Track and Trace in Supply Chain : The Immutability and Information Problem
Supply chains today are complex, globe-spanning, and multi-stakeholder systems. As the chain grows longer, tracking the current location of products and tracing and verifying their sources is increasingly tough. In the past, ERP and other TnT systems have come to the rescue of organizational supply chains that greatly depended on their tracking and traceability functions for credibility.
Why are these long-serving systems falling short of industry expectations now?
Because none of the current track and trace systems are immutable –nor do they provide complete (or, as in my case above, useful) information. And supply chain experts have realized the potential of Blockchain – its immutability ability.
But that’s not all. A major information problem in most supply-chain-driven industries is the lack of consistency in data recording formats – resulting in a huge amount of manual information entries. Digitization was touted as a solution to supply-chain track and trace problems, but digital information units could be counterfeited and copied – making secure digitization a pipedream.
Blockchain is a distributed ledger technology solution that lends itself to solving these critical issues with the supply chain; adulteration and fraud, food wastage, food recall management, building consumer trust, secure digitization of information.
$500 millionin settlements due to one single food recall in 2008! $161 Billion worth of losses due to food waste in 2010. The numbers linked to food losses and recalls are staggering. But precise, efficient track and trace processes using blockchain can cut down, and in several cases, eliminate such waste and recalls by ensuring proper supply chain operations, timely deliveries and advance disposal of contaminated food batches.”
Key Features and Benefits of Blockchain technology
Since it is a decentralized ledger technology, Blockchain does not allow deletions or modifications to the blockchain. A single link can change the copy of the ledger that they control, but any change in their copy has to reconcile with the copies owned by the rest of the links – making unauthorized changes impossible. This creates a built-in trust system, without needing a supervisory authority.
Time-stamped, up to date
Status updates on the blockchain are always real-time because the updates happen at the source of action (for example, a farmer updates the status of produce dispatch on his blockchain portal, and the processing plant sees the update immediately – without the update needing to be uploaded to a central information store). Product status can be verified at any point in time.
Information on the blockchain is never stored at one single location – so it is fault-tolerant by nature. If one of the sites goes offline, the other copies of the blockchain still stay online and can be used to maintain operations.
Integration with automation
An information system is only as good as the information fed to it. All the benefits of blockchain would be negated if the information in it can’t be trusted. So, most blockchain track and trace systems support integration with automated systems that use technology such as IoT to automatically capture information such as dispatch time, location, storage conditions, processing methods, and other items that can influence final product quality.
Permissions based information access
While a wealth of information may be stored on the blockchain, not all of it is relevant to every stakeholder. In some cases, the information may not be something that is relevant, while in other cases it may not be prudent to share the information for business purposes.
Blockchain inherently is secure, because of its linked node structure. Each blockchain node has a unique hash that gets modified every time there is a change, which then necessitates a change in recorded information on the whole blockchain. It is therefore next to impossible to make a change to an existing blockchain without the approval of all stakeholders on the blockchain.
Blockchain Enables Revolutionary Digital Possibilities
Blockchain promises digital capabilities that traditional architectures cannot emulate.
- Inimitable Digital Units
For the first time, Blockchain (with Bitcoin) introduced the concept of digital units that are impossible to copy. The problem of ‘double-spending’ with copies of a unit of food or produce – such as a manufacturer of organic fruit juice using the same digital identity, again and again, to show multiple sales of the same fruit juice can – could until now only be solved by having a central repository or database (which could also be compromised) that held these identities and would periodically verify them to make sure duplicates didn’t exist.
The distributed nature of blockchain ensures that even if copies were to be made, they can only exist at the node that created them. Other nodes on the chain would reject the copies as fake under verification, eventually making them useless.
- Digital files that are impossible to manipulate
With traditional solutions, it is very difficult to verify if a digital file, photo, contract, or other asset has been manipulated in any manner. Skilled IT personnel can alter digital records without leaving a trace of the manipulation, and there is no practical way to ensure that they are original and unaltered.
Blockchain solves this problem with the hashing-based method of asset recognition, which makes it impossible to change an asset once it is on the blockchain (unless at least 51% of the nodes on the chain see the same change). So, blockchain makes unilateral manipulation impossible.
- Digital processes that cannot be manipulated
Another key capability added by blockchain is the ability to secure digital processes. In processes such as the food supply chain, where there are several parties to a contract with varying processes, the blockchain adds a digital process tracking mechanism that ensures each node in the chain performs their part of the process, and any discrepancy (such as tomatoes being received instead of oranges) can be traced back specifically to the point where the flaw occurred.
- Low barriers to entry, make ANY digital record trustworthy
Blockchain enables placing trust in low-cost records, such as email, photos of products or written documents, and SMS because blockchains link ALL records to a hashed fingerprint, which is encoded in all nodes in the blockchain. Any changes to any record on the blockchain will change the hash at a single node, which will be rejected once the other nodes verify the changed record’s hash value with that of the original. The original image can even be stored at a separate storage location instead of on the blockchain’s own storage, with access restricted only to the blockchain itself. Multiple methods for securing records are available with blockchain.
A New Range of Possible Use Cases
Blockchain-based track and trace open up a whole range of use cases that businesses can begin to take advantage of.
- Relevant documentation for products, such as certifications and food audit reports, can be linked to the blockchain. This makes verification as well as regulatory compliance and audit very straightforward and efficient.
- With pricing information becoming transparent, every member of the blockchain gets clear information on the price they are paying and the profit they are earning, making sure everyone on the supply chain gets their due revenues.
- In the event of food recalls, the recall process becomes very streamlined and straightforward. Identifying the specific batch with spoilt/contaminated food is quick and efficient, limiting wastage and ensuring accurate food recalls.
Averting a massive waste of resources
$500 millionin settlements due to one single food recall (in 2008!). $161 Billion worth of losses due to food waste in 2010. The numbers linked to food losses and recalls are staggering. But precise, efficient track and trace processes using blockchain can cut down, and in several cases, eliminate such waste and recalls by ensuring proper supply chain operations, timely deliveries and advance disposal of contaminated food batches.
With secure digital records and processes, blockchain can enable the food supply chain to eliminate all adulteration, food fraud and theft, as well as ensure financial benefits are dissipated accurately to all members who form part of the chain. It will also enable quick reconciliation of food quality and authenticity.
There’s no doubt about it – blockchain in the food industry is set to grow at a CAGR of over 48% over the next five years. Reach out to us to find out how you can transform your supply chain with Track and Trace, as well as achieve the benefits outlined in this blog for your enterprise!