Industrial applications and case studies

EY Global Blockchain
Summit
San Francisco, CA
April 26, 2017

EY Global Blockchain Summit
Industrial applications and case studies

Though they got their start in financial services,
blockchains can be applied in many areas.
Bitcoin, payments
and finance
Internet of Things
(IoT) and
distributed
systems
Supply chain
management
Security systems
Databases and
development
Public sector
services
DefenseTechnology
Power and
utilities
► IBM ADEPT ► Ethereum
► Microsoft Azure
► IBM Bluemix
► DNS alternatives
► Biometrics
► Multiparty supply
chains
► Cross-border
trade and
logistics
► UK endorsement
► Health care
payments and
records
► Secure
infrastructure
► Localized
transactions
► Ultra-secure IoT
networks
► Distributed cloud
computing
► Resilient
networks and
security systems
Technology applications
Industry sectors

Banks are quickly adapting this technology to transform
finance.
Completely open
networks
Bitcoin and
cryptocurrencies
Complete
transparency
Managed industry value
chains
► Industry consortia, like R3
► Software platforms, including
Ethereum and Hyperledger
Real securities and
assets
► International payments
► Trade documents and letters of
credit
► Stocks and securities
Granular access and
visibility rights
► Encrypted user data
► Identity and key management
► Process controls and audits

Blockchains also make an ultra-secure, distributed database
platform for just about any health care application.
Blockchain platforms
You can replace the currency
component with any transactional data
you want and build your own
programming and transaction platform.
It can be public, private or a hybrid.
More than a dozen companies have
already started blockchain-based
health care applications for everything
from clinical trials to prescription
tracking.
Source:
https://www.theregister.co.uk/2016/05/19/acronis_testing
_blockchain_for_backup

The transformation of enterprise finance operations and
audit will be profound.
Enterprise finance
► Single platform to manage every transaction across the enterprise
► All of the different enterprise parties working in a single global
transaction blockchain, including tax authorities
► Complete traceability back to the source for all transactions
► Impossible to double spend the same budget
► Tamper-proof audit trail of transactions

Because blockchains work well across multiple parties, we
expect to see the creation of industry value chains.
Example: medical services
► Multiple parties all interacting securely in a single, integrated database
► Patient records, test results and analytics all on a single platform no complex data
translations needed to build strong audit trails
► Smart contracts could automate payment based on delivery of services
► Robust and unbreakable audit trails would discourage fraud and support analysis of upcoding

Smart contracts could be used to automate some of the
transaction processing work.
Smart contracts in health care
Smart contracts automatically would pay providers when conditions of service are
established, such as:
► Validation that service was received by a registered Medicaid patient
► Service was provided by a properly registered doctor and provider
► Neither party is on a known list of past participants of any fraud

Imagine a supply chain where inventory records are as
accurate as bank records.
Bankable inventory
Up-to-date inventory records across an entire value chain:
► Raw materials
► Work-in-progress
► In transit
► Retail sell-in and sell-out
A secure, multiparty collaborative system where it is impossible to double spend inventory

On a foundation of inventory management, a huge range of
services can be added.
Purchase orders and
payments
Trade financing
VAT calculations
Logistics and bills of
lading
Service and repair
orders
Customs clearance
UPS

Combing “bank-level” security with easy collaboration and
process automation will remake supply chains.
A smart device places its own
repair request.
After a warranty check, the
manufacturer authorizes a
spare parts shipment.
The spare part is removed
from inventory.
Shipping and customs documents
are generated automatically.
Import taxes are paid when
the shipment reaches the
destination country.
A repair engineer is scheduled
when the part has arrived.
The repair contractor is
paid from warranty funds.
UPS

Productivity is the problem that each industrial revolution
has solved. But we have never had a service revolution.
UK total factor productivity, 1990–2012
UK Office of National Statistics, SoftMachines Blog.
Service productivity growth is much
lower than manufacturing productivity
growth.
Information and communications
productivity growth is high, but it is a
relatively small component of the total
economy.

Productivity in the service sector is a complex problem that
many historically thought could not be fixed.
Can we improve the productivity of a
string quartet?
Get rid of some of the players? Then
it’s not a quartet.
Have them play faster? Then it’s not
Mozart.

The reality is that productivity in the service sector is much
more challenging than a factory, but not less addressable.
► Scheduling
► Concert hall utilization
► Ticket sales
► Facility maintenance
Actual time playing,
very small

We believe there are two big areas of opportunity where a
revolution in productivity can occur.
► Asset utilization
► Cycle time compression

Real-world utilization of assets is much lower than we
realize.
4% 4%
20%
25%
50%
60%
0%
25%
50%
75%
100%
Dishwasher
Car
Office
MRI
machine
Taxi
Airplane
Asset utilization, select consumer and industrial examples

Companies like Uber are using analytics and mobile
technology to create real-time digital markets.
➡ All buyers and
sellers can see
each other on a
single-user
interface.
➡ Analytics show
where demand
is high and
premium
pricing is in
effect.

The second big opportunity is for us to decrease the cycle
time required to complete work.
► Asset utilization
► Cycle time compression

When it comes to services and cycle time reduction, the
scope for opportunity is just as large.
Assembling a state-of-the-
art modern automobile
40 hours
Renovating and updating a
home bathroom
4 months
Source: Ford history, Wikipedia.

To achieve a cycle time revolution, Henry Ford brought
precision, order and speed into manufacturing.
► Too many variables to
easily apply in services
and sites
► Every site and location is
unique, to some degree
► Impossible to find and
coordinate all of the
people and equipment
Standardized
process
Standardized
components
Synchronized
resources

Pervasive IoT, combined with process orchestration
software, makes cycle time compression possible.
Standardized
process
Standardized
components
Synchronized
resources
► Apply process
orchestration to
software-managed
variants
► Always be able to find
the right tools and
resources
► Respond instantly to
variations and surprises
► Impossible to find and
coordinate all of the
people and equipment

Many everyday business processes take much longer in
practice than in theory.
Illustrative example
Identify
broken part
Open trouble
ticket and
order spare
Install spare
Test and
certify update
15 minutes 24 hours 30 minutes
<25 hours
Identify
broken part
Open trouble
ticket and
order spare
Install spare
Test and
certify update
3 days, noticed but not documented
for several days
24 hours 5 days, testing and installation tools missing when engineer
arrived, forced to reschedule.
9 days
Theoretical cycle times:
Real-world experience:
To make asset-light strategies work, companies need to squeeze big performance gains from existing assets, cutting the difference between real-world performance and
theoretical minimums. The results can be better utilization of existing assets, even as they age and require more maintenance.

Key contact
Paul Brody
EY Global Innovation Blockchain Leader
+1 415 894 8046
paul.brody@ey.com
Twitter: @PBrody

Thank you!

EY | Assurance | Tax | Transactions | Advisory
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All Rights Reserved.
EYG no. 04033-173GBL
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