Trust with Blockchain in Supply Chain

                                                 

For any business to run smoothly, customer’s trust and loyalty is the fuel. In this digitized world, consumer wants more information, which they want to be verified by trusted sources, faster services, zero shipping costs etc. For all this an efficient and fast supply chain is required. Transactional data of supply chains of majority of the companies are paper based or are on tools like excel, emails which are difficult to collaborate and also are easy to tamper. According to recent study conducted by Stanford Initiative for the Study of Supply Chain Responsibility (SISSCR), disruptions and lack of visibility costs USD 300 billion to companies.

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                Source: blockchain backbone of digital supply chain-Oliverwyman.com

Nowadays, customers’ preferance for organic food is increasing, and using blockchain technology with a simple QR code they can scan the details of product on their phones and can validate every step product has gone through in the supply chain. It will show the real time data like origin, timing, location etc. Customer can decide on the basis of his/her need and preference for the product.

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A crate of oranges scanned as part of a food safety blockchain. Courtesy of IBM

According to CCN Health report, 2014, the United States files 1 million cases of salmonellosis every year. In 2012, Salmonella bacteria infected over 1800 people and killed seven in US. Salmonella bacteria can be found in almost any product or animal that has been in contact with fecal matter this can include handling by infected humans. Recently salmonella outbreak due to Mexican papaya infected 251 people, and caused 2 deaths in US. Centers for diseases control CDC found the origin of contaminated papayas yet it was impossible to recall all the shipments, because of poor records. In June 2017, Mars tried to recall its chocolates after suspicion of salmonella, however according to resources 3000 affected chocolate had already been sold to customers and it was impossible to track those. Recently, French baby milk-maker Lacatalis and health authorities ordered to recall all the packets after reporting of 26 children falling sick, nearly 7000 tons of production is feared to have affected by salmonella. They are unable to gauge the amount and reach of milk which is still in the market. Had their source been recorded in blockchain it could have been prevented.

IBM is entering into a partnership with big food companies like Walmart, Unilever, Tyson, Nestle and Dole to introduce blockchain into their global supply chain. Blockchain can quickly trace back the origin of the product and in which hands it has gone. It creates a ledger which is strongly encrypted and is visible to all. It will increase levels of food safety and easy for governments to audit products, thus increasing the trust of consumers. It is the best way to determine when a food can get spoilt, contaminated. Companies can track the source of contaminated product in the supply chain and stop it from causing outbreaks of foodborne illness. IBM made a technology with Walmart to trace products from farm to store shelves. All the blockchain services are integrated with IBM cloud. Earlier it used to take weeks to collect data, now it takes seconds.

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IBM, Walmart, Beijing’s Tsinghua University, Chinese pork on a blockchain- fleischwirtschaft.de

IBM and Walmart have positively tested blockchains on tracking Chinese pork and Mexican mangoes. Food giants want to simplify supply chains, with tracking of information like temperature, shipment, quality, dates, safety certificates etc. Blockchain can be connected to IoT, distributors place sensors inside refrigerated trucks to monitor temperature and the temperature is noted in the ledger periodically. Company can track delays and estimate delivery time minute by minute.

A U.K. software startup, Provenance, is working to use blockchain to establish the authenticity of food it plans to track tuna fish caught in Indonesia and used in Japanese eateries, from “hook to fork” using information taken from sensors or RFID tags.

For Maersk, the problem is that it has huge piles of paperwork with every container. A single container can have as many as 30 approvals and stamps from different people, which includes customs, tax officers and health authorities. It takes few minutes to load containers on ship but most of the times it is put on port for days because a paper has gone missing, this leads to spoilage of goods inside. The cost of moving and storing of paperwork is almost equal to cost of moving containers around the world. There’s a loss of billions of dollars in maritime fraud every year, because of easy tampering of bills.

Maersk and IBM are working on software that would be visible to everyone for every container. Custom authorities while signing the document need to immediately upload a copy of it, with digital signature, so that Maersk can see that documentation is completed. It becomes a proof of transfer of liability of goods, and custom clearing. If there’s any discrepancy or dispute everyone can track the record, since data is secured and on blockchain it can be trusted. This was first tested in the port of Mombasa in Kenya, containers of flowers were to be transported to Rotterdam in the Netherlands; it was a success and was followed by tracking containers with pineapples from Colombia and oranges from California.

Alibaba is also investing into the blockchain, it implemented healthcare technologies in Changzhou, China. This will provide doctors with patients’ medical records and help in making more efficient healthcare procurement process.

As the world is moving towards big data era, and AI and machine learning are used as competitive advantage, the hand with the data is the king. To implement blockchain, an internal blockchain of the company is to be setup first then extending blockchain to partners, suppliers and customers so that data can be merged. This technology is still in naïve position but it’s growing at speed which is uncatchable. Blockchain has the power to make all data public and free, where wealth comes from its manipulation and application. Every company should be adopting this technology because it would lead to efficiency, transparency and most importantly trust of customers.

 

Sources:

End to End Chain-http://www.oliverwyman.com/our-expertise/insights/2017/jun/blockchain-the-backbone-of-digital-supply-chains.html

Oranges scan by IBM – https://www-03.ibm.com/press/us/en/presskit/50610.wss

Chinese pork supply chain by IBM, Walmart- http://www.fleischwirtschaft.de/economy/news/China-IBM-and-Walmart-use-blockchain-technology-to-track-pork-33638

https://www.bloomberg.com/news/articles/2016-11-18/wal-mart-tackles-food-safety-with-test-of-blockchain-technology

https://www.forbes.com/sites/jwebb/2017/08/31/alibaba-ey-ibm-and-microsoft-use-the-blockchain-to-create-a-transparent-supply-chain/

https://www.forbes.com/sites/stevebanker/2017/09/01/blockchain-in-the-supply-chain-too-much-hype/

https://www.nytimes.com/2017/03/04/business/dealbook/blockchain-ibm-bitcoin.html

https://www.singlegrain.com/digital-marketing/how-blockchain-is-disrupting-digital-marketing/a

 

 

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Author:

ARUSHI GARG

MBA 2017-19

SCMHRD, Pune

A young enthusiastic soul. Currently pursuing Marketing (1st year) in SCMHRD. Technology and innovation always interests me as I’m a computer science engineer. Aspire to solve global warming issue in near future.

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