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Building a better supply chain via the blockchain


Imagine a world where, before you spent a dollar on any good or service you could, at your fingertips trace the entire journey of a product. Did the distributor and transport network that -delivered the coffee beans to this cafe use eco friendly fuels? Is the factory in Bangladesh that hired the tailors for this clothing range known as providing safe work conditions?

You may well argue that answers to these sorts of questions are being addressed today, through the use of certification labels like ‘Fairtrade’ ‘eco-friendly’ or ‘Certified Organic’. As consumers, surely when we see these labels on our t-shirts, cans of tuna and coffee cups, then we can purchase these products guilt free, confident that rigorous supply chain oversight has been executed on by the owners of these centralised databases?

Well, to some degree – yes. Many of these organisations have done a remarkable job at coordinating and overseeing better due diligence when it comes to product provenance. But the fact remains that centralisation of data will always present a single point of weakness and is far from infallible. As these organisations grow, can they maintain the same stringent auditing processes? Can they remain immune to bribery, and fraud, given the high stakes at play for many brands when it comes to market positioning?

Many, including blockchain startup Provenance, are answering ‘No’. Instead, they are looking at the decentralised features of the technology in order to create a dynamic, auditable and transparent ‘digital passport’ for every good and service.

In fact blockchain is proving itself as a useful tool for tracking transactions in real world settings. Experiments in using blockchain to verify provenance is been looked at closely by art dealers, luxury goods makers and traders and winemakers, to name a few.

In Provenance’s own words, they intend on leveraging the technology to allow anyone ‘to inspect the uninterrupted chain of custody from the raw materials to the end sale’. Their framework consists of a series of interoperable modules deployed onto the blockchain by various supply chain actors (Supplier, Manufacturer, Registrar, Standards Organisations, Certifiers and Auditors and finally Consumer), each able to access a fully auditable record of transactions for the product in question.

Of course the digital passport must somehow translate into the physical world. Via a smartphone application, Provenance hopes to be able to serve up this information to a consumer at the point of purchase. RFID and NFC are two technologies, among others, that are being looked at as potential vehicles for this knowledge transfer.

For small business owners, the virtuousness of their supply chain is often a significant advantage over their larger peers. Leveraging the provenance of their products and having the data to back up such claims could be a significant advantage in the war against the mass producers.

One imagines many large corporations will strongly resist technology that exposes their real practices to consumers. No longer will it be acceptable to have little to no end-to-end supply chain visibility, or for that matter, accountability. No doubt it will take some time, but the blockchain writing is clearly on the wall, for all parties in the system to see.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

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