Andre Nery - stock.adobe.com
The hype is that blockchain can take care of all your supply chain issues. The reality, though, is that blockchain in supply chain use cases are largely in the testing phase.
While blockchain does show promise, it's unclear whether it can boost sales and increase revenue, said David Laborde, manager at consulting company Kalypso: A Rockwell Automation Company, based in Beachwood, Ohio.
"In my research, I haven't really been able to find a very clear-cut case that said, 'yes, we can correlate sales lift to [using blockchain],'" Laborde said. "There is research that shows that the more transparent a company is about their products, [that] directly correlates with an increase in [consumers'] purchases," Laborde said.
For many companies, the return on investment may not justify the financial investment required, he said.
And using blockchain in the supply chain comes with potential problems.
Still, the promise of using distributed ledger technology to support greater supply chain visibility and traceability is real. Walmart's mandate that its suppliers use blockchain is arguably the most high-profile case. But the mega-retailer is not the only company interested. Others are moving forward with promising blockchain pilots and initiatives.
Here are seven real-life use cases of how blockchain has the potential to improve supply chain management.
1. Provide diamond supply chain transparency: Brilliant Earth
Ensuring that diamonds are ethically sourced is no easy matter. It's exceedingly difficult to trace them from mining and the many handoffs along their supply chain.
Brilliant Earth, a retailer of ethically sourced diamonds and fine jewelry, is tracking the provenance of its diamonds on the Everledger blockchain, said Beth Gerstein, co-CEO of the San Francisco-based company.
Brilliant Earth has integrated Everledger's blockchain technology into its supply chain to more securely track the origins of its diamonds and provide greater assurance to customers of its responsible practices, Gerstein said.
Everledger's technology provides a blockchain-enabled database that supports the independent tracking of every step in the supply chain from mine operator through each manufacturing step, she said.
The blockchain technology facilitates diamond tracking along with all the supporting documentation, including invoices and certification, as it moves through the supply chain, securely storing this chain of custody information, she said.
"When a customer purchases a blockchain-enabled diamond with Brilliant Earth, all of these details are included so they can see the full chain of custody," Gerstein said.
Currently, Brilliant Earth has approximately 800 diamonds that are blockchain-enabled, she said.
When customers search for diamonds on the Brilliant Earth website, they can use a filter that lets them view and select diamonds that are blockchain-enabled. Once customers click on the descriptions of individual diamonds, they can see more detailed information about the chain of custody, as well as additional insights and assurances of the supply chain, Gerstein said.
Customers can view information such as the origin of the diamond, the region from which it was sourced and the benefits of mining to that region, the rough carat weight, the lot number, an image of the rough diamond where available, and a 360-degree video of the polished diamond, she said.
"When customers purchase a blockchain-enabled diamond, they can gain access to a password protected secure digital vault, including the chain of custody information for their diamond," Gerstein said.
2. Boost drug safety: Merck and Walmart
Ensuring the pharmaceutical supply chain works as it should has important ramifications for drug safety, and in turn, consumer safety. One of the most promising use cases for supply chain blockchain is ensuring that safety.
Merck and Walmart, along with IBM and KPMG, are testing blockchain as part of a program to improve drug safety and security.
The endeavor is part of the U.S. Food and Drug Administration's Drug Supply Chain Security Act (DSCSA) Pilot Project Program. The FDA chose multiple participants, which are testing methods and technologies with potential to create an electronic, interoperable system.
As for Merck, Walmart, IBM and KPMG, each company has a special interest in improving the efficiency of the pharmaceutical supply chain. Merck is a drug manufacturer, Walmart is a leading U.S. pharmacy, IBM sells blockchain technology and KPMG provides consulting services to pharmaceutical companies.
"The idea is that all drug manufacturers will be responsible for being able to validate that their drugs are authentic from the point of manufacture all the way to the point when they're dispensed to the patient," said Tegan Keele, U.S. blockchain program lead at KPMG.
Currently, drugs are traceable when packed in a box that has a barcode or QR code, but visibility decreases as soon as someone opens and unloads that box because the individual units aren't traceable, she said.
Tegan KeeleU.S. blockchain program lead at KPMG
"What blockchain is doing is providing an underpinning augmentative layer across the drug supply chain and enabling that unit-level visibility to be traced as the [drugs] go all the way through," she said.
The idea is to give each drug package a unique identifier that can be tracked on the blockchain from the drugmaker to the pharmacy to the consumer and every other stop along the way.
