Blockchain traceability enhances competitive advantages for businesses
The importance of Traceability for businesses
Traceability is the concept derived from the supply chain, which means the ability to trace all the processes in the supply chain from procurement of raw materials to production, storage, transporting, and distribution. From this definition, traceability can be widened beyond the supply chain area to all business activities. Traceability is the capability to trace business information and verify the history, location, or application of an item by means of documented recorded identification. Therefore, traceability can be applied to all business operations.
Firstly, an enterprise has to forecast the demand of consumers to estimate the outcome for the production. But if the forecast is far different from the actual demand, this will lead to over waste or a shortage of products that cause a significant loss to the company. Accordingly, the supply chain manager needs a trustful data for forecasting. Secondly, traceability helps reduce losses in production and delivery because businesses can control producing and transporting operations tightly based on on-time tracking data. Consequently, the standards for storing and transporting will be followed precisely, thus, reduce the costs of callback products, protect consumers’ health and safety. Lastly, With a traceability system, the business leaders can oversee all the activities and quickly identify the root of the issue when it occurs to solve it right away and minimize the losses.
Traceability is also helping businesses on sales and marketing in generating revenue and strengthening brands. Consumers now concern seriously about the safety of the products and need more information about the journey of products they consume. According to CFG x Futerra Expert Survey, 70% consumers are most interested in transparency about products, 55% of them demand more information on social, health, environment, and safety issues about consumable products before making a buying decision. Also, in this research, 73% consumers will be loyal and buy more products from the brand that is transparent about their products. That means Traceability is the key to earn customers’ trust and loyalty. By giving consumers transparent information from the Traceability system, companies make them more confident in buying and using their products; thus, generate more revenue and build a sustainable competitive advantage over competitors. Otherwise, a transparent Traceability system is also proof of product quality, which contributes to the success of new market penetration and exploration locally and globally.
Blockchain is the solution for Traceability
Traceability is acknowledged as one of the must-have solutions bringing significant value values in terms of cost savings, risk management, and earning customers’ trust for businesses in various industries. However, there is still room for improvement to make it perfect.
Most of the current Traceability systems have centralized database, which is a database that is located, stored, and maintained in a single source where operators can access and input the data. There are many risks of handling a centralized system:
- If it gets attacked by hackers, all the data will be lost or changed. Moreover, the data can be changed internally by somebody who has permission to access the system with unethical purposes.
- Information changing in a centralized system is also hard to retrieve and recover. If this happens, the traceability information is unreliable and meaningless to businesses and consumers; therefore, the system is useless and gains no value to the business.
- The fact that this kind of system is limited and not transparent due to its changeable characteristics and cannot build consumers’ trust and loyalty to the brand.
Blockchain — a technology for storing and handling information, is an ideal graft to make Traceability perfect. Plainly explained, a blockchain is a time-stamped series of immutable records of data that is managed by a cluster of computers joining into that Blockchain. Each of these blocks of data is secured and bound to each other using cryptographic principles. Therefore, there is no central server to execute data recording. Since it is a shared and immutable ledger, the information in it is open for anyone and everyone to see. Hence, anything that is built on the Blockchain is by its very nature transparent, and everyone involved is accountable for their actions.
Unlike the centralized system, the decentralized nature of blockchain technology means that it doesn’t rely on a central point of control. That means Blockchain is more secure, more transparent, and immutable. Once the data is updated on Blockchain, it will be recorded with the exact time of updating called time-stamped, and it is unchangeable. Everyone can access to Blockchain to retrieve the data easily and read the history of information updating. This makes Blockchain data trustworthy and solves the weaknesses of current centralized Traceability systems.
Blockchain-based Traceability vs Non-Blockchain-based Traceability
Consumers these days consider very carefully about choosing which products to buy among a majority of choices. They not only care about prices and brands but also about the origin of the product and how safe it is for their health and environment. Traceability can help to solve their needs of tracking and tracing information on the production and distribution process. But it’s still not enough for a comprehensive solution because the information from a centralized system is untransparent as it is modifiable. That is why Traceability needs Blockchain to complement these flaws.
Blockchain makes the information flow of businesses more efficient, more sustainable, and more reliable. All information that is permanently stored and cannot be altered or deleted from a blockchain-based traceability system will enhance the transparency in all stages of the business operations, reduces risks from counterfeits, business frauds, and gray markets and encourage consumers to buy more products from a brand. Furthermore, Blockchain integrated with IoT technology can help to eliminate the needs of third parties, enhancing the accuracy of recorded information, thereby which, significantly reduces overhead costs and general complexity.
Enhance Business competitive advantages with Blockchain
Having a Traceability system is not only helps in tracing back the information, but it also brings other value to the businesses. Firstly, it helps organizations better manage risks. With seamless data records from actual events, the business leaders can promptly know the current status of the moving or producing products and anticipate potential risks that may occur, then make right decisions to prevent it. Secondly, all the recorded data about how consumers buy products, how much, and when they buy will provide a better basis for forecasting and demand planning, thus, makes the demand forecast closer to actual demand. Another benefit of having a traceability system is cost-saving; uninterrupted information flow helps to eliminate waste of production, material loss, and other opportunity costs. Hence, good Traceability also reduces product callback costs or warranty costs by maintaining product quality and quickly implementing the returning processes.
Currently, there are some Traceability projects based on Blockchain platform; however, only a few of them have successfully made the idea come true. One of those is WOWTRACE- a comprehensive Traceability solution combining Blockchain, AI, and Cloud data. This project has successfully deployed Blockchain Traceability for Vietnamese mango, chocolate, and organic food market and achieved with a flourishing result. Before implementing Blockchain, these companies faced problems with counterfeit products and trust of consumers about the product origins. WOWTRACE helped them with a low-cost solution based on Blockchain QR code. All what the producers needed to do is to attach a unique Blockchain QR code that can not be imitated to every product; then, the traceability information will be recorded and updated on Blockchain constantly through the QR code. Consumers can scan the QR code with a smartphone and get transparent information relating to the products. With this solution, their brand name is protected from impostors, and consumers can easily distinguish the genuine products with counterfeit one easily, which leads to significant growth in producers’ revenue. This is just an example of how a Blockchain-based Traceability can help to gain business competitiveness in terms of supply chain management, sales, and marketing aspects.
About WOWTRACE
WOWTRACE is a completed ABCD (AI, Blockchain, Cloud, Data) Traceability Solution that brings sustainable growth and transparency to the supply chain across Asian countries. Thereby, all stakeholders achieve end-to-end visibility and control over their operations on the supply chain.
Learn more about WOWTRACE at: https://www.wowtrace.io/
