The Heart of Manufacturing Beats with Blockchain

By: Carl Engelking

In a former life, Michael Cromheecke traveled the world as an ambassador of peace – for a global automation technology company that is.

When a customer purchased a machine that was expected to package 500 widgits per minute but only mustered 100, or worse, none at all, Cromheecke would get the call. Given the sheer volume of goods they produce, global manufacturers measure downtime in thousand-dollar increments rather than minutes – that is to say, heads roll when fixes are delayed.

“I was the guy who flew out to factories when the machines weren’t working, and my job was to bring the parties to the table to develop an action plan to fix the problem,” says Cromheecke.

Trouble was the parties involved weren’t always interested in problem solving – at least not the one Cromheecke was there to fix. Instead, everyone got hung up on who was going to foot the bill for lost production time. Fingers pointed in every direction. There wasn’t an easy way to prove “whodunnit.”

It wasn’t productive at all.


An Idea Takes Hold

Years of witnessing this predictable back-and-forth pushed Cromheecke in 2017 to co-found Steamchain, a blockchain-based software platform that industrial equipment builders can use to craft financing plans based on real-time performance of their machines. Cromheecke, Steamchain CEO, says the platform deploys models that measure critical productivity parameters of any piece of equipment and uses the data to calculate and automate payments.

“Steamchain allows manufacturers to buy the outcome, not the machine,” says Cromheecke.

It’s an out-of-the-box idea that could alter the way factory owners and machine manufacturers do business together in the multi-trillion-dollar, global industrial equipment sales industry, allowing all parties to extract more value from their labor. And Cromheecke says it’s all a credit to the blockchain.


Steamchain, a Closer Look

The blockchain is a digital record-keeping system that stores information in “blocks” linked together using cryptographic code. Every block stores a unique timestamp and other information about a transaction. Once a block is recorded, it is permanent and essentially unalterable. What’s more, the blockchain doesn’t exist in one place, but rather in every computer connected to a network, which means anyone on the network can view and contribute to the record in real-time. There’s no centralized control.

The blockchain gained fame as the backbone of Bitcoin, but the underlying technology is like an empty canvas that is being colored in myriad ways. Walmart and a handful of other consumer companies are using it to track food products as they move through global supply chains. FedEx is experimenting with it as a means to track high-value cargo.

At Steamchain, the key benefit of open-ledger technology is that it ensures both buyer and machine manufacturer are accountable to one another – it creates a level of transparency that renders the “whose fault is it” arguments mute. If a machine is supposed to pack 500 widgets a minute, the manufacturer of that machine doesn’t get paid until it indeed packs 500 widgets a minute. If it isn’t, you can bet the manufacturer of that machine is going to do everything in its power to hit that benchmark.

But let’s say the machine is only spitting out 250 widgets a minute because it’s being operated incorrectly. Steamchain helps the manufacturer get insight into this, as well. These are both highly simplistic examples, compared to the complex agreements that are constructed in the real world. However, the takeaway is the same: Steamchain doesn’t make machines run better, but it sure helps the people involved work better together.

“It creates motivations for people in the best positions to make that machine run better and work more effectively together because they have aligned interests,” says Cromheecke. “Today, they spend months arguing about whose fault it is before a machine gets fixed. If you can point these two parties in the same direction and align their interests, they’ll collaborate more effectively.”

And, given monetization is linked directly to a machine’s performance, it gives manufacturers and machine makers plenty of white space to negotiate new, more accurate financing schemes that benefit everyone involved. Steamchain earns its money through the initial software setup, as well as receiving a fraction of every ensuing transaction that occurs using the platform.

“It’s a lot easier to understand food delivery businesses than machine-as-a-service. We all eat. We all know the Uber of…, the Facebook of…,” says Cromheecke.

Cromheecke says his machine-as-a-service solution isn’t as sexy as, say, a ride-hailing service or an urban scooter start-up named after a winged animal. Rather, it’s one of those behind-the-scenes solves that industry insiders can geek out about.


A Milwaukee Manufacturing Mindset  

Cromheecke lives and breathes manufacturing. His father was a contractor, which meant Cromheecke spent much of his youth on construction sites, eventually lining up side-gigs building porches, decks and general handyman work as he grew older. The experience sharpened his appreciation for problem-solving, engineering and mathematics, and he went on to graduate from Michigan Tech with a degree in mechanical engineering. After that, he spent 17 years at Rockwell Automation, overseeing several of the company’s cutting-edge projects and business launches around the world. Though he doesn’t pick up side jobs anymore, he’s still scratching that handyman itch.

“My wife says we live in a construction project rather than a home,” he jokes.

His experience establishing bleeding-edge business ventures at Rockwell was invaluable, as it taught him a key lesson every entrepreneur eventually learns: He was told he was crazy; he was told his ideas wouldn’t work; he was told he was wasting his time and everyone else’s.

Case-in-point: He helped launch Rockwell’s first cloud-based software development, Motion Analyzer, in 2007 – a time when “the cloud” simply meant a puffy white thing in the sky. It wasn’t easy selling the idea.

“Now, everyone is on board with the cloud and of course they saw it coming,” says Cromheecke. “But back then we were told this isn’t possible. We had a few really strong backers, but also really strong opposition.” For what it’s worth, Motion Analyzer remains a key Rockwell product offering.

Today, swap “cloud” with “blockchain” and Cromheecke is again retrofitting the framework of traditional manufacturing with an emerging, yet promising, technology. Cromheecke hopes his work, along with the work of other entrepreneurs in manufacturing, will collectively knock the rust off the Rust Belt with technological solutions catered for dyed-in-blue manufacturing companies.

“Silicon Valley and Austin don’t have the manufacturing base we have here in the Midwest. One of the most important regions for U.S. manufacturing stretches from Green Bay to Chicago. It’s very strong globally,” says Cromheecke. “The last industrial revolution was headquartered here. The original start-ups were headquartered here.”

Cromheecke added that Sheboygan, Wisconsin, of all places, produces more patents per capita than most cities in the United States.

“You can check me on that,” he says.

I did. He’s right. That’s part of the reason Cromheecke is building Steamchain, a software platform with global reach, right here in Milwaukee. Because, to him, that’s where the heart of manufacturing beats – and will beat throughout the so-called fourth industrial revolution.

“Milwaukee shouldn’t go out and try to out-Silicon Valley. That’s not who we are. We need to embrace who we are: the global headquarters of manufacturing technology,” says Cromheecke. “Milwaukee has the right to be that. We’re in a position to be that, but it takes the community working together to figure out how to get that done. We’re not there yet, but we will be.”