How Blockchain Can Revolutionize Traceability & Supply Chain Management
Tags: supplychainmanagement, blockchain
Published: 2022-08-10 13:56:00

The [World Health Organization](https://www.who.int/) (WHO) estimates that roughly 420,000 people lose their lives to food contamination, annually. Thus, as consumer concerns for food safety have increased dramatically over the last two decades, manufacturers have been met with increasingly stringent demands from the FDA. According to The Hindu Business Line, global concern regarding food safety saw an almost 10 percent increase between 2019 and 2020 alone. Moreover, upwards of 50 percent of consumers consider the improvement of food safety to be the prime problem to be addressed by companies, and that said responsibility lies solely in the hands of such companies. 

In addition, 60 percent of consumers worldwide claimed to hold concern over their food’s hygiene and safety. On a similar note, Food Safety News (FSN) conducted a survey which found that 57.1 percent of consumers considered food contamination, such as by potentially deadly bacteria like Salmonella or Listeria, to be their biggest food safety concern. FSN also reported that nearly 20% of UK consumers claimed to have changed their food shopping habits in the past year due to safety concerns. 

This illustrates the existence of a golden opportunity for innovators and disruptors. Undoubtedly, quality assurance and traceability are sectors that are ripe for the picking. In an interview conducted by Quality Assurance Magazine, Andrew Kennedy, President of software company FoodLogiQ, stated that not only are manual, paper-based systems extremely slow, but that the FDA simply lacks the necessary manpower to handle manual trace backs or to connect separate, disconnected systems. Senior solution consultant at Sparta Systems also expressed concern for this haphazard situation. “It’s very hard to work with manual or spreadsheet-based systems” she said. “There’s no way to prove changes or updates; and in FDA inspections, that’s what they will be looking for.” 

## What is Blockchain Technology?
 
A decentralized database whose contents are managed by multiple participants is referred to as a [Distributed Ledger Technology](https://www.investopedia.com/terms/d/distributed-ledger-technology-dlt.asp) (DLT). Blockchain is a form of Distributed Ledger Technology (DLT) consisting of data-filled “blocks” which are then “chained” together. All updates to blockchain databases are forced to append themselves to the end of the chain in the form of a new block.  

Hash Encryption is essential to blockchain technology. In cryptography, a hash is a mathematical algorithm which maps data of any size to an array of bits of fixed length. Each block stores its own data in tandem with hashes referencing all adjacent blocks, forming a highly secure and virtually unbreakable “chain” of data-filled blocks as a result. Because blockchain technology is, by definition, decentralized, no single person or organization can monopolize control over the database. Because blockchains are immutable, the risk of fraud is virtually non-existent, as all records can be traced to their origin. Because blockchain data is encrypted using the most advanced cryptography techniques, data stored on a blockchain is nearly impermeable to hacking. 

Thus, the three biggest benefits of blockchain technology, in contrast to traditional centralized database systems, are its decentralized nature, immutability, and security. 

## Blockchain can Revolutionize Recalls
 
_Food Contamination_ 

As previously mentioned, the current state of food safety and traceability is abysmal, both for consumers and manufacturers alike. Regarding food, consumers are, above all, concerned with food safety and, consequently, traceability. Manufacturers would like to address these concerns, for both consumers and the increasingly demanding FDA, but lack the practical means to do so with traditional technology. In other words, this sector is ripe for disruption by blockchain technology. According to the Journal Frontiers in Blockchain, food supply chain companies face two primary options in order to address said concerns. 

The first option is to optimize chain partner collaborations – a process which is costly, time consuming, and laborious, as demonstrated by a recent Walmart debacle, in which it took an internal team six days, 18 hours, and 26 minutes to trace a package of sliced mangoes to its origin on a Mexican farm. The second option is to simply utilize readily available blockchain technology, select which data they would like to include in the blockchain, and decide which parties to whom the data is accessible via the blockchain. Thus, when we are asking the question, “Which option is the most efficient?”, the answer is, quite obviously, blockchain. 

Furthermore, should a company wish to become “fully transparent” to their consumers, they need only make the respective information publicly accessible via the blockchain. Thus, consumers would be able to trace their food from “farm to fork” via the simple process of scanning a QR code on an app on their phone. 

