Can blockchain technology help fix the problems that plague supply chains? More and more experts and companies are finding ways to bring blockchain and supply chains together to improve transparency and help achieve long-sought environmental and social goals.
Blockchain refers to the distributed ledger system associated with the cryptocurrency Bitcoin. The technology is being adopted for a variety of uses because information recorded on blockchains is both encrypted and stored on many computers, making it all but unhackable (though some have begun to question blockchain’s reputation of invulnerability).
According to business consultants Deloitte, blockchain is increasingly being used to track information in supply chains because it offers an indelible record of such things as prices, dates, location, quality, and certification. “The availability of this information within blockchain can increase traceability of material supply chain, lower losses from counterfeit and gray market, improve visibility and compliance over outsourced contract manufacturing, and potentially enhance an organization’s position as a leader in responsible manufacturing,” Deloitte wrote of the technology.
Blockchain in supply chain management could help companies achieve social or environmental goals. The British company Provenance, for example, has brought together blockchain and so-called smart tagging to track fish caught with sustainable methods.
Provenance wanted to assist fishermen who use traditional pole-and-line techniques to catch tuna. These fisherman compete against industrial fishing trawlers that use damaging drift-net technology. Drift nets capture everything in their path, leading to wasteful bycatching.
In a pilot program, fishermen who use sustainable techniques send a text message that creates a unique identifier for their catch, which is registered on the blockchain. This record of sustainability follows the fish as it’s moved to suppliers, distributors, and sales agents. So, blockchain technology makes it possible to ensure that what’s being sold as sustainable tuna really is.
Another group using Provenance’s platform is Grass Roots, a farmers’ cooperative in Arkansas. Grass Roots is using QR codes to allow customers to track chicken back to the farm it came from. For consumers who want to ensure they’re buying organically raised foods, blockchain provides a level of transparency and confidence never before possible.
“This is a total breakthrough for the small-scale, sustainable farmer,” wrote Cody Hopkins, Grass Roots’ general manager. “Until now, it’s been a struggle for us to tell the story of why our foods are different from those raised in feedlots and large chicken houses. With blockchain, we can show you. We can prove exactly who raised the animal and how it was raised, how many animals were raised in its batch and how they lived, and who the butcher was and how it was harvested. And all of this farm-to-fork information is authenticated by a technology that’s virtually unhackable.”
The Promise of Wider Applications
The same principle is being put into practice by grocery giant Walmart, which hopes to use the marriage of blockchain and supply chains to increase food safety and reduce food fraud, where, for example, vegetable oil is marketed and sold as olive oil from Italy. And as the recent spread of E. coli from contaminated romaine lettuce demonstrates, whenever there’s an outbreak of food-borne illness in the US, it’s nearly impossible to pinpoint the exact origin of the foodstuffs.
A recent pilot test of a new blockchain and supply chain technology being developed by Walmart and IBM managed to track a package of mango slices from a Walmart store back to the farm in Mexico where the mango was grown in just 2.2 seconds.
Deloitte noted that blockchain can also help companies “improve visibility and compliance over outsourced contract manufacturing.” For example, an American clothing manufacturer that’s adopted strong labor standards can better ensure vendor compliance by using blockchain technology to follow the production of goods from one subcontractor to another.
“Proactively managing the supply chain and getting ahead of the curve in traceability can help build a reputation as a leader in responsible manufacturing,” Deloitte said.