Use cases for blockchain have come and gone over the years, with entrepreneurs proposing it to record everything from plastic waste to lemonade. Many of these concepts never made it into a pilot, let alone production. 15 years into its lifespan, and it turns out there’s one thing blockchain is ideal for aside from moving money: tracking the supply chain.
The clue was there all along in the name. Supply chain and blockchain were made for one another, the demands of the former gelling perfectly with the characteristics of the latter. With the blockchain hype that emerged in 2017 having long subsided, we’re left with the businesses determined to use distributed ledgers to solve real world problems. And the supply chain industry, with its inevitable intersection with logistics, is ideally suited to being tracked onchain.
How Supply Chain Benefits From Blockchain
A blockchain is a database that’s been optimized for a very narrow range of behaviors. It can be fast, well indexed, and globally accessible, but these are not traits unique to blockchain. Rather, the qualities that distinguish it from traditional databases are its transparency and trustless-ness. The first of these attributes is easy to define: a public blockchain can be queried by anyone, giving all participants an insight into its current state and the ability to read the data that has been uploaded to it.
As for trustless-ness, this essentially means that blockchain obviates the need to rely on the integrity of those entering the data. Any time data is appended to a blockchain, an unfalsifiable record is permanently created, making it impossible for anyone to subsequently delete or amend an entry. Bitcoin creator Satoshi Nakamoto originally used the term “timechain” which neatly captures the essence of what blockchain does: provide a timestamped record of data entries that everyone can see and no one can amend.
As for how this benefits the global supply chain industry, consider IBM Food Trust. A collaborative network of growers, processors, wholesalers, distributors, manufacturers, and retailers, its focus is on enhancing visibility and accountability across the food supply chain. This is achieved by creating detailed records concerning every step in the chain, from locations to packers and from temperatures to seed types. All of the information that an individual might wish to know, in other words, whether they’re a shopper keen to determine where their fish came from or a supermarket trying to verify that its produce is organic.
Supply on Demand
Up until now, a shopper wishing to ascertain whether their eggs were free range or their coffee ethically sourced would have to trust the label. Most of the time, that will suffice since supermarkets aren’t in the business of deliberately hoodwinking their customers. But between farm and fork, produce passes through dozens of intermediaries and mingles with food from other suppliers, all of which gets warehoused, bagged, and batched, increasing the risk of meat being mislabeled or apples being mixed up.
By creating a record of every step in the process, it’s possible to follow the food as it makes its way through the links in the supply chain that terminate at the store. It’s not that the average shopper cares specifically about who picked their oranges; rather, it’s that the very presence of a public blockchain recording all of these data points disincentivizes unethical behavior.
Retail rewards service Shping, for example, is now using IBM Food Trust to support scannable product information using its app. By scanning a product barcode, shoppers can access traceability information such as the provenance, origin of ingredients, production date and responsible party, transportation details, and whether it was properly handled during transportation and stored at the correct temperature.
For shoppers, this provides peace of mind and the reassurance that they’re getting what they pay for. Ethical shoppers may be happy to pay a premium for line-caught salmon, but would balk if they knew they were being mis-sold farmed salmon. Placing all this data onchain isn’t just about appeasing consumers, either: take the case of reverse food tracing. If a product is found to contain a contaminant, it’s possible to work back and determine where it originated, see the other products packed in the same factory, and tell whether there’s a risk of cross-contamination.
Anything on Blockchain But Mostly Supply Chain
The same benefits blockchain brings to the food supply chain can be equally applied to other industries; diamond mining, say, or oil refining. But supply chain possesses particular characteristics that make it ideally suited for blockchain. As Deloitte notes, “accessible, complete, and accurate data is not always easy to come by in a supply chain. The sheer number of parties involved, such as suppliers, manufacturers, distributors, retailers, and logistics providers, complicates matters. Moreover, since parties in a supply chain typically store data in silos, there is a lack of data sharing among them, and the accuracy of that data can vary considerably.”
Blockchain is not a panacea for enterprise record-keeping, and it cannot fix everything that’s wrong with incumbent systems. Inaccurate information, for example, is false whether it’s recorded on a spreadsheet or a blockchain. But what blockchain can provide is a shared ledger whose inviolability all parties can have faith in. It belongs to no one and it’s controlled by no one, making it ideal for record keeping. Tracking lettuce on a blockchain may not be exciting, but in a world where our salad is as likely to come from the next continent as it is from the next field, it’s extremely useful.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.