Today's supply chains are highly complex, not transparent, costly and inefficient due to the many intermediaries involved in the process of moving a product from its source to a merchant. The lack of collaborative systems between all involved intermediary parties also makes things difficult.
As a result, consumers do not have any information about the product they buy. There is no simple and reliable way to verify the authenticity of the item without knowing whether a product is genuine or counterfeit, healthy or dirty, and coming from the source it claims. The lack of a system to verify the health and transparency of a supply chain also prevents consumers from trusting the products they buy.
Lineage tracking with blockchain
According to a study by the OECD and EUIPO, imports of counterfeit and pirated goods are worth about half a trillion dollars a year, or about 2.5 percent of global imports.
To restore customer trust lost due to foodborne illness cases such as the notorious horse meat scandal in 2013 when foods advertised as beef were found to contain undeclared meat, a transparency method must be provided to quickly track the source of the items. While there are currently ways to trace the origin of products, these are highly complex, costly and time consuming methods.
Blockchain, on the other hand, is a distributed ledger technology that promises a decentralized, peer-to-peer system, bypassing all brokers (or keeping them reliable), not only reducing time and cost, but also providing a better customer experience.
Blockchain-based lineage tracking offers a solution where lost trust can be recovered through a consensus method. Offering a cost-free verification process, the blockchain helps secure a transaction. Any wrong activity can be detected, monitored and prevented by the community. Removing multiple agents also reduces the time and cost to fix any of their problems.
Market applications
There are many blockchain technology implementations used to solve similar problems. One example is restaurants that can offer their customers full transparency to trace the origin of ingredients in customers' ordered foods. Blockchain technology can provide full traceability of products to build consumers' confidence in ordering and enjoying food. Zest Labs is one of the freshness management solutions for today's restaurant industry that uses blockchain for food traceability.
The CDC estimates that 48 million people fall ill each year in the US, 128,000 are hospitalized, and 3,000 die from foodborne illnesses. Improving problematic supply chains of blockchain technology can help reduce these numbers by ensuring food security. Walmart, for example, is using IBM's blockchain-based technology to improve food security, monitor foodborne illnesses, and bring transparency to the food supply chain.
Competitive advantage
There are different solutions on the market to trace the origin of the products, but as we mentioned earlier, these solutions take days to produce output. In addition, since the products pass through multiple agents, it may not be possible to know and trust them all. At this point, blockchain-based solutions are very advantageous. Technology that eliminates intermediaries both reduces costs and offers a much faster solution.
As blockchain technology grows in popularity, we will begin to see more industries and verticals using this technology. Technology, which is already being used extensively for supply chain solutions, has the potential to transform many different industries.