Blockchain and how it helps with traceability in Supply Chain
As many of us have heard the buzzword Blockchain, what entirely does it mean? Yes, we all know that blockchain has its excellent traceability, immutability and enhanced security features but what problems does it actually solve? As for me, whenever anyone asks me “Hey where are you working or what do you do” and I go like I work for a Blockchain company and the next question is “Sorry I don’t get you, what chain is this”. Well to be honest, as dramatic as it sounds this is a common perception whenever I’m conversing with someone just by mentioning the word Blockchain.
Blockchain is “an open, distributed ledger that records transactions between two parties efficiently and in a verifiable and permanent way. In a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication while validating new blocks. Once recorded, the data in any given block cannot be altered without the alteration of all subsequent blocks, which requires a consensus of the network majority” (Source: Wikipedia) The technology can work for any transaction that involves value which includes money, goods, property. Now since we have got a little detail on what is all about, let’s now look into how blockchain works. The illustration below gives us a very brief idea of how blockchain works.
The uniqueness of blockchain, in the long run, is it helps organizations to save costs, create efficiency in a service or product line, build a sustainable and scalable business model and building a decentralized system where it eliminates fraud, enhance security and stems itself as a bulletproof system for organizations. While I could go on listing the many advantages and how it benefits an organization, but I would like to single out a specific use case which blockchain is able to check all boxes as mentioned above, supply chain.
A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources. The supply chain represents steps to get the product or service from its original state to the customer. In the manufacturing sector, there is a heavy emphasis on the flow of production. Manufacturers are to ensure that products reach distributors and retailers on time. Although they are measures to keep track of the product and transport them to the retailers safely, at certain times product is lost midway, sometimes through the process products are recalled back due to expiry, etc. This triggers additional cost to the companies and in the long run, it becomes a headache for the companies and organizations are looking to solve this long-term problem.
Japan-based Chaintope is one company attempting to address this problem using blockchain. Chaintope offers solutions to provide full visibility in the supply chain of pharmaceutical and consumer products between the manufacturer, distributor, and the end consumer. The process flow revolves where the cartons are scanned between the manufacturer right down to the retailer and every process flow is recorded within on-premise local storage and linked back to the blockchain. As the blockchain is immutable and robust, information is hard to be tempered and consumers are able to identify the origins of the product while the retailers and manufacturers are able to track in case items were lost, recalled or tampered halfway through the process. The blockchain integration involves a smooth and seamless way while data (serial, batch number, and expiry date) is captured in real time.
The supply chain solution that is developed by Chaintope aims to promote visibility, avoid counterfeit products, minimize product recalls and protect the brand image. With the integration of blockchain into the mix from a consumer point of view, Chaintope visualizes more trust within consumers while retailers and brand owners maintain shipping accuracy and improve procurement efficiency. Chaintope is currently piloting the supply chain project with a local retailer and looks forward to launch it to the market within a couple of months.