"That linkage, and being able to see where [a drug] has been and who touched it and when, effectively makes it very, very difficult for bad actors [to introduce] counterfeit drugs," Keele said.
In May, Merck, IBM, KPMG and Walmart announced the completion of the pilot program, according a Merck press release. The companies said that the pilot proved that blockchain technology could be used to help meet the FDA's DSCSA requirements to identify, track and trace prescription medicines and vaccines distributed within the U.S. as well as increase patient safety.
The final report, which was submitted to the FDA in February, included several recommendations that discussed the value of ultimately moving toward an industry standard for interoperable blockchain.
3. Ensure saleable drug returns: FFF Enterprises
Along with more general pharmaceutical supply chain safety, blockchain can help ensure drug returns are legitimate.
FFF Enterprises Inc., a pharmaceutical distribution company based in Temecula, Calif., is one of several companies using the MediLedger Network blockchain to verify the return of saleable drugs, said Jon Hahn, FFF Enterprises' CIO.
The MediLedger Network was built by and for the pharmaceutical industry, he said. The endeavor is also part of the DSCSA Pilot Project Program.
The MediLedger Pilot Project explored the feasibility of using blockchain technology to create an electronic interoperable system as required by the DSCSA. MediLedger is an initiative of Chronicled, a San Francisco-based technology company that builds blockchain-powered ecosystems and supply chain products.
In February 2020, the MediLedger Pilot Project submitted its final report to the FDA detailing how and why blockchain can meet the DSCSA requirements for an interoperable track-and-trace system for U.S. prescription drugs.
Participants in the MediLedger Pilot Project, including FFF Enterprises, have been testing and developing a variety of products to run on the network that can help companies comply with the DSCSA regulations.
One component of the DSCSA mandates that all prescription medicine returned to distributors must have their unique product identifiers verified with the manufacturers before distributors can resell them. MediLedger is already in commercial use for the verification of salable drug returns.
"We are supposed to verify that when we get a drug returned to us from somebody who purchased it, the drug that got returned can be verified at the unit level," Hahn said. "This is now required by law only for items that are being returned that we can put back into stock and resell."
The DSCSA Saleable Returns Verification regulation mandates that when a pharmacy returns a product, the distributor must verify that the serial number on the bottle is the same as the serial number the manufacturer applied to the package before it can be restocked and resold.
This is to ensure that no one can introduce a counterfeit drug into the supply chain as well as to ensure that the drug is actually coming from the person who bought it, Hahn said.
The MediLedger blockchain network combines a "look-up directory" accessed through distributed ledger technology with a private messaging network that allows companies to securely request and respond to product identifier verification requests.
"When we get a product back that we can resell, we type in that product identification information, which contains product data, manufacturer data and the serial number into MediLedger's product verification system," Hahn said.
The response from the drug manufacturer comes back to FFF Enterprises' private MediLedger blockchain node, which is a server running FFF Enterprises' copy of the software that provides the saleable product verification functionality. The underlying technology is blockchain, Hahn said.
"So, we are actually running our own MediLedger blockchain node through which we initiate an inquiry," Hahn said. "And then the response comes back to that blockchain node."
The MediLedger blockchain is a network of private nodes and public nodes, Hahn said. A private node, which contains a company's private data, is owned and controlled by each company. A public node contains information that different companies need to share, such as product data.
"So, we have our private node and the private node interacts with a public network of nodes that MediLedger manages," he said. "And the two of them exchange information."
If the information FFF Enterprises receives confirms the product it inquired about is legitimate, it can go back into inventory to be resold.
"If we aren't able to confirm if the product is legit, we can't put it into saleable inventory and we have to do further research, which typically involves a call to the drug manufacturer, asking them to confirm whether this is a legit product," Hahn said.
4. Provide tracking info to consumers: Bumble Bee Seafoods
Many consumers also want better insight into their foods' origins. Blockchain applications are meant to support better visibility in the food supply chain.
Bumble Bee Seafoods uses SAP's Cloud Platform Blockchain service to trace yellowfin tuna's journey from the ocean surrounding the remote islands of Indonesia to local retailers.
Bumble Bee believes blockchain is the safest way to share data between parties due to the technology's reputation for being incorruptible and verifiable. SAP's blockchain technology lets consumers access the origin and history of Bumble Bee Seafoods' fair-trade-certified Natural Blue by Anova yellowfin tuna using their smartphones to scan QR codes on 12-ounce bags of tuna steaks.
"That will tell them where the tuna was caught, how it was caught, the species that's in the finished good product and whether it's fair trade or not," said Tony Costa, CIO at Bumble Bee.
