Blockchain, the digital distributed ledger technology, has become a prominent game-changer in the world of financial services. In addition, blockchain has shown promising applications in the domain of supply chain management thereby drawing attention to blockchain traceability. The blockchain is basically a decentralized ledger or a digital system recording the transactions between multiple parties in a transparent, verifiable, immutable, and secure manner. The record of transactions could help in monitoring every phase of a business transaction carefully.
Even if the hype around the use of blockchain-based traceability has been gaining fuel, it is also important to know that many such applications are still in the stages of development. The following discussion helps you obtain a clear impression of traceability in blockchain with a detailed overview of technical underpinnings. In addition, an overview of the possible applications of blockchain traceability in different sectors could also enlighten readers.
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Blockchain and the Supply Chain Management
Most of the discussions surrounding traceability in blockchain technology would refer to supply chain management contexts. Blockchain technology introduces promising value to the domain of supply chain management and traceability is one of them. Blockchain technology, when combined with the ability for programming business logic, by leveraging smart contracts could offer better traceability. How?
Blockchain ensures improved transparency into the details of the provenance of consumer goods. Provenance implies the chain of custody of a product from the point of origin to the point of consumption. In addition, blockchain also improves accuracy in asset tracking throughout its journey in the supply chain. The applications of blockchain in supply chain management, even in the existing technologically empowered world, could contribute to better efficiency. At the same time, blockchain could also help in ensuring auditable tracking of assets alongside restricting exploitative behaviors.
What Does Supply Chain Management Look Like Now?
The need for traceability in blockchain refers to the various issues experienced by the existing supply chain management sector. The shipping industry spends almost half of the cost of transportation on paperwork. Furthermore, studies have also pointed out concerns of mislabeling in food products. In addition, many products also include ingredients sourced through illegal measures. Another prominent issue in the existing supply chain management landscape refers to the counterfeiting of luxury goods. Furthermore, the counterfeiting of consumer goods such as electronics and pharmaceuticals also creates the necessity for introducing blockchain traceability.
How Can Blockchain Improve Supply Chain?
The use of public, private, and hybrid blockchain could introduce traceability, transparency, and accountability in the movement of assets. Blockchain can be helpful for the logistics sector for improving the efficiency of business processes alongside reducing costs of supply chain infrastructure. So, what is traceability in blockchain, and how it can make supply chain management better? Supply chains generally have a complex network of manufacturers, suppliers, retailers, distributors, auditors, and customers. The shared ledger infrastructure of blockchain could help in streamlining the workflow across all participants in the network. Furthermore, the shared infrastructure could ensure improved visibility for auditors regarding the activities of participants in the value chain.
Enterprise blockchain technology has the potential for transforming conventional supply chain management by introducing traceability in blockchain technology. The three distinct use cases of blockchain in supply chain management refer to traceability, tradability, and transparency. Blockchain can leverage traceability for improving operational efficiency through mapping and visualization of enterprise supply chains. The continuously increasing demand for sourcing information about products is also a notable factor for emphasizing the need for blockchain traceability. Blockchain could help enterprises in developing a better understanding of supply chain operations alongside ensuring the engagement of consumers with real, immutable, and verifiable data.
Traceability in blockchain also relies profoundly on the ease of capturing crucial data points such as claims and certifications. As a result, it can help in strengthening trust followed by enabling open access to the data. After registration on the blockchain, the authenticity of data points is verified by third-party attesters. It is also important to note that traceability in blockchain refers to the introduction of benefits for real-time updates and validation of information.
How Does Blockchain Achieve Product Traceability?
Supply chains all over the world support the movement of almost any type of asset including consumer packaged goods. In addition, the global supply chains also deal with product recalls, when certain consumer products or raw supplies must be recalled for preventing illness or injury. Recalled consumer products have a formidable negative influence on millions of people all over the world with lawsuits, lost sales, and replacement costs. The answer for ‘what is traceability in blockchain’ would focus on applying blockchain for streamlining product recall alongside reducing counterfeiting.
So, what goes on in the technology surrounding the concept of traceability in blockchain technology? Blockchain is basically a ‘chain of blocks’ in which each block represents the collection of different transactions. Each block is added to the existing chain of blocks with a cryptographic hash function. If you need to access the data of a block, then you need the keys for decrypting the hash function to obtain desired data. Each block in a blockchain contains the timestamp of the transaction alongside details of the participants involved in the transaction. As a result, it offers a comprehensive audit trail in which you can find the different milestones an asset has crossed in the journey through the supply chain.
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Implementing Blockchain Traceability
Supply chain traceability is one of the significant use cases pertaining to blockchain technology. Apparently, the replacement of conventional supply chain processes with distributed ledger technology can enhance the trade volume of the US by 15%. In addition, the initiative could also boost the US GDP by almost 5%. Blockchain could offer the flexibility of tracking almost any physical or digital product across all the phases of its lifecycle. Blockchain traceability could support the expansion of sustainable and ethical production and the use of any commodity on a global level.
