As consumers, regulators, and other stakeholders demand to know the origin of products on the market, producers, distributors, and retailers struggle to provide it. In today’s global supply chain, goods pass through numerous intermediaries from origin to consumer, leaving data spread across multiple systems in different formats. Piecing together the full product journey to ascertain authenticity and safety can be difficult, if not altogether impossible. Sure, there are digital track-and-trace systems in place, but this information, too, is centrally held by a single stakeholder—and it can be costly to implement and maintain.
Blockchain technology offers a solution to product tracing’s complexities by storing each leg of the journey on an immutable distributed ledger. With appropriate permissions in place, real-time visibility becomes systemic, enabling not only live track-and-trace but also numerous opportunities for increased efficiency.
According to a recent report by the UCL Centre for Blockchain Technologies, early projects are already yielding results. For example, the global olive oil market, and extra virgin olive oil (EVVO) in particular, is plagued with deceptions and outright fraud, including shipping product from one country to another to increase its value, or blending cheaper oils to cut costs. Italian olive oil producer Certified Origins uses blockchain to substantiate its product’s provenance. The olive oil is fully traceable back to its point of origin via a customer app that obtains the product journey information from the blockchain.
A significant set of blockchain use cases centers around the “circular economy.” Rather than using raw materials to make products, which are then consumed and thrown away, circular economic models strive to reduce waste, reuse products, and recycle materials. Major retailers, including Adidas, Neiman Marcus, Nordstrom, and IKEA, have launched circular-economy initiatives. This approach has been driven in part by consumer demand for sustainable and ethically sourced products that has made supply-chain visibility an imperative for maintaining brand value.
Exposing counterfeit goods with blockchain technology
The circular economy has also opened up a bourgeoning secondary market, particularly for luxury goods, which poses additional challenges for companies. How, for example, can a luxury brand support a secondary market for its products without cannibalizing its own sales and destroying value? Previously, stakeholders had to rely on trusted intermediaries to ascertain authenticity. But blockchain’s distributed ledger extends visibility beyond the supply chain, past the original purchase and into the secondary market without intermediaries. With the ability to verify the authenticity of their products even after they’ve left the store, consumer goods companies can make it easier for consumers to distinguish real from counterfeit, removing doubt and increasing the product’s value in their customers’ eyes. In fact, the original producer or retailer could increase incremental sales by buying back and re-selling the same product multiple times, not unlike the auto industry’s certified pre-owned model.
Leveling the product tracing playing field with decentralized data
Certainly, implementing blockchain faces some obstacles, largely around the issue of interoperability. If I've got a blockchain system and you've got a blockchain system, we need to find a way to communicate. Any solution would raise issues of data governance since such an exchange could potentially break the chain. Large companies like Walmart have the leverage to make suppliers use its blockchain, but smaller companies don’t have that power. What’s needed is standardization, so that everyone’s on the same page. That’s the advantage of a platform like the Oracle Blockchain Cloud Service. It’s an industry- and application-agnostic foundation that makes building and implementing blockchain applications much easier. Moreover, thanks to the inherent standardization of a platform, these applications can be more flexible and future-proof.
This is all just the tip of the iceberg when it comes to blockchain’s potential for product traceability. There are numerous opportunities to reduce reliance on intermediaries, save costs, and streamline operations while providing companies and consumers with transparency into the supply chain. Blockchain can help break down the silos of existing data structures while also creating a secure and auditable product history that can be accessed in near real-time. This is a major step forward for retailers seeking to manage the supply chain from source to shelf and even after the sale.
To learn more about Oracle Blockchain Platform, visit Oracle Blockchain on the web.
Download the full UCL CBT report,"Distributed Ledger Technology in the Supply Chain" here.
Read the second part of my interview with Nikhil Vadgama, Research Fellow at UCL CBT on
"How Blockchain Can Transform Grocery Industry Logistics' here.
About the Author
Nikhil Vadgama, Research Fellow at UCL CBT
Nikhil Vadgama is a Research Fellow of the UCL CBT and was responsible for orchestrating the world first accredited Blockchain Executive Education Programme. His experience has spanned multiple sectors including Education, Real Estate and FinTech. Most recently he has been involved in commercialisation of academic research in the AI and Blockchain domains. He was previously an Investment Banker with HSBC. Nikhil has an MBA from INSEAD, an MPhys from Oxford University and has passed all three levels of the CFA programme.