– The benefits of immutability –
One of the biggest advantages of blockchain technology in general, which contributes to its role in sectors ranging from financial services to healthcare, is its immutability. Any information stored in blockchain cannot be altered, making the technology ideal for keeping records of any products distributed through the supply chain.
“The best way to secure the supply chain is to have an indisputable registry (leger) of product and origin records. Blockchain can provide such a record,” explains Alejandro Tornero, CEO of OARO Eco-NFT.
When blockchain is included in the supply chain, he says, it provides an auditable trail of every part, component and system used. The problem of counterfeit, fraudulent and suspicious goods (CFSI) is almost entirely solved with blockchain. This immutable registry system creates a trusted network – an ecosystem of supply. Unlike paper records, which cannot provide the necessary level of traceability and security, blockchain is tightly structured and has capabilities of efficiency, transparency, security and risk mitigation that other systems cannot achieve.
“The application of blockchain is not limited to those industries that require reliable supply. Undeniable traceability has many benefits for consumer goods, fashion and electronics. Blockchain provides an accurate record of a product’s origin, allowing companies to address challenges such as eradicating slavery and corruption in their supply chains,” Tornero notes.
– Cryptography in the supply chain –
At the heart of this capability is cryptography, a technology that protects information and communications by preventing any non-participating user from accessing the asset.
“When using blockchain in a supply chain context, evidence of actions taken between participants can be stored in the Ledger, providing an irrefutable source of truth that the action took place at the time it was claimed,” says Conor Svensson, founder and CEO of Web3 Labs.
According to him, the evidence can be linked to “hashes” of relevant documentation that are backed by strong cryptography. This means that it is impossible to change the facts related to an event after it has been logged in the Ledger.
– Proof of external effects on products –
Blockchain can provide proof of external exposure to products, allowing distributors to solve any problems faster. This has led to businesses becoming big investors in the technology and incorporating it into their supply chains.
“You can use leger in conjunction with other technologies, such as IoT, to show evidence of tampering or exposure to external factors that may have affected the goods being shipped,” Swennson says. – The combination of factors like security assurance and transparency for participants is actually driving organizations like Microsoft and Coke One (the largest distributor of Coca-Cola in the U.S.) to use this technology to generate significant cost savings in their supply chain operations.”
– Rethinking the retail supply chain –
In retail, a decentralized database built on blockchain makes it possible to effectively track touchpoints in the distribution of goods to customers. According to Abhishek Rauniyar, associate vice president of advanced analytics and data science at The Smart Cube, this would not have been possible five to 10 years ago.
“At the concept level, blockchain is about creating a decentralized database where everything that’s been recorded can’t be edited. In that sense, it’s a very secure database mechanism, and it gives a lot of advantages to companies that need to ensure data integrity,” he says.
As Walmart’s recent example showed, blockchain can play a huge role in the supply chain. The leading U.S. retailer integrated blockchain into its food supply chain to track every touchpoint a product passes through before it reaches customers’ homes.
“Implementing blockchain allowed the retailer to track the source in real time. Before, it could take about a week, even with all the data collected. Because this data is tamper-proof, it’s easy for organizations to track the origin of any problems that arise and fix them before they lead to serious consequences,” Rauniar explains.