Uses blockchain for data integrity in the supply chain

As immutable distributed ledgers with complete traceability, blockchains can revolutionize many facets of almost any industry. One of the most obvious is supply chains, and since every industry has them, virtually no industry will escape the blockchain revolution.

In this article, we will examine how blockchains can ensure data integrity in supply chains. As always, I will give concrete examples of how things can work in practice.

Provenance tracking

Imagine a world where a buyer can track a product every step of the way from its source to the shelf they picked it up from. Such a world is possible thanks to massively scalable public blockchains.

One of the biggest problems with supply chains today is that the data provided by the parties along them is unreliable. Thanks to blockchain technology, accurate data can be ascertained at every step of supply chains, with responsible parties cryptographically signing to confirm accuracy.

What will this mean for product supply chains? Ask De Beers, the world’s largest diamond mining company. This company’s long and controversial history is no secret, but these days it uses blockchain technology to prove its stones are conflict-free. This tracking of stones from source to shelf also allows De Beers to prove that the diamonds are authentic, which would have obvious benefits for many other industries.

Data such as identifying information, production details, information about the materials used in production, a product’s journey through the supply chain, images and scans of the product at different points in its journey, and even data from IoT devices can all be uploaded to the blockchain. All parties involved can be more confident that the data is accurate thanks to the transparent nature of utility blockchains and the immutability of the ledgers.

Quality assurance

Whether it’s $1 million sports cars or $0.10 trinkets, every business is concerned with quality assurance. Companies are also all too familiar with shifting blame and transferring money that can happen when irregularities are discovered or products disappear.

Since blockchains can be used to track processes, including both manufacturing processes and the transportation of goods through supply chains, they can lead investigators to the source of irregularities. For example, if a product is signed as undamaged when it leaves the factory, including photos and video evidence, and then turns out to be damaged when it is unloaded at the next gate, it is logical to conclude that it was damaged in transit.

While this could affect all industries, an example of how blockchain is being used for these purposes today is the food safety blockchain project by IBM and Walmart. This project records where each product is grown, stored, processed and inspected. It helps deal with problems like recalls and helps track down the source of the problem.

Data related to production, suppliers, transportation, product specifications, batch/lot numbers, corrective actions, and things like certifications and inspections can be stored on utility blockchains, taking quality assurance to a whole new level.

Fraud and forgery

We briefly touched on how blockchain can be used to authenticate goods when we discussed De Beers diamonds above, but let’s expand on that now. Fraud and counterfeiting are widespread problems across all types of supply chains, causing all kinds of havoc. For example, it is estimated that food fraud costs $40 billion and affects around 10% of the supply chain. According to the Organization for Economic Co-operation and Development (OECD), counterfeit and pirated goods accounted for 3.3% of world trade as of 2019, and it is likely to have worsened since then.

Blockchains make it impossible for any bad actor to manipulate or falsify data once it is written to the ledger. This enables everyone, including end consumers, to trace products back to their sources, ensuring authenticity.

How would this work in practice? Each luxury item will be assigned an NFT by the manufacturer so it can be tracked and traced on the blockchain for life. Whenever the product changes hands, digital signatures can confirm the transaction, providing full insight into the chain of custody and making it possible to determine without doubt who owns or has owned a given item.

Blockchains can be used for many great things, but pushing counterfeit goods out of the legitimate economy and making it impossible for fraudsters to tamper with data in their supply chains is one of the most exciting. Companies such as Louis Vuitton, Gucci and Rolex can greatly benefit from such systems.

Immutable utility blockchains are key

In truth, the use cases outlined above only scratch the surface of what’s possible. Blockchains can also be used to set up smart contracts for real-time tracking and create sustainable supply chains.

But for any of this to be possible, the blockchains themselves must be scalable. A few thousand transactions per second won’t cut it – it will take millions of transactions per second to underpin global supply chains. Layer-two solutions won’t cut it either – all the benefits of time-stamped records in the chain are lost when such “solutions” are introduced. The aforementioned advantages are also lost when many private blockchains are used.

If you are interested in learning more about scalable utility blockchains and how they can be used to create greater data integrity in supply chains, join us at the London Blockchain Conference between May 31 and June 2. This will be the largest enterprise blockchain conference in the world and we would love to see you there to share ideas on how blockchains can be used to create a better world. Sign up for free today!

See: How the London Blockchain Conference will shape the future of blockchain

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