A Supply Chain Story: GS1, The Blockchain And The Off-chain

Recently two of my worlds collided a bit; my start-up food business, and my side interest of blockchain tech. I felt an urge to write about it as I found it incredible what a huge impact blockchain tech could (will) have on this area; not just food, but the whole supply chain.

In the last year I started using GS1 standards for my business. To give some background we’re a startup called Eat Grub and we make insect based food products for human consumption. I won’t talk much about it apart from to say you can click the link if you want to find out why we should be eating insects.

Anyway, using GS1 really changed the way we approached international shipments. We were forced into it due to gaining our very first major national listing in a supermarket chain outside of the UK. The reason we had to do so was for traceability, and also conformity. You can imagine a warehouse taking in 100 trucks worth of product each day from all over the world; you would need a specific standard in place or otherwise you’d have a ridiculous amount of information all over the place and their ERP system would be a disaster. If one location has a standard for receiving goods, then it only makes sense that all locations use the same standard. It saves paperwork, time and money. Most importantly it means you can more easily follow goods if there’s a problem.

Enter GS1

Nearly every product you purchase has a barcode (or GTIN-13 number). You might not know it, but nearly every single small to large company who creates a retail product has a special 8 digit number (GLN code) that forms part of every barcode that they create. Immediately, it gives a product an original source and an element of traceability. How cool is that. So simple, yet so effective.

Now imagine I, as a small business receive my order from my large international customer, and I am required to send a shipment using GS1 standard barcodes, this small piece of traceability gets elevated somewhat. GS1 have a barcode system called GS1–128, which put simply, is a bunch of barcodes, with a bunch of different data encoded. Why would you do this? Well, it means that if I’m sending 6 pallets of product, I could put a document on each pallet in barcode form that shows exactly what product each pallet contains, the batch number of the product that is on the pallet, and it’s use by date, total weight etc etc. You get the point.

Here below is one of my old GS1–128 sheets that went on one of my pallets that I shipped. You’ll see a bunch of different barcodes and information. I’ll run through each number separately.

GS1–128 example

1) SSCC — This is really important. This code is a one-off code that is generated only within my GS1 account. I tell it what number SSCC code it will be for me using some predefined parameters, it will then combine that number with my location number, and then use an algorithm to create a checksum number. Each SSCC number is only to be used on one pallet or container, so for a 6-pallet shipment, I’d have 6 different numbers. Each pallet’s contents as a result would be tied to the SSCC number, making it easier to track within a warehouse, or if it is sent onwards to another destination. My business is too small to have a special stock management and tracking system (ERP), so I have a simple spreadsheet that I keep all this info on too just in case I have to refer to it in the future.

2) Content — This is simply the barcode of the product that I’m sending. You’ll notice that my barcode does not match my location prefix, but that is because we are quite new to using GS1. This will be changing soon.

3) This is the batch code of the product. If there’s a problem with it, it can be used to speak with the manufacturer of our product, and he in turn and trace the ingredients back to source.

4) Best before date on packaging.

5) Weight of the pallet.

6) You will notice on all the barcodes there are numbers within ( ) — This is how the standard is formed. Each number within the barcode represents a different piece of data — so, in this example (10) is the batch code. Every member of GS1 will use these same ( ) formats and across the board the numbers will always mean the same thing. If you think that most companies in the food product and healthcare industry are GS1 members, then you can see that any new solutions need to have some kind of conformity to this already excellent system.

Now this example I’ve given really is the most basic of use cases. Just think about the complexity for the healthcare industry or for distributors dealing with many different companies’ products.

How does blockchain come in to play?

Over the years’ there have been a number of scandals involving food. There was the horse meat scandal (which was found in beef products), and then the baby milk scandal in China. There are many counterfeit wines and tobacco products on the market too. Medical supplies (one of GS1’s areas of expertise) can also potentially suffer.

By utilising a system that can track a product using on and off blockchain solutions, it should be possible to create a supply chain with far more integrity than present.

Firstly, utilising a blockchain ledger to store the logistics data (and any other data necessary), there is the possibility to have an un-editable, and therefor more accountable system in place. Companies signing up for block-chain solutions are already most likely operating in an honest manner, so how can we attempt to weed out counterfeit or compromised products?

Tamper proof RFID tags are one such solution, enabling a consumer brand to attach a coded RFID tag to each product, box or pallet of product they put through the supply chain. If that product is then tampered with during the supply process there then should be the opportunity to understand where that likely happened. From a consumer perspective, if there is no RFID tag present on a product they were expecting to have one (such as an expensive luxury good), it will automatically raise alarm bells, hopefully cutting out a large % of counterfeit goods as they will be shunned by the consumer, or more ideally removed from the chain earlier.