In addition to using blockchain to offer consumers the ability to track and trace yellowfin tuna, Bumble Bee is in the process of capturing data to provide the same level of visibility to the fishermen and the buyers.
Data helps fishermen how they're catch counts compare to other fishermen, Costa said.
The blockchain application helps to fuel Bumble Bee's sustainability and traceability efforts.
"The analytics and capabilities of leveraging this information is going to be pretty special," he said.
5. Deliver fresher fruit: Naturipe Farms
Blockchain has the potential to provide insight into a company's sustainability practices.
Naturipe Farms, LLC uses the SAP Cloud Platform Blockchain service to track blueberries from the point of harvesting to the dinner table. Naturipe, based in Salinas, Calif., is a partnership between four fair trade-certified berry growers across the globe.
After growers pick and pack the blueberries, they place QR codes onto open crates of fruit. Those codes remain on the crates all the way to the store, according to an SAP video. Consumers can then scan the QR codes on the individual packages of blueberries with their smartphones to see where those berries were grown and even learn about the sustainability practices of the farm.
In addition to traceability, SAP's blockchain service helps Naturipe solve another problem -- timeliness.
The typical current process is to track the fruit with handwritten paperwork that accompanies each shipment, said Carol McMillan, director of IT at Naturipe in the same SAP video. That process can cause delays in getting berries clear through customs -- up to four hours for an air shipment and up to two days for a boat shipment. That's not ideal because fresh berries already have a short shelf life.
Many of the berries are produced in Central and South America, so being able to onboard the data captured by the growers is important, said Sathya Narasimhan, senior director of blockchain business development at SAP.
6. Ensure slave-free chocolate: Tony's Chocolonely
The cocoa supply chain isn't so sweet upon close inspection. For example, the region encompassing Ghana and Ivory Coast produces 60% of the 3.5 million tons of cocoa beans produced annually in Africa -- in part by using child labor and slave labor.
Amsterdam-based Tony's Chocolonely chocolate company represents one business that is working to help end child labor and modern slavery in cocoa supply chains as well as to help create a slave-free chocolate industry.
As part of that mission, Tony's Chocolonely teamed up with Accenture to develop and pilot a working private blockchain prototype that its supply chain partners in Ivory Coast successfully tested in the field.
Tony's enlisted the help of two of its partners in Ivory Coast, Socoopacdi, a cocoa farmers' cooperative, and Ocean, a local trader, to test the blockchain system, which included a web app to enter data, integration services between the app and the blockchain, the multichain blockchain platform and the cloud infrastructure. Specific stakeholders were tasked with entering data at three stages of the chain -- bean collection, local trader purchasing beans, and international trader buying beans from local merchant. In this way, the blockchain tracked each batch of beans all the way through the supply chain.
The first transactions were recorded on Jan. 4, 2018 and the pilot wrapped up on Feb. 15, 2018. During the six-week test, the company did experience some technical glitches and noted challenges getting data from the physical world into the digital platform. And for now, the company has an operational method of tracking its cocoa supply chain. Still, company leaders believe in blockchain's traceability potential and may use the technology in the future. It's taking a wait-and-watch approach as the technology matures and gains wider traction, which will make blockchain's use in the supply chain more attractive.
7. Keep meat cold: Golden State Foods
Foodborne illnesses and food safety are critical concerns for companies and their supplier networks, as consumers increasingly push for food safety measures.
Golden State Foods (GSF), a food service company based in Irvine, Calif., partnered with IBM on a pilot program that uses RFID to track fresh beef's movement, IoT devices to monitor its temperature and blockchain to manage the business rules between supply chain partners.
GSF is part of the IBM Food Trust, a network that uses blockchain to track and trace food as it moves along the chain among wholesalers, suppliers and retailers and provide them with transaction details.
Ramesh GopinathVP of supply chain solutions, IBM
"One big value proposition of blockchain is the ability to run trusted business logic on the trusted data, which can help in dispute resolution," said Ramesh Gopinath, vice president of blockchain solutions at IBM.
Gopinath offered the following scenario: Imagine a supplier of beef patties and a restaurant customer get into a dispute because the restaurant said the beef patties didn't last 14 days.
"So, either the supplier messed up or the shipping company messed up, and they didn't manage the cases of beef patties in the right temperature range," he said. "Meanwhile, the trucking company says when it delivered the beef patties everything was fine and puts the blame on the restaurant."
Keeping track of the flow of goods in the supply chain on a system such as Food Trust helps participants track the temperature information and potentially settle any disputes, Gopinath said.
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