You can also notice many industries depending on third-party manufacturers or multiple vendors prior to the creation and labelling of final finished goods. In some of the cases, the white-label products are sold prior to repackaging or relabeling. On the contrary, the value of traceability in blockchain refers to the transparency in process tracking. As a result, manufacturers could get a clear view of their value chain thereby ensuring that they could guarantee the efficient movement of third-party products and final product labelling.
With the help of blockchain, you can track the movement of assets alongside recording information and showcasing records of previous assets. Blockchain leverages the use of smart contracts for employing traceability of assets. So, traceability in blockchain could ensure that any individual could notice the chain of custody and journey of an asset through the supply chain in real-time.
Real Uses of Blockchain Traceability
The most crucial aspect in understanding the implications of blockchain-based traceability refers to its real uses. Blockchain could enable traceability across various sectors which points out the possibilities for making traceability one of the driving factors for blockchain adoption. As you have seen already, the applications of traceability are clearly evident in the supply chain context. Blockchain can help in improving the traceability of products across supply chains. Now, let us dive deeper into the various examples of the use of traceability across various sectors.
The applications of blockchain traceability in the supply chain are clearly evident from the decentralized aspect of blockchain. Using blockchain in the supply chain could imply that blockchain or distributed ledger technology applications could empower global trading partners for engaging in secure transactions along with consensus regarding shared facts for improving visibility, transparency, and efficiency. The primary use cases for blockchain in the supply chain focus on the immutability of the provenance of goods. In addition, the use of blockchain based traceability in supply chain use cases also ensures relief from the troubles of reconciliation with multiple parties. Most important of all, blockchain could also offer the advantage of real-time visibility to enable track and trace analysis.
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Traceability in blockchain technology also works effectively for different pain points in the agriculture sector. Traceability in the agriculture sector could empower the efficiency of crop production alongside improving the management of agricultural finance. For example, the combination of blockchain technology and IoT sensors could help in monitoring the crop field. Blockchain could help in documenting the data collected for different parameters of the crop field such as soil moisture, temperature, light, humidity, and ph. In addition, the incorporation of machine learning algorithms and predictive models could also enable farmers to make insightful decisions in agriculture. Furthermore, blockchain traceability also presents positive implications for the management of agricultural finance. Farmers, as well as stakeholders, can share information across all steps of food production while auditors could conduct audits effectively.
The answer to ‘what is traceability in blockchain’ for the fashion industry would largely refer to the problem of counterfeiting. The burden of counterfeit goods is costing the fashion industry a lot in terms of annual sales every year. At the same time, fashion brands are losing their credibility in the market. Therefore, blockchain could help in monitoring the supply chain of goods for establishing a better foundation of trust for customers. Blockchain could ensure that customers know where the fashion products come from. In addition, the use of unique identifiers for verifying the originality of goods is a promising benefit of traceability. The unique identifier can help you find out where the product has been in its journey through the value chain.
The expectations of consumers regarding the standards of their food are fluctuating constantly with each passing day. Consumers want to know the source of their food and the practices used in manufacturing the food. Blockchain-based traceability could help customers know the exact place of origin of their food. In addition, it also enables visibility into information regarding the actual producers of the food and its freshness. Workers at each stage in the food supply chain have to update the database with information about the product. Therefore, traceability in the food supply chain could offer conclusive advantages such as the reduction of food fraud and false labelling.
Manufacturing companies could utilize blockchain for easier data exchange with better accuracy and security throughout complicated supply chains. Traceability in blockchain technology in the manufacturing sector could ensure access to a permanent digital record of materials, ingredients, parts, and other products. As a result, it can ensure prolific growth in the end-to-end visibility of the manufacturing process. At the same time, all participants in the manufacturing process could access a single source of trust. Most importantly, blockchain could also help in improving supply chain traceability for manufacturers. For example, the use of IoT and blockchain could help in collecting product data such as temperature, pH, moisture, and other aspects at different points of the product’s journey in the supply chain.
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Will Blockchain Bring Next-Generation Traceability?
The foremost challenge in the present world is the development of trust. Addressing the traceability concerns for products in supply chains of different industries can be quite difficult with considerable challenges. In addition, consumer demands are also changing constantly. Consumers want affordable and immediately accessible products albeit with keen attention to factors such as origin, validity, and quality of products. Therefore, next-generation traceability has to focus on continuous monitoring, complete visibility, and transparency alongside improved agility and flexibility in manufacturing and logistics. Blockchain traceability can provide crucial support for addressing notable traceability issues evident in present times. Blockchain could offer a detailed audit trail for assets, with a consistent digital thread empowered with smart contracts and automation.
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One of the notable factors about traceability in blockchain technology refers to the basic design element of blockchain. The documentation of transactions on the blockchain in an immutable, secure and verifiable way paves the road for traceability. Blockchain can play a crucial role in improving traceability by offering a detailed audit trail of transactions on a network.
In addition, the benefits of security and interoperability point towards favorable prospects for the use of blockchain traceability. While traceability in blockchain already has many promising use cases for different sectors, it can also introduce next-generation traceability. Learn more about the use of blockchain for improving traceability right now!