You may already be familiar with the term ‘blockchain’ as the system behind Bitcoin and other cryptocurrencies, along with news of the growing impact it is having on the world of finance.But the potential influence of this technology is stretching far and wide, with industry leaders becoming more aware of the possible benefits, which include reliable monitoring, better traceability, and increased transaction security too.
This begs the question: how could blockchain technology change the supply chain industry? In their report, When two chains combine, Deloitte explores the advantages that blockchain technology can bring to supply chains across the world.
This blog takes in the key points of the Deloitte report and looks at the biggest benefit blockchains could have on the supply chain industry, namely, better traceability of the product, from seed to shelf.
What is blockchain?
Blockchain is a continuously growing list of records that operates using a global peer-to-peer network.
Whenever a record or transaction is added to this computer database, also known as a universal ledger, it is copied and added to a ‘chain’ of computer code. Any transactions recorded within the blockchain will be fixed there permanently, with thousands of copies of this transaction able to verify that it took place.
On the blockchain, anything of value — money, titles, identities, contracts, and even votes — can be stored and managed privately using advanced cryptography and a consensus of transaction approval from others within the network. This means that files are impenetrable to anyone looking to tamper with the contents, as they would need to hack thousands of computers on the network at the same time.
Using blockchain for better supply chain traceability
The potential is there for businesses to improve their supply chain management through end-to-end tracking that is both more accurate and transparent. The blockchain has the capability to monitor events and data associated with a product, providing a full audit trail of prices, dates, locations, and certifications.
Consumers are becoming increasingly demanding for more transparency from brands and manufacturers, particularly within the food industry where 90 percent of people surveyed listed transparency as a critical factor on impacting their purchase.
A public, permissionless blockchain could be an effective and inexpensive way to trace each material used, and build confidence with increasingly environmental and socially conscious consumers.
The retail industry
When it comes to traceability, the retail and FMCG industries are at the forefront of new techniques and technology, such as blockchains. This is due in part to consumers wanting more information and greater transparency of how retailers operate.
As flagged in our report into the retail industry in 2020, 74% of consumers said they would be “proud” to be associated with a brand or retailer if they provided transparency and shared what the company really cares about.
In an era where consumer purchases are more ethically-driven than ever before, publicising product information from seed to shelf is imperative, not just for logistical reasons, but to win over the support of consumers worldwide.
The issue of modern slavery
As well as understanding where their products come from, ethically-driven consumers also want to know who is making the product they are buying.
Despite legislation in the UK stating that Modern Slavery is now illegal, 29% of businesses say they need to audit their own procurement processes to ensure they are compliant - a statistic found in our Modern Slavery Report.
Once completed, it is this kind of information that can be stored within blockchains, not only to ensure the company stays compliant, but provide ethically-driven consumers with the information they need to feel comfortable buying from a brand or retailer.
Other uses of blockchain?
As mentioned above, anything of value can be placed and held within the blockchain. This includes the standards and controls that provide evidence of supply chain compliance.
With all blockchain transactions timestamped and permanent, this will provide proof that all parts of the supply chain have been compliant with regulatory conditions, including health and safety checks and modern slavery compliance.
The values of blockchain are currently being increasingly investigated by pharmaceutical companies who are under regulatory pressure to effectively monitor, report, and share information and supply chain compliance measures.
Is the supply chain industry ready?
Although blockchain is starting to get the creative minds of the supply chain industry whirring, there is some way to go until the technology is widely adopted. We are currently still understanding the early trials of this technology, including elements such as cost, and the difficulty with linking blockchain technology to physical objects.
If companies are looking to introduce new technology, including blockchain, it is more important than ever that they get an accurate reading of the overall condition of their supply chain capabilities, management, and monitoring. Not doing so before jumping on board with new tech could prove fatal for many businesses.