Supply chain: blockchain, a guarantee of traceability
Published on 19 June 2018
Capable of comprising hundreds of phases, supply management involves many people and entities often in different locations. In fact, it generates a plethora of administrative and regulatory procedures: deliveries, imports, traceability, invoicing... which all need their own unique monitoring process. Faced with this complexity accentuated by a lack of transparency from organizations, blockchain is currently shaping up to be a real opportunity for Supply Chain digitization. What can we expect in terms of traceability? Let’s take inventory of the possible benefits.
Blockchain and traceability: what are we talking about?
Blockchain in a nutshell
Since it was first used in 2008, it has led to the rise of the now famous bitcoin. However, blockchain does not stop at the financial sector. Blockchain technology enables us to store and send information securely and transparently. Its uniqueness: its distributed operating mode with no central point of control.
By extension, we talk about blockchain to refer to a database created with this technology. Shared by different users and with no intermediary, this secure database keeps a record of all exchanges between authorized users so that each user can verify the validity of all blocks in the chain. Blockchain can also be applied to various sectors of activity such as the Supply Chain.
The concept of traceability
Traceability is the ability of finding out where a product comes from and following its route throughout the entire transformation and distribution chain. The requirements for traceability are set by regulations issued by national and international regulatory authorities and vary depending on the type of merchandise. In the European Union, for example, food product traceability is controlled by the European Food Safety Authority.
Blockchain serving the Supply Chain
Blockchain technology has many advantages for the Supply Chain sector: it is programmable, reliable and provides us with real-time information on operations. Goal: to be able to react as quickly as possible in the event of hazards. These specific features make it a quality guarantee for companies, especially those working in the food sector.
In the distribution chain, being able to automate certain tasks allows us to enhance our efficiency and reduce processing times. Thanks to a programmable blockchain, it is completely possible, for example, to send automatic payments once merchandise has been received. If an order has not been received, we can also automatically trigger a dispute management process.
Implementing a traceability process without a blockchain is of course entirely possible. However, the inviolability of blockchain gives the traceability chain an even more convincing value. Users of the chain cannot change it because it is secure and jointly owned by various entities. In fact, the information it contains is considered to be reliable and cannot be doubted. It is not operated by an actor which could have economic or political interests.
Accessibility of data in real time
With blockchain, the various actors in the value chain can also detect problems or irregularities in real time. Without real-time solutions for handling situations, at least two weeks are needed to locate unsafe food products during a food safety incident.
A quality guarantee
In the food sector, blockchain is intended to speed up the process for identifying the source of product contamination. In specific terms, each actor in the supply chain records in the blockchain all the operations carried out for the distribution of products. From production to the point of sale, we can more quickly trace back and identify the vector of contamination in the cycle.
In fact, Carrefour Group has just launched the first food sector blockchain in Europe to ensure the traceability of its farm chickens coming from Auvergne. Incubation, breeding, feeding, slaughtering, storing and sale: each step in the production, processing and storage of poultry is recorded and makes up one element in the blockchain and is secure with personalized access at all levels of the chain.
What advantages in terms of traceability?
In the Supply Chain, the proven advantages for blockchain are many. Actors can increase their operational efficiency and thus boost their brand image.
Reduced transit and shipment times
Today, an international shipment of goods requires on average verification by 30 different entities. These various inspections still mainly rely on the manual verification of paper documents. If a supporting document is missing, an entire container (or several) must remain at a standstill.
The accumulation of these operations inevitably slows down the delivery of merchandise and creates significant costs for operators on the Supply Chain... costs which we could eliminate with blockchain!
Reduced development costs
As a low-cost technology, blockchain raises high hopes in the logistics sector. With no need for major investments, all financial actors can benefit from accessible solutions at a low cost.
Improved company brand image
In terms of marketing, a brand that uses blockchain can also significantly boost its image and spark greater trust from consumers in their products. How, you ask? Let’s take the fashion brand Baby Ghost as an example. This brand has been using blockchain to trace and track its clothes and accessories since the spring/summer 2017 collection.
By scanning an NFC chip or a QR code on each article, consumers can access the complete record for the products they buy and as such verify the authenticity of their purchases. Thanks to this technology, the brand claims to have successfully enhanced interactions with its customers. Thus, using blockchain will give brands that are concerned about their customer relations a real marketing potential.