying technology is ought to be a marriage of Ethereum and Hyperledger Fabric blockchain networks. Ethereum being used for MFG token related actions within the platform while Hyperledger works as a private blockckhain that operates as a sidechain for all the business transactions including generating purchase orders and tracking the progress of the production.
Utilizing Hyperledger as a sidechain not only causes big savings on transactional gas fees, but it also helps avoid delays and hassles associated with current Ethereum scaling issues.
OEM (Original Equipment Manufacturer) parts tokenization
In February 2020 SyncFab released the industry's first tokenization technology with an operational distributed manufacturing supplier network, enabling parts tokenization right at their point of production.
Every component or part that is manufactured can be tokenized as NFT using ERC721 token standard. Each NFT token includes product-specific attributes and details relating to the specific part or end product including original order specifications and product requirements. This feature allows for oversight on intelectual property usage as well as savings on sovereign audit and regulatory compliance records.
Parts tokenization enhances quality control, prevents counterfeiting and provides immutable traceability records not only for a production process but for the whole PLM (Product Lifecycle Management) history. It is “a dream come true” for many OEM manufacturing program managers.
This article says that studies show that using blockchain tokenization technology can cut MRO costs by $3.5BN or 5% and boost revenues by $40BN or 4% each year while also addressing $4 billion in aerospace parts inventory management inefficiencies and $20BN in unplanned maintenance costs.
Parts Library PLM
In March 2020 SyncFab revealed it's Parts Library PLM. It is an added feature designed to make OEM purchase managers supply chain planning jobs easier than before with greater emphasis on dynamic remote work solutions to rapidly evolving external supply chain shocks.
Thanks to the parts tokenization technology and Parts Library PLM, OEM parts program managers no longer need to pull historical documentation such as where a part was manufactured or who repaired it, which can be hard to obtain.
Now they can simply scan a part (via QR code) to get a complete, verified and immutable history of each part in real time. Should a problem arise, recall parts can be tracked, traced, isolated and mitigated faster and more accurately than ever before!
SyncFab’s Parts PLM Dashboard is configured for OEM Parts Engineers and Program Managers to organize all relevant information pertaining to each individual part according to industry best practice including:
1, Part Drawings
2, Part Numbers
3, Part Revision History
4, Part Description.
OEM organizational benefits of streamlined part number system includes:
- Decreasing overall project risk
- Decreased time/work involved in obtaining quotes on prototypes and finished parts
- Streamlined communication between Engineers and Suppliers for faster turnaround
- Minimizes overstock of legacy parts inventory
- Minimizes errors and delays when launching new product builds
SyncFab stated in an update from mid January 2020 that they are soon going to begin offering service bundlings of their new blockchain procurement features in subscription SaaS (Software as a Service) format which will be announced in greater detail soon.
MFG Token
MFG, an abbreviation of ManuFacturinG, is a utility token which serves as a fuel for the SyncFab ecosystem.
It's an entry ticket into the services and features SyncFab Manufacturing Blockchain platform offers.
Usecases within the platform
- A fee for sending RFQs in the SyncFab Platform is paid in MFG token, whereas SyncFab plans to use their MFG Tokens to reward manufacturers who place faster bids and price more competitive (lower-priced) quotes. Every RFQ created will be listed as an auction, attached with a MFG Token reward to the manufacturers for their bidding efforts. Once an auction is over, the winner takes 50% of token rewards, 20% of token rewards goes to second and third top bidder each and 10% is recycled into Loyalty pool
- Similarly, a manufacturer can also add tokens to their quote. This can technically be viewed as a discount that is paid to purchaser if the offering manufacturer is selected as a winner.
- Other MFG paid incentives can be quick responses, quality deliverables, customer loyalty or even data sharing can be incentivised with MFG token. Starting from May 20th 2020, SyncFab will be offering webinars to NTMA members explaining how to use the platform and how to qualify for MFG token incentive programs.
- MFG token is needed to create MFGPRT token (=to tokenize parts as ERC721 NFT). A screenshot of SyncFab platform from the article announcing launch of tokenization technology suggests tokenization of one part costs 100MFG tokens. Please note this number was not stated officially and might not be accurate. However, if you consider a single car averages of 30,000 parts and an aeroplane averages of 2,000,000 individual parts, that's a lot of parts to be tokenized.
- MFG Smart Contracts can automate payments based on custom triggers, such as goods arriving or passing inspection.
- There is a fee in MFG added to final purchase orders transacted within the ecosystem. The transaction fee is paid for by the purchasers on top of the quoted price.
Tokenomics
Max supply in the token sale: 1 000 000 000 MFG
Current max supply: 868 459 136 MFG (unsold tokens were burned)
Circulating supply: 235 030 956 MFG
Token distribution
Token sale: 30%
Partnership adoption pool: 30%
SyncFab tech development: 15%
Founding team and bounty: 10%
Smart MFG tech LTD: 15%
How to buy MFG token
SyncFab wants to make it as easy as possible for users of the platform to aquire MFG tokens so they can send RFQs, incentivise manufacturers or tokenize manufacturing parts as NFTs. This is why the team implemented an option to purchase MFG token within the platform directly with fiat via credit card, ACH (Automated Clearing House), or bank transfer with their Stripe and Plaid integration. I find it worth mentioning, that Plaid is also one of purchase options on Coinbase.
However, the proprietary platform wallet also allows to deposit MFG token from any 3rd party wallet, which means users can also buy MFG tokens at the open market and then send it to their SyncFab wallet.
My preferable option to purchase MFG at the moment is KyberSwap, which is a dapp of KyberNetwork. KyberSwap is a decentralized exchange that requires no KYC and your tokens are always in your wallet. Anyone just needs to link their ERC20 compatible wallet (Trezor, Ledger, Metamask…) and then swap their ETH or any ERC20 token for MFG.
