The Potential of Blockchain-Powered Supply Chain Ecosystems

With the world’s population increasing to 8.5 billion over the next decade, and global food demand expected to increase by 70% through 2050, there is growing pressure on food supply networks to keep pace. This strain has led to a global system weakened and vulnerable to bad actors. It’s no secret that there have been noticeable media exposure, public health impact and decrease in consumer confidence in recent years due to numerous food safety incidents. Nowhere is this more evident than in alcohol, where up to 70% of drinks sold in developing countries contain fake liquor.

The need for traceability and transparency in alcohol supply chains is vital due to its very direct and instant impact to our health. Most recently 40 individuals died in Malaysia and 10 in India due to alcohol poisoning in what’s perceived as just another set of unfortunate casualties. This norm is unacceptable and a solution is desperately needed.

Already with years of alcohol distribution experience under our belts, DropChain is setting out to create a solution within an industry we know all too well. We envision an end-to-end ecosystem that enables anyone along a supply chain, from brands owners down to end-retailers, to verify the provenance of the alcohol or beverage being sold or consumed. Today, however, that is not the case:

Lack of data transparency in later stages of supply chains

There are many challenges to achieving this vision, including:

1. Lack of incentives for downstream players to contribute their data
2. Lack of scalable solutions to conduct testing on alcohol content
3. Lack of mechanisms to verify and encourage consistent participation
4. Lack of a comprehensive and affordable logistics solution accessible to each stage of a supply chain

The last point, a lack of a comprehensive solution, is a key issue facing logistics today. Without the right tools and technology, it is difficult to tackle the problems of food safety in a scalable manner. Large established brands already have the budget to partially invest in their own logistics solutions, and even then, still face significant issues with driving traceability and transparency in their supply chains. The majority of the industry, small to medium-sized boutique and craft brands, simply don’t have the budget and capability to tackle this issue in the first place.

DropChain’s solution incorporates a number of technologies to drive traceability within a supply chain. One technology we are placing high expectations on is the use of blockchain.

In a blockchain-power supply chain ecosystem, key logistics information across multiple shipments is aggregated and stored as a block of data in an ever-growing chain of information (the blockchain). The data being recorded on the blockchain is also immutable, meaning bad actors can no longer alter the provenance of the food or drink being consumed. A rare bottle of whiskey cannot exist in two places at the same time, and a one-of-a-kind bottle of wine cannot be consumed twice over two periods of time.

In addition to higher levels of data integrity provided by blockchain, DropChain will also leverage a gamified incentive system to encourage downstream players to provide data willingly and consistently.

Trustworthy and transparent data across the entire supply chain

DropChain will tackle the challenges listed above, starting with Points 1 and 4. With a secure, reliable foundation and scalable platform accessible to brands large and small, we’ll grow our community of brand customers and begin collaborating with other companies to enabled DropChain to deliver even more value. For example:

• Third-party certification companies are looking to collaborate with DropChain to store verified data into our blockchain. Working with DropChain gives these firms access to our existing brands and end-retailers, strengthening the added-value benefits DropChain offers to our users. This addresses Point 3 by driving the prestige and positive branding associated with product authenticity verification, and also further rewarding verified companies.

Verifying and recognizing various parts of supply chain network for doing social good

• Besides monetary rewards, business reputation is also highly coveted amongst SME’s. DropChain is ready to work with third-party reputation and financial firms to enable SME’s to leverage their reputation to gain further benefits (for example, qualifying for short-term loans from financial institution partners). The more transparent a distribution point is in DropChain’s ecosystem, the higher their level of trust and overall reputation. With that positive reputation brings additional non-monetary benefits, further addressing Point 1.

Driving reputation-based rewards to enable further benefits

• DropChain already has relationships with lab facilities that can assist with professional foodstuff lab testing. Working together, we can execute on testing random samples of product across multiple industry verticals to ensure the product integrity of our brand customers. In combination with big data and machine learning, we can provide analysis on fraudulent behaviors at various points in a supply chain to help brand owners understand who the bad actors are within their system, tackling Point 2.

Random testing various parts of supply chain will enhance fraud detection and get to the root of counterfeits

These examples are just the tip of the iceberg. With a strong underlying foundation in place, we can do a lot more to enrich and enhance the entire ecosystem, creating more benefits and generating more business for each point on the supply chain.

Strong partnerships are fundamental to the success of DropChain and we look forward to collaborating with partners across multiple industries to provide a comprehensive system that delivers transparency, accountability, and security in the way we trace what we eat and drink.

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