_Automobiles_
 
According to Forbes magazine, over 28 million vehicles were recalled in 2017 alone. In 2016, the situation was even worse, with 52 million vehicles being recalled. These recalls were largely related to defective Takata airbags and their inflators, which, in some cases, would shoot out metal shrapnel.  

Problems with traceability in the automotive industry are not just limited to potentially lethal defects, however. The 45-billion-dollar counterfeit auto part market flourishes in the absence of reliable, efficient, and accessible traceability. Consequently, both automotive manufacturers and consumers pay the price. Whilst automotive manufacturers may be able to see one or two steps upstream, they often lack any substantial visibility beyond their immediate vendor. This black market contributes significantly to lowered safety in automobile usage, and, hence, increased risk of injury or death. 

In fact, airbags, brake pads, and radiators are commonly counterfeited parts. Moreover, companies are sometimes at a huge financial loss when performing recalls. When they are unable to pinpoint the exact vehicles which are defective, they are forced to overcompensate by recalling all vehicles of a certain make or model. In 2016 alone, recalls were a 22-billion-dollar expense for automakers. Nonetheless, there exists a solution to all these problems. By implementing blockchain technology, automotive manufacturers can provide dramatically increased transparency and safety protocols to their manufacturing process. 

Blockchain would reduce counterfeit parts to an absolute minimum by easily tracing each part’s place of origin, tracking changes of custody, and providing an immutable record of all transactions. Faulty parts can be traced from their origin all the way down to the individual vehicle that it was used in. Likewise, in cases in which the faulty part is coming from a particular source, blockchain will enable manufacturers to pinpoint exactly which factory is problematic. Thus, only cars made with parts from the factory in question would need to be recalled, saving manufacturers billions of dollars in overcompensation costs. With the future of automobiles being self-driving, traceability and safety are paramount components to the industry as a whole, and blockchain technology can provide said traceability and safety, for instance, blockchain car sharing services. 

## General Product Recall & Supply Chain Management
 
In product manufacturing, huge financial losses are often incurred by the smallest of manufacturing errors. All that is required to trigger such losses is the inclusion of a single bad batch to spoil the rest. Even though all of the other batches are safe, they must all be disposed of. With the use of custom blockchain development, such extreme and unnecessary financial loses can be easily avoided. Blockchain in supply chain management can provide manufacturers, farmers, government regulators, and retailers the ability to isolate and trace the source of any contaminated ingredients throughout the entire supply chain, with convenience and ease. Thus, by being enabled by blockchain technology to trace each product – along with its respective potential defects – with ease, companies and consumers alike benefit greatly. Consumers are much safer, since the time required to trace products from origin to consumer is reduced to a minimum (as opposed to current processes, which can take days, or even weeks). 

Companies are much safer in the sense that they do not have to incur unnecessarily extreme  financial loses (which have the potential to bankrupt the company) from potential product manufacturing defects. Moreover, by reducing the wasteful financial incursions that are blanket recalls, a healthier and more robust economy is achieved for the community and nation as a whole, further benefiting consumers and companies alike. Instead of playing Russian roulette with potential defects which yield the potential to shatter companies’ reputations, companies can instead focus their energy on more economically productive ends, such as improved customer service or product design. 

Fortunately, many companies are already beginning to implement farm-to-shelf and farm-to-field technologies. These companies include Intel, IBM, TE-Food, and more are actively aiding companies in surmounting this transition. Since blockchain is a highly economically efficient and secure technology, consortiums such as the Blockchain in Transport Alliance, which has over 500 members, have been developed to encourage the use of blockchain in supply chain management. 

## Conclusion
 
In addition to the many uses of blockchain technology which have been expounded upon above, there exists many other potentialities and uses of blockchain. While blockchain holds the potential to completely revolutionize industrial traceability &amp; supply chain management, it also holds enormous potential in other sectors of the economy, such as voting, health, pharmaceuticals, finance, real estate, and more. Although many projects implementing the use of blockchain are already underway, many other uses of blockchain remain to be conceived of and implemented. In fact, noteworthy companies such as FedEx, Burger King (Russia), Bank of America, Microsoft, Mastercard, Overstock, and others, are already using blockchain. Without doubt, blockchain is a revolutionary technology that will completely disrupt any sector who can benefit from security, record-keeping, and decentralized, distributed databases. Undoubtedly, companies who will benefit the most from blockchain technologies will likely be, just as in most disruptive technologies, the earliest adopters.