Outside of payments, which is still mostly using cryptocurrencies rather than the underlying blockchain technology, the most active area for retail blockchain applications is in supply chain. On the surface this makes a lot of sense: supply chains depend heavily on cross-border situations where smart contracts could address current processes that are dependent on a lot of paperwork, letters of credit, escrow accounts, multiple currencies, and increasing governmental requirements around visibility into ports of origin, cargo contents, and general supply chain visibility.
Tackling some of these applications – especially smart contracts in the place of import documentation, or currency exchange – requires an enormous degree of coordination and cooperation, and sometimes with either large demanding parties (like the US Government for imports) or small parties that just aren’t tech savvy, let alone have regular access to the internet. It would be easy to think that this would be one of the harder areas to tackle because of these complications.
In fact, it has been easier than that. One, every party wants greater supply chain visibility. And solving that visibility is a core prerequisite to almost all of the other challenges that exist in supply chain today. What has been missing has been a neutral third party that still gives companies complete control over who can see their data (so that competitors don’t get access), along with the ability to revoke that access if relationships change, while also ensuring security that at a minimum provides immutability of data.
…And that sounds like a job for blockchain! In fact, there has been an enormous amount of activity around retail supply chain and blockchain. There are three main areas of focus: visibility, anti-counterfeit, and IoT/RFID. What follows is a round-up of activity in each of these areas. I just want to emphasize that these companies are being called out not because they are wildly successful – several businesses and/or their business models have not been established or proven in any way, and there’s no guarantee that any of them will be around tomorrow. I’m using them as examples of different ways of approaching the same problem, or as evidence that there is activity of some kind, but in no way endorse any of these companies. Invest at your own risk!
Supply Chain Visibility
IBM has been one of the most active companies around supply chain visibility, and has put together at least two consortiums of companies, as well as created an incubator that supports even more companies that are creating blockchain solutions that address supply chain visibility.
The IBM Food Trust blockchain consortium, which includes companies like Unilever and Nestle on the supplier side, and Albertsons and Walmart on the retailer side.
TradeLens, a joint IBM-Maersk consortium designed to tackle some of the thornier issues around import/export.
And here is the list of the ten blockchain startups that are joining IBM’s accelerator.
There are some retailers who are going their own way in investing in supply chain visibility that leverages blockchain, including Carrefour, which has already been using blockchain to track chicken, and is expanding that to include Italian lemons and oranges, as well as milk.
On the supply chain side, Starbucks has partnered with Microsoft to track packaged coffee (when you buy Starbucks coffee from the shelf of your local grocery store), and has additionally turned that around to an app that consumers can use to trace the origins of the package they’re buying. And Bumble Bee Foods has partnered with SAP to track seafood in its supply chain.
Some startup tech vendors, including Connecting Food (one of IBM’s accelerator companies) and Omnichain, are putting together packaged supply chain solutions that companies can buy – not consortiums, and ideally providing a more “off the shelf” approach to initiatives like the ones that Starbucks, Carrefour, and Bumble Bee are undertaking.
LVMH, the parent company of a slew of luxury brands that often fight counterfeits in the market, has taken the lead in using blockchain in their efforts, partnering with Microsoft to launch the AURA anti-counterfeiting initiative. LVMH is focusing first on Louis Vuitton fashion and Christian Dior perfumes, and hopes to provide what is basically a lasting certificate of authenticity for every item, which makes it possible to verify that the item was actually manufactured by the brand in a way that assists the initial purchase but also the resale market.
This is an area that has also been active from a start-up perspective, with new tech vendors organizing to provide white-label solutions for any brand to protect the authenticity of their products. LINFINITY is one such company, and simplyBrand is another. They work by providing the technology that enables companies to basically issue certificates of authenticity for their products, and attach them to individual items, often using either an NFC chip or a 2-D barcode embedded in the packaging or as a label to connect the item to the digital certificate.
IoT / RFID
While RFID in supply chain is nothing new, IoT brings a new dimension to it, with the inclusion of sensor data, like temperature, vibration, or g-forces (to measure if something was dropped). The problem with IoT and blockchain is that blockchain is not very efficient in handling transactions, and with or without sensor data, IoT generates a LOT of data.
There is a lot of interest in solving this problem, because IoT-generated data is the kind of data that is easier to “trust” than manually-entered data, and can provide enormous depth to supply chain visibility tracking, if the volumes can be managed.
One consortium working on this is the Auburn University’s CHIP initiative. Where IBM’s Food Trust focuses on consumer packaged goods, Auburn’s focuses much more on the fashion supply chain – which makes sense, because fashion has done a lot more with RFID than food has, even when it seems like IoT-based sensor data might ultimately be more valuable for food. If CHIP can prove out that RFID and blockchain go together well, it won’t be that much more of a step to expand it to sensor-generated data as well.
Beyond Track and Trace
All of these initiatives focus in some way on track and trace – even anti-counterfeiting is rooted in tracking the origin or provenance of an item. But in supply chain, there are opportunities to expand blockchain use beyond that application. One to watch here is the Levi’s-Harvard initiative that will attempt to use blockchain to track labor welfare. This isn’t the most intuitive use of blockchain out there, and I think it will still be subject to “garbage in/garbage out” issues (ensuring that data added to the blockchain is accurate to begin with). But it does show how blockchain could expand potentially far beyond track and trace in the retail supply chain.
The Bottom Line
If you want to see blockchain at its most mature in retail, look no farther than the retail supply chain. That said, there is still an enormous amount of immaturity involved here, with most activity focused either on pilots or barely initial rollouts, or startup tech companies that have not yet proven they can scale. And while visibility/track and trace make up the majority of the use cases where there is activity, there is still plenty of room for further innovation in the space.
Stay tuned! Before you know it, that coffee you’re drinking or tuna sandwich you’re eating (hopefully not both at the same time, that doesn’t sound very appetizing) may have a blockchain record of its supply chain travels attached to it – that you can view on an app on your phone.
What that means for consumer behavior, though, remains to be seen.
Author: Nikki Baird