It is also possible to link Coinbase wallet to KyberSwap. Then you're just few simple steps from getting your MFG. Buy ETH on Coinbase with fiat > Send ETH to Coinbase Wallet (app) > Link your Coinbase Wallet to KyberSwap > Swap ETH for MFG. Takes literally 3 minutes.
For an easy step by step manual check out this guide.
Notable partnerships/memberships
As mentioned in the beginning of the article, SyncFab boasts NTMA partnership, that just by itself accounts for 10% of US Manufacturing market, and is one of founding members of CESMII, a White House-appointed & US Department of Energy (DOE) sponsored initiative ($70millions)
In early 2020, SyncFab joined MOBI, a global consortium of industry-leading automakers, technology-based startups, and other mobility players. It's a nonprofit foundation formed to accelerate the adoption and to promote standards in blockchain, distributed technologies for the benefit of the mobility industry, consumers, and communities. Mobi has very impressive list of members that can potentially take advantage of SyncFab technology, especially from automotive industry, such as BMW, Renault, GM, Honda, Ford and other.
SyncFab’s user base grew more than 1000% in 2019, including companies like SpaceX and many other Fortune 500 noteworthy companies (which are apparently under NDA).
Other partnerships include San Leandro City Chamber of Commerce, Citi Innovative, Throne, CLG and the blockchain platform is boasting to be trusted by companies such as Lucid, Divergent3D, Clearmotion.
To get more familiar with SyncFab partnerships have a look at this article from community member Grills.
Other information and interesting links
Information
SyncFab has overdelivered on promises stated in the whitepaper despite not reaching hardcap. Two major features of current platform (tokenization technology and Parts Library PLM feature) are not mentioned in the WP at all.
SyncFab, despite not favourable market conditions in 2018 and 2019 where many projects were cutting operations down, grew their team by multiple new members with impressive CVs, such as: Max Wasilko as Procurement Sales Operations, Srinivas Ratnam to boost Cross Chain Interoperability, Vinay Munjewar to Manage Manufacturing Blockchain Program, Michael Cuesta to Procurement Operations role, Danielle Smith as General Counsel (btw how many microcaps can you think of that have their own employee to ensure legal compliance?), Rob Rao to the Sales Team, John Papageorgiou to the Product Team or the latest addition Josh Holmes as OEM Supply Chain Sales Executive. They also extended their advisors network with names such as Deborah Acosta, Duaod Thompson or Henry Robinson.
SyncFab (and feel free to correct me if I'm wrong) has no valid competition. Yes, there are some track and trace blockchain solutions or decentralized marketplaces for goods/parts being build, but in terms of directly connecting buyers & manufacturers of industrial parts and tracking these parts as NFTs right from their point of production all the way to the end of their lifecycle, no project or team is even close as far as I know. And given the fact that SyncFab has multiple patents pending for their solution, it is likely it's going to stay that way for a while.
And finally, to keep my promise to be transparent with you, there are also few things I found that could be better, but I personally don’t see them as big issues at the moment.
These are:
- >> no activity on github to confirm project development, which is understandable as they have multiple patents pending for their solution.
- >> there is not much info on how Ethereum + Hyperledger “marriage” work together. Possibly also because of pending patents.
- >> MFG has low liquidity on KyberSwap and probably isn’t well suitable for high volume trading. The highest single order swap you can make is 5ETH worth, whereas price slippage is sub 2%. I personally don't mind as I'm not a trader and KyberSwap makes a lot of sense for their clients who want to purchase MFG at the open market. Definitely makes a lot more sense than creating an account on some unregulated exchange in my opinion.
- >> some parts of WP would deserve an update, such as original token flow diagram that doesn’t include tokenization technology.
- >> one update also mentions that many Fortune 500 companies joined the platform in 2019. It would be nice to know which ones.
- >> the team is not much directly engaging with the community on telegram or other social media except for sharing updates. They actually re-opened their official telegram to communication from “announcements only” after a year or so. However, they do release and share updates very frequently. I can imagine their priorities are fundamentally different compared to projects building their own node networks, incentive models, governance systems, attracting devs to build dapps etc. They need to focus on bringing more and more users onto their platform and keep working on it, and in this regard they are doing very well as far as we can tell.
Please note that last few above paragraphs are just my personal assumptions.
Interesting related articles
- >> SyncFab website
- >> SyncFab Medium channel
- >> SyncFab blog
- >> SyncFab Whitepaper
- > > CEO Twitter account
- >> Freshly re-opened telegram group
- >> SyncFab pending patents. 1, 2, 3
- >> The World’s First Peer-to-Peer Manufacturing Supply Chain on Blockchain
- >> Nasdaq article about Syncfab bringing manufacturing capabilities back to USA
- >> SyncFab’s response to COVID19 pandemic shocks to supply chain
- >> 10 Blockchain Benefits for Supply Chain Management by Syncfab
- >> Forbes article on outdated supply chains with an idea how an ideal solution should look like (almost describing SyncFab btw)
- >> Forbes article on 5 Use Cases Proving Blockchain Can Have A Massive Impact On The Manufacturing Industry. Mentions SyncFab as well
- >> Deloitte article on Blockchain in the Automotive Industry
- >> Deloitte study on Accelerating technology disruption in the automotive market
- >> Takata recalls 10 million air bag inflators — part of largest auto recall in U.S. history
- >> FAA says more than 300 Boeing 737 jets may have faulty wing parts
- >> The 10 Biggest Recalls of 2019
- >> The 10 Biggest Car Recalls of all time
Follow me on Twitter for updates: https://twitter.com/Nitramydes
