Blockchain Technology in Supply Chain

Blockchain Technology in Supply Chain

November 13, 2016 by Hitesh Malviya


The limits haven’t been reached yet in attempts to find use cases for blockchain technology across industries and extract all the benefits distributed ledger can bring into sometimes unexpected areas of application.

One of the elements of businesses that blockchain technology is believed to aid in improvement is supply chain and logistics. Similar to the financial services industry, in supply chain and logistics, blockchain has a great potential in increasing transparency.

Modern business models in industries requiring vast supply chains for seamless distribution of goods usually keep the network behind the store shelves conceal. Hence, for the most part of the products in everyday consumption, clients would find far from hassle-free models to trace the logistics and understand the origin and journey that the product they hold in their hands went through.

As fairly noted by industry professionals, we know amazingly little about most of the products we use every day. An nearly incomprehensible network of retailers, distributors, transporters, storage facilities and suppliers stand between us and the products we use. Yet, almost all participants of that complex network stay hidden from consumers that enjoy merely the end result of design, production, delivery, and sales process of products.

One of the industries that is believed to benefit the most from the consumer view is the food industry. Regrettably, history doesn’t lack instances proving the relevance of the problem with food chains’ mass contamination cases due to poor control over suppliers and other reasons related to produce reaching the customers. The recent Chipotle food contamination crisis, Chinese tainted milk scandal and numerous other cases prove the necessity for changes to be applied for stringent and transparent supply chain systems control.

While companies like Everledger and Ascribe offered solutions for diamonds and digital artwork industry to fight forgery, in the food industry, there’s Provenance, one of the most interesting initiatives aimed to create transparent supply chains for all types of products throughout every part of a product lifecycle.

Supply chain certification on the blockchain

The way Provenance aims to bring transparency into supply chains is by implementing supply chain certification on the blockchain.

“… we propose an alternative approach to the certification and chain-of-custody challenge in sustainable supply chains: a system to designate and verify certifications of certain properties of physical products; e.g ., organic or fair trade. We will outline a model of the various materials and components from initial production through manufacture and assembly to the final customer.

” At each point in time, the prototype of our model details four key properties concerning all materials and consumables it covers: the nature( what it is ), the quality( how it is ), the quantity( how much of it there is) and the ownership( whose it is at any moment ). Key attributes may be read and linked from pre-existing datasets such as barcodes, or newly ascribed along the way .”

The company suggests that every step of the supply chain carved into the body of the blockchain will allow to securely audit all transactions that brought the final state of being into effect, i.e ., to inspect the uninterrupted chain of custody from the raw materials to the end sale.

Given the complexity of networks responsible for filling up the stores, the transparency of every step is a great deal for every relevant participant. Provenance brings up an example of a system with six types of players in the chain ūüėõ TAGEND Producers Manufacturers Registrars, which are organizations that provide credentials and a unique identity to actors Standards organisations, which define the rules of a certain scheme Certifiers and auditors, which are agents — usually separate agents, to maximize security — that inspect producers and manufacturers and verify certain standards, like annual production capacity Customers, the buyers of products all along a supply chains, including the end-consumer.

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