There are a number of blockchain companies working with these RFID tags already, including VeChain, Waltonchain, and Wabi (I may have unintentionally missed some out). All have various key partners in place already on a global scale, and some are currently being used in real-world uses. RFID can be specific to usage requirements, so for instance they can have temperature monitoring for chilled/frozen goods, be tamper proof for products that need to remain sealed, or just be more simple like a QR code.

It’s worth noting that these companies are far more than just RFID, and to find out more about their individual strategies and partnerships follow the links to their pages at the bottom to discover more.

How does this work for the real customer though? By real customer I’m talking about perhaps a large distribution company who deal with lots of shipments from all over the world every hour of the day, or a wholesale distributor of food products, or even a major supermarket chain who want to verify the sourcing of all their products. Dealing with multiple data sources for tracking would get difficult, so how can we utilise pre-existing ERP solutions whilst taking advantage of new block-chain tech?

Bear in mind that there would never be a sudden switch from all logistics solutions to suddenly solely use block-chain. It would be a slow process that would certainly need a method of storing and using data both on and off the chain for multiple applications.

Enter off-chain solutions

Imagine you could store all the logistic tracking data in a decentralised network but make use of both off-chain standards (like GS1) and then integrate blockchain based ledger data-integrity and other technology.

A company called OriginTrail has done just that. They recently partnered with GS1 who I talked about at the beginning of this article, in order to develop a blockchain agnostic protocol that can act as a middle layer supply chain solution.

This means that their protocol can be applied to any blockchain (including private ones) to enable GS1 conformance. It can also integrate within a supply chain company’s current ERP solution. (ERP is basically a business’s internal process management software and it will deal with things like supply chain, but also other unrelated things — it depends on the company requirements).

The logistics data would be stored on their OriginTrail Decentralised Network, which is in turn written to blockchain ledger for safety and assurance. The logistics company may not even need to have a block-chain themselves. It makes integrating new ideas with old working methods far more easy-to-do. Asking multi-billion-dollar companies to simply change everything over-night is almost impossible so you have to make it easy.

Credit: Origin Trail

This image shows the flow of data in a simple way. Most importantly you’ll see that nothing changes in the supply chain flow (far left column). It’s uninterrupted. The blockchain layer can consist of any blockchain (even multiple ones), including the other supply chain solutions mentioned earlier.) OriginTrail does not have their own block-chain and their token (TRAC) is an ERC-20 token meaning it is built on Etherium.

I mentioned middle layer solution above. This means that sitting on top of the OriginTrail protocol you could actually develop dapps, also knows as Decentralised Applications, (far right column of the image) for particular requirements if needed, such as the RFID idea mentioned previously, or to simply show compliance. As a specific use cases, you could verify whether a product is Organic Certified, or produced to particular manufacturing standards, such as BRC Certification (which is a requirement of many major food retailers), or even forensically verify authenticity, a project which is now under pilot in labs that include Unilever as one of their clients.

For those that don’t know, Unilever is one of the worlds ‘mega-brands’ that own many of the household names you know and love (or hate), like Marmite. For big companies like this, integrity of product is key, and keeping that over so many brands and products could be a tough task to achieve with efficiency.

On a consumer level you could even track your yoghurt back to source if you wanted to.

What I’m getting at is that this is a fully flexible protocol and service that would be capable of seamlessly integrating into the particular logistic needs whether a GS1 member or not. You could operate your logistics of let’s say baby formula, to GS1 standards, with each product additionally tagged with RFID that is linked to a block-chain for assurance. You’re making the best of both worlds, and in the end the data is all written to ledger wherever it’s origination came from so it’s safe from tampering after an undesired event.

All the blockchain solutions mentioned make use of node staking. This is what allows it to be authentic. The nodes are in basic terms used to verify and sign data and are owned by 3rd parties who own a fixed number of tokens. I’m not going to go into the full details of how each token or node is used by each company. They all have white-papers or comprehensive information that describes how it is used far better than I can in an overview like this. I have placed links to all the company websites listed in this article at the bottom (and some others within this space) that you can read at your own leisure.

To summarise, supply chain blockchain is to me one of the fastest moving, and closest to real-world use cases of the technology at the moment. The only other idea that is close to actual scaled use right now (IMHO) is Ripple and their XRP token for making international payments easier. To me there is one interesting and major correlation with Ripple and OriginTrail as companies. They have created a product that seamlessly integrates with already existing solutions and creates benefit to their clients without too much fuss. If their clients then choose to apply the blockchain part of the solution they will stand to benefit even further. It’s a very smart way to bring blockchain solutions to the real world rather than simply as a speculative asset.

Disclaimer. I own some VET, TRAC, XRP and others.